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COMPENDIUM 


ERCANTILE    LAW. 


BY    THE    LATE 


JOHN    WILLIAM    SMITH. 


(ri)irb  edition. 

GREATLY     ENLARGED     AND     REVISED     Tfl  ROUGH  OUT     FROM     TH: 
LAST     ENGLISH     EDITION. 


BX 

JAMES    P.    HOLCOMBE 

AND 

WILLIAM     Y.     GH  OLSON. 


D.    APPLETON    AND    COMPANY, 


Nos.    443    &    445    BROADWAY 
1867. 


TJi-'i  3  i/^t 


T 


Kntered,  according  to  Act  of  Congress,  In  the  year  ISOO, 

By  D.  Appleton  &  Company, 

Ir  the  Clerk's  Office  of  the  District  Court  of  the  United  Stales  for  llie  Southern  District  ot 


New  York. 


\9 


I 


PREFACE 

TO    THE    THIRD    EDITION, 


Tins  edition  of  Mr.  Smitli's  excellent  treatise  on  Mer 
cantile  Law  will  be  found  to  differ  materially,  and  it  k 
hoped  for  the  better,  from  the  last.  The  present  Editor 
has  carefully  revised  all  the  notes  originally  prepared  by 
him,  constituting  much  the  larger  portion  of  the  American 
additions  to  the  work.  He  has  not  taken  as  large  a  liberty 
with  the  contributions  of  Judge  Gholson,  but  has  appended 
to  them  a  statement  of  the  most  important  points  which 
have  been  since  adjudicated  on  their  subjects,  by  the  En- 
glish and  American  courts.  He  has  endeavored  so  to 
select,  arrange  and  condense  from  the  mass  of  learning 
before  him,  as  to  compress  within  the  limits  of  this  volume 
the  most  important  expositions  of  commercial  law  by  the 
American  courts.  With  what  success  the  task  has  been 
accomplished,  he  submits  to  the  judgment  of  the  profession. 

James  P.  Holcombe 

January  Isf,  1855. 


PREFACE 

TO    THE     SECOND    EDITION, 


The  reader  will  find  tlie  contents  of  this  edition  mucli  en* 
larged.  A  great  portion  of  the  new  matter  was  compiled 
by  the  late  Mr.  Smith,  who  had  most  carefully  inserted, 
both  in  the  text  and  notes,  the  cases  published  previously 
to  his  death  at  the  close  of  the  year  1845,  including  the 
four  volumes  of  Queen's  Bench,  the  earlier  portion  of  the 
sixth  volume  of  Manning  and  Granger's,  and  the  whole  of 
the  twelfth  volume  of  Meeson  and  Welsby's  Reports.  A 
few  cases  may  be  found  in  the  recent  earlier  Reports, 
bearing  on  the  different  topics  discussed,  which  are  not 
cited  ;  but  from  the  copious  references  to  the  same  volumes 
in  which  they  are  contained,  the  Editor  is  satisfied  that 
the  omission  of  them  was  intentional,  and  he  has  not  pre- 
sumed to  add  them.  So  far  as  he  could  do  so,  consistently 
with  the  due  correction  of  the  text,  he  has  confined  his 
additions  or  alterations  to  the  notes,  and  he  has  refrained 
from  inserting  any  mark  to  distinguish  the  parts  inserted 
by  him,  as  he  believes  the  facts  stated  above  will  enable 
the  I'eader  to  do  this  without  the  inconvenience  of 
brackets. 


PREFACE 

TO    THE    FIRST    ENGLISH    EDITION 


The  idea  of  tliis  work  was  suggested  by  Mr.  Burton'a 
Compendmm  of  tlie  Law  of  Real  Property.    Tlie  acknow- 
ledged utility  of  that  book  induced  tlie  author  to  believe, 
that  an  attempt  to  compress  the  chief  doctrines  of   an 
equally  important  branch  of  the  law  into  a  treatise  of 
similar   dimensions,   might   not  prove   altogether   useless. 
The  Mercantile  Law  is,  in  one  respect,  better  adapted  to 
such   compression  than  the  Law  of  Real  Property,  inas- 
much as  the  reasons  upon  which  the  former  is  based  can 
be  explamed  more  shortly  than  those  which  support  the 
latter.     The  reasons  upon  which  our  Law  of  Real  Pro- 
perty is  founded,  are,  generally  speaking,  historical ;   and 
part  of  history  must,  therefore,  be  recounted,  in  order  to 
explain  them  clearly  and  philosophically ;  while  the  Mer- 
cantile Law  is  deduced  from  considerations  of  utility,  the 
force  of  which  the  mind  perceives  as  soon  as  they  are 
pointed  out  to  it.     For  instance,  if  a  writer  were  desirous 
of  explaining  why  a  rent-service  cannot  be  reserved,  in  a 
conveyance  by  a  subject  of  lands  in  fee-simple,  he  would 
be  obliged  to  show  the  feudal  relations  that  existed  be- 
tween lord  and  tenant,  the  nature  of  subinfeudations,  and 


PREFACE. 


how  the  lord  was  injured  by  tliem  in  sucli  liis  relation  to 
his  tenant ;  how  the  statute  quia  emijtores  was  enacted  to 
prevent  this  injury,  in  consequence  of  which  statute  a 
tenure,  without  which  no  rent-service  exists,  cannot  be 
raised  by  a  conveyance  from  one  subject  to  another  in  fee- 
simple.  In  like  manner,  the  explanation  of  a  recovery,  of 
a  fine,  of  a  copyhold,  of  an  estate  in  ancient  demesne,  of  a 
use,  of  a  trust,  would  require  a  process  of  historical  deduc- 
tion. But  when  the  reader  is  told,  that  the  drawer  of  a 
bill  of  exchange  is  diseharged  if  timely  notice  be  not  given 
him  of  its  dishonor,  because,  without  such  notice,  he  might 
lose  the  assets  he  has  placed  to  meet  it  in  the  drawee's 
hands ;  or,  that  if  A  hold  himself  out  as  B's  partner,  he 
will  be  liable  as  such,  because  he  might  else  enable  B  to 
defraud  persons  who  had  trusted  him  upon  the  faith  of  the 
aj^parent  2:>artnership  and  joint  responsibility — when  these 
reasons,  and  such  ■  as  these,  are  given,  every  man  at  once 
perceives  their  cogency,  and  needs  not  to  be  told  lioio^  that 
he  may  know  wliij^  the  law  was  settled  on  its  present  foot- 
ing. The  fitness  of  this  subject 'for  compression  is,  there- 
fore, hardly  questionable.  The  difficulty  of  compressing 
it  is,  however,  extreme ;  the  author  who  attemj)ts  to  do  so, 
must  continually  keep  in  view  a  triple  object — must  aspire 
at  once  to  clearness,  brevity  and  accuracy  ;  a  combination 
so  difficult,  that  its  difficulty  may,  it  is  hoped,  be  fairly 
pleaded  in  excuse  for  some  of  the  deficiencies  and  imper- 
fections which  the  reader  may  discover  in  the  following 
pages,  and  which  would  have  l)een  still  more  numerous, 
but  for  the  kind  assistance  of  friends,  to  whom  the  Author 
takes  this  opportunity  of  returning  his  sincere  acknow 
ledgments. 

July  30.  1834. 


ADYEKTISEMENT 

TO    THE    A3IERICAN    EDITION 


TnK  tieatise  of  Mr.  Smitli  oa  Mercantile  Law  wants  no 
introduction  to  tlie  profession.  It  lias  been  received,  both 
in  England  and  in  this  country,  with  signal  and  growing 
favor.  There  is  no  work  in  the  lawyer's  library,  of  which 
it  can  be  said  with  more  truth,  '•'■  multiim  in  ixirvoy- 
There  is  scarcely  an  important  principle  of  commercial 
law,  which  has  been  decided  by  the  English  courts,  that 
it  does  not  state  with  fullness,  perspicuity,  and  accuracy,  and 
sustain  by  reference  to  the  adjudicated  cases. 

But  great  as  is,  beyond  question,  the  value  of  that 
work,  it  is  not  sufficiently  adapted  to  the  wants  of  the  pro- 
fession in  the  United  States.  It  devotes  more  space  to 
analosries  and  illustrations,  drawn  from  the  civil  law,  than 
to  the  labors  of  Kent,  Story,  and  other  eminent  American 
jurists.  The  Editors  believe,  that  in  the  department  of 
mecrantile  law,  we  are  in  advance  of  our  transatlantic 
brethren.  Under  these  circumstances,  they  have  supposed 
that  a  running  commentary,  as  it  were,  upon  the  most 
important  American  decisions,  pointing  out  the  cases  in 
which  there  exists  any  conflict  of  authority,  and  directing 
attention  to  the  new  questions  which  have  arisen  for  adja- 


10  ADVERTISEMENT. 

dication  in  our  own  courts,  must  greatly  increase  the  use- 
fulness of  the  original  work.  The  present  edition  lias  been 
prepared  for  the  purpose  of  accomplishing  that  object. 
How  far  they  have  succeeded  it  is  not  for  the  Editors  to 
say  ;  but  they  believe  that  they  have  brought  under 
review  as  many  of  the  decisions  of  the  Supreme  Court  of 
the  United  States,  and  of  the  principal  commercial  courts 
of  the  several  States,  as  the  limits  of  a  single  volume 
would  permit. 

The  original  work  has  been  reprinted  from  the  last 
and  most  complete  English  edition,  greatly  improved  by 
the  author  before  his  death.  The  American  Editors  have 
added  references  to  the  most  important  cases  which  have 
been  since  decided. 

The  volume,  in  its  present  form,  is  presented  to  the 
profession,  in  the  hope  that  it  will  supply  a  desideratum 
which  has  been  long  felt  and  acknowledged  by  all. 

Ja:mes  p.  Holcombe. 
WiLLiAii  Y.  Gholson. 


CONTEXTS. 


FASa 

Introduction 17 


BOOK  I. 

OF      MERCANTILE     PERSONS. 

Chap.  1—0/  Sole  Traders 37 

Chap.  II. — Of  Partners — 

Sect.  1.  Partnership,  what    43 

Sect.  2.  How  formed 52 

Sect.  3.  How  dissolved 53 

Sect.  4.  Rights  and  liabilities  of  partners  among  themselves  56 

Sect.  5.  Rights  of  third  persons  against  partners 73 

Sect.  6.  Rights  of  partners  against  third  persons 97 

Chap.  III. — Joint  Stock  Companies — 

Sect.  1.  What 101 

Sect.  2.  How  formed — and  dissolved 103 

Sect.  3.  Rights  and  liabilities  of  members  inter  se 130 

Sect.  4.  Rights  against,  and  liabilities  to,  third  parties  ....  134 

Chap.  IV. —  Corporations 140 

Chap.  V. — Principal  and  Agent — 

Sect.  1.  Definition  and  character  of  agent 147 

Sect.  2.  Rights  of  principal  against  agent 153 

Sect.  3.  Rights  of  agent  against  principal  . . . , , IfJG 


12  co]^rrENTS. 

Sect.  4i.  Rights  of  third  persons  against  principal 169 

Sect.  5.   Rights  of  principal  against  third  parties 203 

Sect.  6.  Rights  of  agent  against  third  parties 208 

Sect.  7.  Rights  of  third  parties  against  agent 209 

BOOK  II. 

OF     MERCANTILE     PROPERTY. 

Chap.  I. — Incidents  peculiar  to  Mercantile  Property 221 

Chap.  II. — Shipping — 

Sect.  1.  The  privileges  of  a  British  ship 228 

Sect.  2.  Wliat  ships  are,  properly  speaking,  British, 230 

Sect.  3.  How  title  to  British  ships  may  be  acquired  and 

transmitted   238 

Sect.  4.  Rights  of  part  owners 248 

Chap.  \\l.— Goodwill 252 

Chap.  IV. — Properdj  in  Negotiable  Instruments   255 

BOOK  III. 

OF  MERCANTILE  CONTRACTS.. 

Chap.  I. — Bills  of  Exchange  and  Promissory  Notes — 

Sect.  1.  Their  definition,  requisites,  and  form 2G2 

Sect.  2.  Parties  to  a  bill  or  note 280 

Sect.  3.  Transfer  of  bills  and  notes 287 

Sect.  4.  Acceptance  297 

Sect.  5.  Presentment 303 

Sect.  6.  Notice 331 

Sect.  7.  Payment 334 

Sect.  8.  Resistance  against  payment   337 

Sect.  9.  Remedy  on  lost  bills  and  notes 355 

Chap   II. — Contracts  ivith  Carriers 359 

Chap.  III. —  Contracts  of  Affreightment — 

Sect.  1 .  AfTreightment  by  charter-party 369 

Sect.  2.  Contract  for  conveyance  in  a  general  ship 370 


CONTEXTS.  13 

PAGE 

Sect.  3.  Duties  of  master  and  owners 380 

Sect.  4.  Duties  of  the  merchant 389 

Sect.  5.  General  average 401 

Sect.  6.  Salvage 404 

Sect.  7.  Dissolution  of  contracts  of  affreightment 408 

Chap.  IV. — Maritime  Insurance, 

Sect.  1.  Definition  and  nature  of  contract 410 

Sect.  2.  The  parties  to  a  contract  of  insurance 412 

Sect.  3.  The  subject  matter,  or  what  may  be  insured 414 

Sect.  4.  The  policy — its  form  and  construction 419 

Sect.  5.  Results  of  contract 472 

Sect.  G.  Proceedings  after  a  loss 483 

Chap.  V. — Insurance  vpon  Lives   495 

Chap.  VI. — Lisurance  arjainst  Fire   503 

Chap.  VII. — Bottomry  and  Respondentia 527 

Chap.  VIII. —  Contracts  of  Hiring  and  Service 532 

CuAP.  IX. —  Contracts  with  Seamen — 

Sect.  1.  Nature  and  form  of  contract 538 

Sect.  2.  Duties  and  rights  of  seamen  under  the  contract  .. .  542 

Sect.  3.  Wages,  how  lost  or  forfeited 548 

Sect.  4.  Remedies  of  seaman  for  his  w^ages   553 

Chap.  X. — Ajyprenticeship 557 

Chap.  XI. —  Guaranties — 

Sect.  1,  Nature  and  form  of  contract 5G2 

Sect.  2.  Surety,  how  far  liable 581 

Sect.  3.  Surety,  how  discharged 5S2 

Sect.  4.  Surety,  how  indemnified   585 

Sect.  5.  Representations  in  the  nature  of  guaranties 587 

Chap.  XII. —  Contracts  of  S'lle — 

Sect.  1.  Ability  of  vendor  to  sell   593 

Sect.  2.  Form  and  requisites  of  a  contract  of  sale 590 

Sect.  3.  Duties  of  vendor (522 

Sect.  4.  Duties  of  vendee (540 

Sect.  5.  Effect  of  illegality q4q 


]4  COXTEXTS. 

Chap.  XIU.— Contract  of  Debt- 
Sect.  1.  Definition  of  contract 053 

Sect.  2.  Duty  of  debtor G54 

Sect.  3.  Duty  of  creditor G72 

BOOK  IV. 

OF     MERCANTILE     REMEDIES. 

Chap.  I. — Stoppage  in  Transitu — 

Sect.  1,  Right  to  stop  in  transitu,  what G77 

Sect.  2.  Who  possesses  it CS2 

Sect.  3.  IIow  long  it  continues GS2 

Sect.  4,  IIow  defeated   G85 

Sect.  5.  IIow  it  may  be  exercised CS7 

Chap  II. — Lien — 

Sect.  1.  Lien,  what GS8 

Sect.  2.  How  acquired G89 

Sect.  3.  IIow  lost G97 


A    COMPENDIUM 


MERCANTILE     LAW 


COMPENDIUM 


I 


OF 


MERCANTILE    LAW. 


INTRODUCTIOK 

This  Treatise  will  be  divided  into  Four  Books.  The  First,  concern« 
ing  Mercantile  Persons ;  the  Second,  Mercantile  Property ;  the  Third, 
Mercantile  Contracts;  the  Fourth  and  last,  Mercantile Eemedies :  A 
method  which  appears  the  simplest  and  most  comprehensive ;  since 
it  includes,  under  a  few  heads,  the  description  of  those  by  whose 
intervention  trade  is  carried  on ;  of  that  which  they  seek  to  acquire 
by  so  employing  themselves ;  of  the  arrangements  which  they  are  in 
the  habit  of  adopting,  in  order  to  do  so  effectually ;  and  of  the  mode 
in  which  the  proper  execution  of  those  arrangements  are  en- 
forced, (a) 

As  it  is  anxiously  desired  that  the  book  should  be  of  practical 
utility,  it  has  been  thought  prudent  to  refrain,  while  stating  and 

(a)  Tlie  division  of  the  Code  de  Commerce  is  into  four  Books: — 1.  Du  Commerce  en 
general,  under  which  head  is  placed  the  law  relating  to  sole  traders,  partnerships, 
principal  and  agent,  sales,  bills  of  exchange,  and  promissory  notes.  2.  Du  Commerce 
maritime.  3.  Des  faillites  et  des  Banqueroutes.  4.  De  la  Jurisdiction  Commerciale. 
This  last  head  can  of  course  find  no  place  in  an  English  treatise,  the  jurisdiction  ia 
commercial  cases  being,  in  this  country,  vested  in  the  same  tribunals  which  take 
cognizance  of  other  civil  causes. 

2 


18  INTRODUCTION. 


Origin,  History,  and  Importance  of  Commercial  Law. 


explaining  the  various  rules  of  law  comprised  under  tlie  foregoing 
heads,  from  entering  into  much  historical  inquiry  regarding  their 
origin.  Such  inquiry  might,  it  was  apprehended,  have  diverted 
the  mind  of  the  reader  from  the  practical  part  of  the  work :  besides 
which,  any  attempt  to  blend  an  account  of  the  ancient  with  an  ex- 
planation of  the  modern  state  of  the  law  would  have  introduced 
confusion  into  the  latter,  and  prevented  the  attainment  of  that  de- 
gree of  clearness  and  brevity  which  is  so  desirable,  indeed  essential, 
in  a  work  of  this  sori.  Add  to  this,  that  a  knowledge  of  the  his- 
tory of  our  commercial  law  is  not  so  conducive  to  the  right  under- 
standing of  its  present  rules  as  is  that  of  the  feudal  history  to  a 
clear  comprehension  of  our  present  law  of  real  property.  Great 
part  of  the  latter  system  stands  solely  upon  feudal  reasons,  and 
must  appear  to  the  man  ignorant  of  those  a  mere  collection  of  arbi- 
trary regulations.  Our  mercantile  law,  on  the  contrary,  is  wholly 
founded  on  considerations  of  utility ;  and  though  many  of  its  rules 
are  derived  from  the  institutions  of  ancient  times  and  distant  coun- 
tries, still  is  their  introduction  into  our  system  owing  not  to  a  blind 
respect  for  their  origin,  but  to  an  enlightened  sense  of  their  pro- 
priety. No  one,  unless  acquainted  with  their  feudal  source,  could 
assign  any  reason  for  the  rules  which  respect  fines,  escheats,  or  re- 
coveries ;  but  it  is  not  necessary,  for  the  purpose  of  enabling  the 
reader  to  see  the  justice  and  good  sense  of  the  law  of  general  aver- 
age, to  show  him  that  it  formed  part  of  the  maritime  code  of  the 
ancient  Rhodians. 

At  the  same  time,  it  cannot  be  denied  that  the  history  of  our 
commercial  law  is  a  subject  of  great  interest  and  rational  curiosity, 
and  it  may  not  be  amiss  to  say  a  few  words  of  the  sources  whence 
its  various  regulations  are  derived,  here,  at  the  commencement  of 
the  volume,  where  they  cannot  possibly  embarrass  the  practical 
consideration  of  the  topics  to  which  the  remainder  is  devoted. 

As  the  mercantile  law  of  England  concerns  a  great  variety  of 
interests  and  possessions,  so  it  is  derived  from  a  variety  of  sources  and 
authorities.  In  ascertaining  the  legal  rights  arising  out  of  commer- 
cial transactions,  it  frequently  becomes  necessary  to  have  recourse 
to  the  volumes  of  international  law,(i)  frequently  to  the  contempo- 

(b)  See  De  la  Yega  v.  Vianna,  1  B.  &  Ad.  284.     Medeiro3  v.  Hill,  8  Bing.  234. 


IXTEODUCTIOX.  19 


Origin,  History,  and  Importance  of  Commercial  Law. 


raneous  laws  of  nations.(c)  So  far  as  it  affects  title  to  lands,  it  de- 
pends upon  those  feudal  institutions  from  whicli  tlie  rules  that,  in 
our  country,  govern  such  property,  originate.  It  is  deducible  in 
great  part  from  the  imperial  code  of  Eome,  in  great  part  from  the 
different  maritime  codes  of  ancient  Europe ;  and  all  these,  its  com- 
ponents, while  they  are  interspersed  and  qualified  by  a  multiplicity 
of  statutory  enactments,  are  explained,  blended,  and  applied,  and 
the  cases  for  which  they  have  omitted  to  provide  are  solved,  by  the 
decisions  of  our  English  Courts  of  law  and  equity. 

Numerous,  however,  as  are  its  subsidiaries^  it  is  to  the  maritime 
and  the  imperial  laws  that  it  is  most  largely  indebted.  Personal 
property  is  the  chief  object  of  commerce  :  with  that  kind  of  property, 
therefore,  is  the  mercantile  law  chiefly  conversant.  Now  the  Eng- 
lish law,  so  far  as  it  concerns  that  branch  of  property,  is  deducible 
in  great  part  from  the  laws  of  Rome.  Our  ancient  jurists,  devoted 
almost  altogether  to  the  explanation  of  the  feudal  system  and  its 
consequences  to  the  tenure  of  real  property,  seldom  discuss  the 
nature  of  what  they  considered  a  far  inferior  species  of  possession : 
and,  whenever  they  do  touch  upon  personal  property,  adopt,  almost 
verbatim,  the  doctrines  and  language  of  the  civilians.  The  fact  is, 
that  when  commerce  and  commercial  property  began,  during  the 
reigns  of  John  and  his  son  Henry  the  Third,  to  attract  some  little 
attention,  (as  we  may  gather  from  the  famous  stipulation  in  Magna 

Kaylor  v.  Taylor,  9  B.  &  C.  718.  The  Admiralty  Reports  passim,  Haveloek  v.  Rock- 
wood,  8  T.  R.  2G8. 

(c)  See  Trimbey  v.  Yignier,  1  Bing.  K  C.  151.  Rothschild  v.  Currie,  1  Q.  B.  43_ 
Alivon  V.  Furnival,  4  Tyrwh.  751,  1  C.  M.  &  R.  211.  la  determining  how  far  the 
ordinances  of  a  foreign  code  are  to  influence  the  decisions  of  an  English  court  of 
justice,  the  following  is  a  leading  principle  on  which  the  case  is  often  found  to  turn ; 
viz.,  foreign  contracts  must  be  construed  according  to  the  law  of  the  place  where 
they  were  made.  But  the  remedy  on  them  must  be  pursued  as  it  exists  where  the 
parties  happen  to  be.  De  la  Vega  v.  Viauna,  iiU  supra.  Huber  v.  Steiner,  2  Bino-. 
N.  C.  202.* 

*  The  general  principle  tlius  briefly  but  clearly  laid  down,  has  been  recognized 
in  man}-  leading  cases  in  the  American  Reports.  There  is  one  important  limitation 
to  it,  however,  which  is  thus  expressed  by  Chief  Justice  Taney,  in  the  case  of  The 
Bank  of  Augusta  v.  Earle,  13  Peters,  519,  589.  "Courts  of  justice  have  always  ex- 
pounded and  executed  contracts  made  in  a  foreign  country,  according  to  the  'iiws  of 
the  place  in  which  they  were  made:  provided  that  law  teas  not  rcpugjia^it  to  the  law* 
or  policy  of  their  own  country." 


20  IXTRODUCTIOX. 


Origin,  History,  and  Importance  of  Commercial  Law. 


Charta,  in  favor  of  foreign  merchants,  and  the  enactment  of  the 
Statute  de  Mercatorihus{d)  a  few  years  afterwards  for  the  security  of 
trading  debts,)  questions  respecting  trade  and  personal  property 
began  more  frequently  to  intrude  themselves  upon  the  notice  of  the 
judges,  who,  finding  that  those  principles  of  feudal  law  which  had 
been  the  main  object  of  their  previous  study  were  often  wholly 
insufficient  to  meet  the  exigencies  of  these  new  cases,  were  glad  to 
have  recourse  to  the  already  mature  system  exhibited  in  the  com- 
pilations of  Justinian,  which  had  been  discovered  about  a  century 
before, (e)  a  system  which  must  have  appeared  the  more  applicable 
to  personal  property,  as  it  had  been  adopted  by  the  ecclesiastical 
authorities  to  whom  the  administration  of  such  property,  after  its 
owner's  death,  was  already  intrusted.  Thus  it  came  to  pass,  that 
the  imperial  law,  which,  at  this  very  time,  was  so  indignantly  re- 
pelled from  any  interference  with  the  landed  interest  of  the  king- 
dom, (/)  was  adopted  as  tile  governing  principle  of  a  description 
of  property  destined  ultimately  to  compete  in  importance  with  the 
landed  interest  itself. 

The  maritime  law,  to  which  our  courts  arc  so  considerably 
indebted,  is  a  system  or  rather  a  collection  of  systems,  which  grew 
up  in  Europe  upon  the  revival  of  commerce  after  the  dark  ages. 
Some  parts  of  it  are  indeed  of  far  greater  antiquity,  being  confess- 
edly derived  from  a  Greek  origin,  particularly  from  the  celebrated 
law  of  Ehodes,(^)  the  masterpiece  of  ancient  jurisprudence.     As 

((/)  13  Edw.  I.  This  act  created  a  species  of  security  entitled  a  statute  merchant^ 
the  holder  of  ■which  had  a  right  to  seize  all  his  debtor's  lands  and  hold  them  till  his 
claim  was  satisfied  out  of  the  profits.  "  It  is  remarkable,"  saj's  an  eminent  writer, 
speaking  of  this  statute,  "  that  the  feudal  restraints  of  alienating  lands,  and  charging 
them  with  the  debt  of  the  owner,  were  softened  much  earlier  for  the  benefit  of  trade 
than  for  any  other  consideration." 

(e)  Viz.,  in  1130,  at  Amalfi;  but  Mr.  Hallam  thinks  that  the  Pandects  were  either 
wholly  or  in  part  known  in  Europe  before  the  discovery  of  the  Amalfitan  copy. 

(/)  See  the  famous  passage  in  the  Statute  of  Merton,  20  Hen.  3,  cap.  9.  Koga- 
verunt  omnes  episcopi  magnates  ut  consentirent  quod  nati  ante  matrimonium  essent 
legitimi  sicut  illi  qui  nati  sunt  post  matrimonium.  Et  omnes  comites  etBaronesund 
voce  responderunt  quod  nolunt  leges  Anglia;  mutare  quaj  bucusque  usitataj  sunt  et 
adprobatse.  See  also  Selden,  Jan.  Angl.  1,  2,  s.  43,  in  Fortesc.  c.  33,  where  we  find 
the  nobility  declaring  "that  the  realm  never  had,  nor  never  shall  be  governed  by 
the  civil  law." 

((/)  Our  law  of  general  average  is  a  copy  of  that  of  Rhodes.     "Lege  Rhodia 


INTRODUCTION.  21 


Origin,  History,  and  Importance  of  Commercial  Law. 


to  tlie  Eomans,  though,  they  had  numerous  and  well-framed  regu- 
"■  itions  for  the  government  of  personal,  in  common  with  other  pro- 
perty, for  commerce,  considered  as  commerce,  they  appear  to  have 
entertained  scarce  more  respect  than  did  the  feudal  lords.  That 
portion  of  Justinian  which  contains  the  maritime  code  of  ancient 
Italy  (A)  seems  to  have  been  no  improvement  on  the  pre-existing 
laws  of  Ehodes  and  Athens. (z)  Far  more  important  are  the  rules 
established  by  those  commercial  republics  of  Southern  Europe, 
which  first  emerged  from  the  barbarism  of  the  dark  ages.  Dante 
and  Petrarch  are  not  better  witnesses  of  their  early  progress  in 
civilization,  than  is  the  Consolato  del  Mare  the  first  modern  code  of 
marine  jurisprudence,  (/)  The  influence  of  the  Italians  over  the 
commerce  and  commercial  regulations  of  our  own  ancestors  is  well 

cavetur  ut  si,  levandae  navis  gratia,  jactus  mercium  factus  sit , omnium  contributione 
sarciatur  quod  pro  omnibus  datum  est."    Dig.  14,  2,  1. 

(/t)  See  the  Pandects  from  14  to  20,  and  Eoceus  Notabilia  de  Navihus  et  Naulo, 
passim.  Tlie  work  of  Roccus  contains  an  abstract  of  tlie  points  to  be  collected  from 
Justinian  and  various  other  sources,  and  is  an  extremely  useful  compendium. 

(i)  We  have  tlie  authority  of  an  Emperor  for  this  proposition : — 'kvruvlvog  elnev 
'Evdaifiovr  "  'Eyu  ^iv  tov  kocj/xou  Kvgiog,  6  6^  vouog  ri/g  daTiuaarjg.  Tcj  vofiij  tuv 
'Podluv  KqiviaOu  -cj  vavTiKu)  iv  olg  firj  Tig  tuv  ijjieTtguv  avTui  vu/uog  ipavTiovTac."  Dig 
14,  Tit  2. 

{j)  This  is  a  collection  of  the  maritime  laws  of  Barcelona.  Tliere  is  an  excellent 
translation  by  M.  le  Professeur  Boucher,  published  in  1808.  In  calling  it  the  earliest 
modern  code,  I  have  followed  Lord  Tenterden.  Mr.  J.  Park,  however,  describes  it  as 
a  compilation  from  the  laws  of  Venice,  Pisa,  Genoa,  Barcelona,  Marseilles,  and  Amalfi, 
which  last  he  ctatea  to  have  been  published  in  the  eleventh  centurj-,  and  to  be  the 
earlist  modern  sj'stem  of  marine  law.  See  the  Consolato  del  Mare,  cited  and  relied 
on  by  Tindal,  L.  C.  J.,  in  Gould  v.  Oliver,  4  Bing.  N.  C.  134.  There  is  an  edition  of 
the  Conxolato  in  the  Inner  Temple  Library,  which  is  the  earliest  I  have  seen,  and 
which  belonged  to  the  celebrated  Daines  Barrington.  It  is  a  translation  from  Cata- 
lonian  into  Castilian,  for  the  use  of  the  people  of  Valencia,  printed  in  1539,  and  con- 
taining bj'  way  of  supplement  a  charter  granted  to  the  merchants  of  Valencia  by 
Ferdinand  of  Arragon.  This  charter  regulates  the  election  of  consuls,  and  contaits 
provisions  regarding  the  paj-ment  of  losses  upon  policies,  which  prore  the  system 
of  marine  insurance  to  have  been  then  well  understood  at  Valencia.  The  book  con- 
cludes— "  £Jn  honor  y  gloria  de  Dios  todo  poderoso,  y  de  la  sacratissima  Virgen  Maria 
niadre  suya  abogadora  de  los  pccadores,  y  de  los  ben  aventurados  Santos  Sant^  Elmo,  San 
Olemente,  San  Nicolas,  San  Antonio,  y  de  las  ben  aventuradas  Santas  Santa  Tecla,  Santa 
Ursola,  Santa  Barbara,  Santa  Clara,  patronos  y  abogados  de  todos  los  navegantes,  haze 
fin  el  presente  libro  llamado  Consolado  del  Mare,  imevamente  traduzido  de  la  lengua 
Catalana  en  nostro  rmlgar  Castellano  impresso  en  la  metropolifana  Cuidad  de  Valencia, 
por  Fraiicisco  Diaz  Roma7io  a  un  dias  de  mes  de  Enero  anno,  1539." 


22  INTRODUCTION. 


Origin,  History,  and  Importance  of  Commercial  Law. 


known,  and  is  attested,- even  at  this  day,  hj  the  reference  in  sea- 
policies  to  the  street  which  was  distinguished  by  the  name  and  resi- 
dence of  their  countrymen.  The  towns  situated  upon  the  northern 
coast  of  Europe  soon  emulated  the  activity  of  the  Italians.  The 
Ordinance  of  Wisbuy  and  the  Hanseatic  Ordinances  remain  as  proofs 
of  their  advancement,  while  that  of  Oleron,  promulgated  by  our 
own  Richard  the  First, (/c)  bears  testimony  that  the  advantages  of  a 
well  regulated  marine  were  not,  even  at  that  early  period,  alto- 
gether unknown  to  English  statesmen,  notwithstanding  our  con- 
fessed inferiority  to  the  republics  of  the  Baltic  and  Mediterranean. 
It  would  be  wrong  to  quit  this  part  of  the  subject  without  men- 
tioning the  most  perfect  of  all  foreign  ordinances,  that  of  Louis  the 
Fourteenth,  "  composed,"  to  use  the  words  of  the  ablest  English 
writer  on  commercial  law,  "in  the  reign  of  a  politic  prince,  under 
the  auspices  of  a  wise  and  enlightened  minister,  by  laborious  and 
learned  persons,  who  selected  the  most  valuable  principles  of  all 
the  maritime  laws  then  existing ;  and  which,  in  its  matter,  method, 
and  style,  is  one  of  the  most  finished  acts  of  legislation  that  ever 
was  promulgated." 

These  various  systems  of  commercial  law  have  been  discussed, 
improved,  and  illustrated  by  several  extremely  able  writers.  The 
names  of  Vcdin,  Pothier,  [l)  and  Emerigon  are  familiar  to  every  Eng- 
lish as  well  as  every  foreign  lawyer.  It  was  not  till  lately  that  our 
own  country  could  boast  of  any  names  fit  to  compete  with  those  of 
the  continental  jurists;  that  of  Molloy  could  scarce  be  cited  in 
answer  to  this  reproach,  which  is  now,  however,  completely  effaced 
by  the  industry  and  ability  of  many  valuable  writers,  at  the  head 
of  whom  may  be  placed  Lord  Tenterden,  Mr.  Justice  Park,  and  Sir 
John  Bayley.  America,  too,  whose  authors,  resembling  us  as  she 
does  in  laws  and  language,  may  be  fairly  reckoned  with  our  own, 
has,  of  late,  contributed  much  to  the  elucidation  and  improvement 
of  commercial  law.     And  it  would  be  unpardonable  in  me  while 

{k)  It  seems  to  admit  of  doubt  whether  the  laws  of  Oleron  are  not  attributable 
to  another  source.  See  Hallam,  Middle  Ages,  vol.  ii.  p.  482,  1st  ed.  Pardessus  Col- 
lections des  Lois  Maritimes,  chap.  8. 

{I)  See  the  encomium  passed  on  Potlder  in  Cox  v.  Troy,  5  B.  &  A.  481.  A  con- 
siderable part  of  this  writer's  works  has  been  adopted  verbatim  into  the  French 
code. 


I 


INTRODUCTION-.  23 


Origin,  History,  and  Importance  of  Commercial  Law. 


touching,  however  cursorily,  upon  this  topic,  to  omit  the  mention 
of  Chancellor  Kent  and  Judge  Story.  ^ 

Here  it  should  be  observed,  that  the  foreign  laws  and  foreign 
lawyers  who  have  been  just  mentioned  as  having  mfluenced  the 
formation  of  the  mercantile  law  of  this  country,  were  never,  at  any 
period,  recognized  by  the  judges  of  our  courts  as  bemg,  per  seof 
any  authority  whatever.     Respected   the  rules  which   they_  lay 
down  may  be  for  the  learning  and  sagacity  which  they  evince 
but,  when  they  are  obeyed,  it  is  as  part  of  the  law  and  custom  of 
England,  declared  to  be  such,  either  by  long  usage  and  tradition, 
or  by  the  decisions  of  our  own  courts  of  justice  containing  an 
enlightened  adaptation  of  ancient  principle  to  modern  convenience, 
and  promulgating  that  as  law  which  the  judges  of  remoter  times 
would  have  pronounced  to  be  such,  could  similar  questions  have 
come  before  them  under  similar  circumstances  and  in  a  similar  state 
of  society :  not,  indeed,  that  there  is  any  foundation  for  the  charge 
which  some  persons  are  in  the  habit  of  repeating  against  the  Eng- 
lish iudo-es,  whom  they  accuse  of  inventing  rules  of  law  to  answer 
the  exigencies  of  the  case  before  them,  and  then  pronouncing  those 
rules  to\ave  been  the  common  law  of  the  realm  from  time  imme- 
morial.    True  it  indeed  is,  that  the  judges  are  occasionally  forced 
to  lay  down  a  new  rule,  in  order  to  meet  some  new  class  of  circum- 
stances ;  but,  in  doing  so,  they  are  obliged  to  take  the  greatest  care 
that  this  addition  to  our  law  shall  not  conflict  with  any  pre-esistmg 
portion  of  it.     However  politic,  however  useful,  the  adoption  of  a 
particular  doctrine  may  appear,  still,  if  demonstrated  to  be  mcon 
sistent  with  any  principle  or  rule  already  known  and  acted  upon, 
the  judges,  obliged  thereto  by  oath,  refuse  to  sanction  it.     Thus  is 
the  course  of  their  decisions  hemmed  in,  as  it  were  with  walls,  by 
ancient  principles  and  analogies,  and,  if  there  be  but  one  way  of 
determinincr  a  case  without  offending  those,  in  that  one  way  aro 
they  compelled  to  determine  it.     Nothing  therefore  can  be  moro 
unfair  than  to  upbraid  judges  thus  restricted  as  being  arbitrary 
devisors,  rather  than  faithful  expounders  of  the  law. 

Fortunately  for  the  prosperity  of  this  country,  our  tribunals, 
when  they  first  began  to  direct  their  serious  attention  towards  com- 
mercial subjects,  found  that  the  customs  which  had,  by  long  accep- 
tation ripened  into  law,  whether  originally  taken  from  the  sources 


24  INTRODUCTIOX. 


Origin,  History,  and  Importance  of  Commercial  Law. 


abcye  pointed  out,  or  devised,  as  many  of  them  doubtless  were,  by 
tlie  good  sense  of  the  people  themselves,  were  all  extremely  reason- 
able ;  and  they  were  consequently  enabled,  without  deviating  from 
that  analogy  to  old  rules  which  they  were  bound  to  preserve  while 
promulgating  new  ones,  to  build  up,  on  the  foundation  which  had 
thus  been  laid,  a  system  under  which  England  has  arrived  at  her 
present  unexampled  height  of  commercial  prosperity.  We  will 
conclude  this  introduction  by  tracing  as  briefly  as  jDOSsible  the 
gradual  advancement  of  our  law  towards  this  its  present  state  of 
excellence. 

The  history  of  our  commercial  law  is  of  course  closely  inter- 
woven with  that  of  our  commerce.*     When  trade  was  unimportant 


*  "  It  is  under  the  action  of  assumpsit  that  the  modern  Law  Merchant  has  been 
incorporated  into  the  Common  la\r.  In  the  time  of  Edward  III.  we  discover,  that 
in  the  ordinary  transactions  amongst  merchants,  that  is,  members  of  the  trading  com- 
munity, a  distinct  law  prevailed,  of  a  more  liberal  nature  than  the  general  law,  and 
that  it  was  more  summarily  and  expeditiously  exercised.  This  was  called  the  lex 
mercatoria :  it  had,  in  all  probabilit}-,  silently  prevailed  in  London,  and  other  com- 
mercial towns,  in  some  shape,  throughout  the  whole  of  the  Anglo-Saxon  times. 

"  By  the  statute  27,  Edward  III.  (stat.  2)  in  each  town  where  the  staple  was  or- 
dained, a  mayor  was  to  be  chosen,  skilled  in  the  law  merchant,  to  do  right  to  every 
man  according  to  that  law.  The  lex  mercatoria  is  expressly  mentioned  by  Fortescue. 
In  common  societies  of  merchants,  and  in  mutual  contracts,  saj's  Selden,  equity  and 
good  conscience,  rather  than  strict  law,  is  required;  and  he  mentions  a  case  in  the 
time  of  Edward  II.  where,  following  up  this  principle,  the  defendant  in  an  action  of 
debt  brought  secundum  legem  mercatoriam,  for  some  corn  sold,  was  not  permitted  to 
wage  his  law,  though  he  might  have  done  so  in  an  ordinary  action  of  debt.  It 
would  seem,  too,  that  merchants  had  always  been  specially  favored,  by  having  a 
more  summary  process  in  the  King's  Court 

"As  regards  the  modern  law  merchant.  In  the  reign  of  James  I.  it  was  held, 
that  if  a  merchant  direct  a  bill  of  exchange  to  another  merchant,  payable  to  A,  or 
to  order,  and  the  other  accept  it ;  by  the  law  merchant  a  promise  was  to  be  implied 
in  the  acceptor  to  pay  it ;  afterwards  an  action  of  assumpsit  was  given  to  every  in- 
dorsee to  whom  the  bill  was  assigned. 

"So  every  indorser  who  assigned  such  bill,  was  held  liable  to  an  assumpsit  by 
every  subsequent  indorsee  ;  and  if  the  merchant  to  whom  it  was  directed  refused  it, 
the  director  (drawer)  was  liable  to  every  indorsee ; — and  so  the  law  continues. 

"  A  comprehensive  and  rational  system  of  law,  on  the  subject  of  Bills  of  Exchange 
and  Promissory  ISTotes,  has,  with  some  help  from  the  legislature,  been  established  by 
the  judicial  decisions  of  Lord  Mansfield  and  his  colleagues,  and  their  distinguished 
successors. 

"Through  the  medium  of  the  action  of  assimipsit,  also  under  the  auspices  of  Lord 


IXTRODUCTION.  25 


Origin,  History,  and  Importance  of  Commercial  Law. 


and  despised,  there  could  be  little  need  of  regulations  for  its  govern- 
ment ;  the  increase  of  the  one  occasioned  the  multiplication  of  the 
other.  During  the  early  feudal  times,  when  no  profession  was 
deemed  honorable  except  that  of  arms,  when  a  separate  jurisdiction 
and  a  petty  tyrant  were  to  be  found  in  each  manor,  and  the  court 
at  which  the  injured  trader  must  have  sought  redress  from  the 
oppression  of  a  powerful  baron  was  presided  over  by  that  very 
baron  or  his  deputy,  it  is  obvious  that  there  could  be  little  safety, 
little  room  for  commerce,  and  accordingly  we  find  that  it  was 
greatly  neglected.  Most  of  that  which  existed  was  in  the  hands 
of  Jews  and  foreigners,  the  former  of  whom  were  the  inventors,  or, 
at  least,  the  first  to  make  use,  in  this  country,  of  bills  of  exchange, 
(m)  as  the  latter  were,  though  at  a  somewhat  later  period,  of  policies 
of  insurance.  The  native  traders  were  to  be  found  nowhere  but  in 
the  cities  and  free  towns,  whose  municipal  privileges  enabled  them 
to  afford  security  to  the  persons  and  j^roperties  of  their  inmates 
against  the  grasp  of  feudal  oppression,  and  which,  although  in 
later  ages  their  exclusive  rights  may  have  operated  disadvanta- 
geously  on  commerce,  were,  in  those  early  and  distracted  times,  its 
nurseries  and  safeguards.  In  these  places,  under  a  self-elected 
government,  supplied  with  adequate  means  of  defence,  and  strong 

(m)  Little  is  kno'W'n  for  certain  as  to  the  origin  of  bills.  Letters  of  credit  were 
known  to  the  ancients  (see  an  example,  Cic.  Epist.  ad  Alt.  xii.  24,  xv.  25) ;  but  they 
Beem  never  to  have  become  negotiable.  This  subject  is  learnedly  discussed  hy-Pothier 
Traite  du  Contrat  de  Change,  part.  1,  cap.  1,  s.  1.  His  conclusion  is  "  11  n'y  a  rien  sur 
cela  de  certain  si  ce  n'est  que  les  lettres  de  change  etoicnt  en  usage  dhs  le  quatorzihme 
siecle."  The  first  case  in  our  law  books  concerning  them  is  Martin  i-.  Boure,  Cro.  Jac, 
6.  Sir  "W.  Blackstone,  on  the  authority  of  the  Universal  History,  attributes  their  in- 
vention to  the  Moguls,  2  Comm.  466. 

Mansfield,  the  law  of  Insurance  was  formed  into  a  system,  which  has  been  found  to 
be  adapted  to  all  the  exigencies  of  society;  indeed,  the  whole  of  the  modern  system 
of  commercial  law  may  be  said  to  have  almost  originated  with  tlie  same  eminent 
Judge. 

"This  system,  which  is  admitted  to  exhibit  a  comprehensive  and  enlightened 
spirit  of  jurisprudence,  is  based  upon  very  different  reasons  and  principles  from  those 
which  govern  real  property  law,  and  is  derived  from  a  variety  of  sources  and  au- 
thorities— from  international  law — the  different  maritime  codes  of  ancient  Europe,— 
Dut,  far  above  and  be3-ond  all  from  the  Imperial  Code  of  Rome." 

Spence's  History  of  Equity  Jurisdictio7i,Yo\.  I,  p.  247. 


26  IXTRODUCTIO:S'. 


Origin,  History,  and  Importance  of  Commercial  Law. 


enough  to  bid  defiance  to  the  most  powerful  of  the  neighboring 
barons,  the  traders  of  the  realm  exercised  their  avocations  peacefully, 
defended  by  the  arms  and  charters  of  these  half  mercantile,  half 
military  communities. 

The  promulgation  of  the  laws  of  Oleron  by  Eichard  the  First, 
and  the  protection  assured  to  foreign  traders  and  to  the  corporate 
towns  of  the  realm  by  the  Great  Charter,  are  the  only  legislative 
incidents  memorable  with  regard  to  commerce  with  which  we  meet 
I  prior  to  the  reign  of  Edward  the  First,  when  a  signal  benefit  was 
1  conferred  on  the  trader  by  allowing  his  debtor  to  charge  his  lands 
in  a  statute-merchant,  and  permitting  execution  to  be  levied  against 
them  by  digit.  During  the  period  which  intervened  between  his 
reign  and  the  accession  of  the  House  of  Tudor,  commerce  pro 
gressed  but  by  slow  steps.  About  that  period  a  concurrence  of 
fortunate  events  gave  it  a  sudden  impulse.  The  discovery  of 
America  and  of  a  passage  by  sea  to  the  East  Indies,  the  total  ces- 
sation of  civil  hostilities,  and  the  augmented  might  of  the  crown, 
were  all  circumstances  in  the  highest  degree  favorable  to  it.  The 
power  of  the  barons  was  now  rapidly  on  the  decline,  and,  under 
the  safeguard  of  the  throne,  the  realm  at  large  became  a  free  field 
for  the  industry  of  the  trader.  The  increase  of  commerce  is  now 
distinctly  marked  by  an  increased  attention  to  the  laws  which  regu- 
f  lated  it.  In  the  reign  of  Ilenry  the  Eighth,  bankruptcy  laws  were 
' ,  for  the  first  time  introduced.  During  the  long  reign  of  Elizabeth, 
I  trade  rose  to  an  extraordinary  pitch  of  prosperity.  Policies  of  in- 
'  surance  became  so  frequent,  that  a  peculiar  court  was  instituted  to 
adjudicate  upon  them,  which  was,  however,  soon  abandoned  for 
the  ordinary  tribunals.  And,  even  while  we  may  lament  the 
shackles  placed  on  enterprise  by  the  creation  at  this  period  of  a 
number  of  unjustifiable  monopolies,  still,  even  here,  we  have  occa- 
sion to  remark  the  increased  spirit  of  the  mercantile  community, 
since  their  remonstrances  compelled  that  arbitrary  princess  to  re- 
voke the  most  obnoxious  of  them.  In  the  reign  of  her  less  for- 
midable  successor,  James,  monopolies  were  publicly  declared  ille- 
gal, and  the  law  of  patents  placed  almost  upon  its  present  footing. 
The  nation  was  now  in  a  rapid  course  of  advancement,  which  was 
not  checked  even  by  the  civil  war.  To  the  reign  of  Charles  the 
Second,  a  period  fertile  in  legislative  improvement,  we  are  indebted 


INTRODUCTION.  27 


Origin,  History,  aud  Importance  of  Commercial  Law. 


for  tliose  excellent  navigati(jn(w)  laws,  to  which  England  has  to 
attribute  so  much  of  her  subsequent  maritime  greatness.  In  those 
of  William  and  Anne,  promissory  notes  were  placed  upon  their 
present  footing,  and  the  banking  system,  a  history  of  which  will  be 
found  in  the  great  case  of  the  Bank  of  England  v.  Anderson^  3 
Bing.  N.  C.  589,  dates  from  that  period.  Much  was  now  done  for 
commerce,  not  merely  by  the  legislature,  but  by  the  courts,  which 
were  now  filled  with  learned  and  liberal-minded  men,  anxious  to 
apply  the  law  so  as  to  meet  the  exigencies  of  the  subject.  Among 
these  stands  pre-eminent  the  Lord  Chief  Justice  Holt,  whose  name 
no  English  lawyer  ought  ever  to  pronounce  without  great  venera- 
tion. He  was  a  man  of  profound  learning  and  unflinching  integ- 
rity, and  he  possessed  a  fund  of  strong  natural  good  sense  which 
rendered  him  peculiarly  ca]3able  of  dealing  with  commercial  ques- 
tions, many  valuable  decisions  on  which  are  referable  to  his  time. 
Indeed,  I  have  no  hesitation  in  saying  that  Lord  Holt  alone  accom- 
plished more  for  English  mercantile  law  than  the  whole  body  of 
the  English  judges  prior  to  his  elevation.(o)  Those  who  desire 
to  estimate  his  powers  of  mind  and  mode  of  dealing  with  im- 
portant legal  questions,  will  do  well  to  peruse  his  celebrated  judg- 
ment in  Coggs  v.  Barnard,  Lord  Raymond,  909,  in  which,  availing 
himself  of  his  acquaintance  with  the  civil  law,  he  settled  the  law 
relative  to  bailments  on  its  present  footing. 

At  last — a  great  epoch  in  our  commercial  history — the  Court  of 
King's  Bench  was  presided  over  by  Lord  Mansfield. (p) 

The  character  and  qualities  of  this  great  man  were  singularly 
well  adapted  to  the  work  he  felt  himself  called  on  to  achieve,  that 
of  communicating  form  and  symmetry  to  the  then  rude  and  shape- 
less mass  of  our  commercial  law.     Sprung  from  a  noble  family,  he 


(n)  Smith,  in  his  Wealth  of  Nations,  speaks  highly  of  them.  "  When  the  Act  of 
Navigation  was  made,"  says  he,  "  though  England  and  Holland  were  not  actually  at 
■war,  the  most  violent  animosity  subsisted  between  the  two  nations.  It  is  not  impos- 
sible, therefore,  that  some  of  the  regulations  of  this  famous  act  may  have  proceeded 
from  national  animosity.  They  are  as  wise,  however,  as  if  they  had  been  all  dictated 
by  the  most  deliberate  wisdom." 

(o)  The  present  law  with  regard  to  Bills  of  Lading  seems  to  have  originated  with 
Lord  Holt;  see  Evans  v.  Martlett,  1  Ld.  Raym.  271. 

{p)  His  lordship  was  sworn  in  on  the  8th  of  May,  lYoG,  vice  Sir  Dudley  Ryder. 


28  INTRODUCTION. 


Origin,  History,  and  Importance  of  Commercial  Law. 


had  enjoyed  an  education  suited  to  his  birth.  He  was  versed  not 
only  in  the  liiws  and  history  of  his  own  country,  but  in  those  cele- 
brated writin2;s  which  constitute  the  noblest  monuments  of  ancient 
greatness.  To  these  he  could  recur  as  guides  in  doubt  and  models 
of  arrangement ;  from  these  he  learned  to  regard  law  as  a  science, 
to  be  expanded  by  the  development  of  principles,  not  merely  am- 
plified by  the  accumulation  of  precedents.  He  was  imbued  too 
with  a  taste  for  polite  literature,  and  this  he  turned  to  its  true  use, 
not  to  efface  or  supersede  his  graver  studies,  but  to  embellish  their 
results  with  the  graces  of  clear,  appropriate,  and  energetic  language. 

Great  as  the  improvement  he  effected  was,  it  cannot  be  a  matter 
of  surprise  that  such  a  judge,  occupying  the  chief  seat  of  judica- 
ture for  upwards  of  thirty  years,  was  able  to  accomplish  it.  The 
change  which  his  accession  to  the  bench  produced  is  thus  described 
by  the  ablest  of  his  judicial  contemporaries. 

"Before  that  period,"  says  Mr.  J.  Buller(2')  "we  find  that,  in 
courts  of  law,  all  the  evidence  in  mercantile  cases  was  thrown  to- 
gether; they  were  left  generally  to  a  jury,  and  they  produced  no 
^stablished  principle.  From  that  time,  we  all  know  the  great  study 
has  been  to  find  out  some  certain  general  principles,  which  shall  be 
known  to  all  mankind,  not  only  to  rule  the  particular  case  then 
under  consideration,  but  to  serve  as  a  guide  for  the  future.  Most 
of  us  have  heard  those  principles  stated,  reasoned  upon,  enlarged, 
and  explained,  till  we  have  been  lost  in  admiration  at  the  strength 
and  stretch  of  the  human  understanding.  And  I  should  be  very 
sorry  to  find  mj^self  under  the  necessity  of  differing  from  any  case 
which  has  been  decided  by  Lord  Mansfield,  who  may  be  truly  said 
to  be  the  founder  of  the  commercial  law  of  this  country." 

It  is  needless  to  recount  here  what  has  taken  place  since  the  de- 
cease of  this  great  judge.  It  will  be  found  in  the  ensuing  pages, 
and  is  in  the  recollection  of  many  of  our  own  contemporaries.  Suf- 
fice it  to  say,  that  the  course  on  which  he  entered  has  been  pursued 
with  no  less  zeal  than  wisdom  by  his  successors.  One  great  man, 
LordStowell,  has  done  much  to  raise  the  reputation  of  his  country: 
his  judgments — models  of  judicial  argument  and  eloquence — are 
cited  and  admired  not  merely  in  our  courts,  but  in  those  cf  every 


(q)  Lickbarrow  v.  Mason,  2  T.  R.  63. 


IXTRODUCTIOK  29 


Origin,  History,  and  Importance  of  Commercial  La'W. 


commercial  nation  in  the  world.  The  legislature  has,  in  the  mean 
while,  clone  its  part,  and,  while  it  has  not  been  slow  to  supply  de- 
ficiencies and  correct  mistakes,  it  has,  hitherto,  fortunately  abstained 
from  any  vexatious  interference  with  arrangements  dictated  by  that 
best  of  legislators — Experience. 

The  mercantile  law  of  England  is,  in  point  of  fact,  an  edifice 
erected  by  the  merchant,  with  comparatively  little  assistance  either 
from  the  courts  or  the  legislature.  The  former  have,  in  very  many 
instances,  only  impressed  with  a  judicial  sanction,  or  deduced  proper 
and  reasonable  consequences  from,  those  regulations  which  the  ex- 
perience of  the  trader,  whether  borrowing  from  foreigners  or  in- 
venting himself,  had  already  adopted  as  the  most  convenient,  (r) 

(r)  Thus  the  earliest  English  dissertations  on  commercial  law  are  collections  of 
usages  written  by  merchants,  who,  from  their  practical  knowledge  of  the  regulations 
in  use  among  their  own  class,  had  become  better  commercial  lawyers  than  those  of 
Westminster  Hall.  The  author  of  Marius  was  a  public  notary,  who  lived  in  the 
middle  of  the  seventeenth  century.  It  is  scarcely  to  be  looked  on  as  a  legal  treatise 
on  bills  of  exchange  ;  it  is,  as  the  name  imports,  a  work  giving  good  practical  advice 
from  a  practical  man,  to  persons  receiving  and  negotiating  bills  of  exchange.  Per 
Parke  B.  in  Whitehead  v.  Walker,  9  M.  &  W.  514.  So  too,  it  was,  at  one  time,  the 
practice,  when  a  disputed  point  of  commercial  law  arose,  to  receive  evidence  of  the 
custom  of  merchants  with  regard  to  it,  and  then  leave  it  to  the  decision  of  the  jury 
in  the  way  mentioned  by  Mr.  J.  Buller.* 

*  Mr.  Justice  Story,  in  the  case  of  Rogers?;,  the  Mechanics' Ins.  Co.,  1  Story's  Rep. 
608,  observes,  "I  own  myself  to  be  no  friend  to  the  indiscriminate  admission  of  evi- 
dence of  supposed  usages  and  customs  in  a  peculiar  trade  and  business,  and  of  the  un- 
derstanding of  the  witnesses  relative  thereto,  which  has  been  in  former  times  so  freely 
resorted  to,  but  which  is  now  subjected  by  our  courts  to  more  exact  and  well-defined 
restrictions.  Such  evidence  is  often — verj-  often — of  a  loose  and  indiscriminate  nature, 
founded  upon  very  vague  and  imperfect  notions  of  the  subject ;  and  therefore,  it  should, 
as  I  think,  be  admitted  with  a  cautious  reluctance  and  scrupulous  jealousy,  as  it  may 
shift  the  whole  ground  of  the  ordinary  interpretation  of  policies  of  insurance  and 
other  contracts."  Mr.  Btll,  in  his  Commentaries  on  Mercantile  Jurisprudence,  page 
390,  says,  that  "  three  things  are  necessary  to  settle  a  usage  as  a  rule  of  the  law  mer- 
chant: 1,  proof  of  the  usage;  2,  the  legality  of  it,  or  at  least,  that  it  is  not  incon- 
sistent with  the  common  law,  but  an  allowable  deviation  from  it;  and  3,  tlie  allow- 
ance of  the  custom  judicially."  "  Of  these  two  alternatives,"  says  Mr.  Dunlap,  in  his 
edition  of  Paley  on  Agency,  "  it  is  assured]}'  better  that  the  merchants  receive  their 
law  from  the  courts,  than  the  courts  their  law  from  the  merchants."  The  same  sen- 
timents are  expressed  by  Lord  Eldon,  C.  J.,  in  Anderson  v.  Picher,  2  B.  <fe  P.  168. 

The  usage,  however,  being  established,  the  law  is  well  stated  in  the  following  re 
marks,  whicli  we  quote  from  the  note  of  the  reporter  to  Yeats  et  al.  ::  Pirn  et  al.  1 


so  INTRODUCTION'. 


Origin,  History,  and  Importance  of  Commercial  Law. 

The  latter,  wisely  reflecting  that  commercial  men  are  notoriously 
the  best  judges  of  their  own  interests,  have  interfered  as  little  as 
possible  with  their  avocations,  have  shackled  trade  with  few  of  those 
formalities  and  restrictions,  which  are  mischievous,  if  only  on 
account  of  the  waste  of  the  time  occupied  in  complying  with  them. 
The  mercantile  law  of  England  is  perhaps  of  all  laws  in  the  world 
the  most  completely  the  offspring  of  usage  and  convenience,  the 
least  fettered  by  legislative  regulations.  Thus,  the  performance  of 
one  of  the  most  obvious  parts  of  the  duty  of  a  merchant,  and  one 
which  the  laws  of  most  other  countries  enforce  by  many  and  anx- 
ious provisions,  viz.^  the  keeping  a  correct  account  of  his  transactions, 
(5)  is  left  by  us  to  be  enforced  solely  by  public  opinion,  and  by  the 

(s)  See  the  French  Code  de  Commerce,  \\\.  1,  tit.  2,  which,  after  describing  several 
books  which  every  tradesman  is  to  keep,  besides  an  inventory  of  his  whole  property, 
proceeds  in  art.  11.  "Les  livres  dont  la  tenue  est  ordonnee  par  les  art.  cidessus 
eerout  cotes  parapbes  et  vises  soit  par  un  des  jnges  des  tribunaux  de  commerce,  soit 
par  le  maire  ou  un  adjoint  dans  la  forme  ordinaire  et  sans  frais."  This  kind  of  in- 
quisition must  be  a  great  check  on  commercial  enterprise.  Again,  in  France  many 
branches  of  agency,  which,  among  us,  are  open  to  the  competition  of  every  indivi- 
dual, are  monopolized  by  persons  nominated  by  the  government,  entitled  agens  de 
change  and  courtiers.     Code  de  Commerce,  liv.  1,  tit.  5. 

Holt,  92.  "All  contracts  made  in  the  ordinary'  course  of  trade,  without  stipulation, 
warrantv,  or  express  provision,  are  presumed  to  incorporate  the  usage  and  custom  of 
the  trade  to  which  they  relate.  The  mode  is  tlie  ground  of  the  contract,  and  the 
custom  and  usage,  as  members  or  parts  of  that  trade,  compose  a  whole  thing.  The 
contracting  parties  being  conusant  of  such  customs,  are  presumed,  and  the  presump- 
tion is  generally  consistent  with  the  truth,  to  have  it  in  their  intention  that  their  con- 
tract shall  not  exclude  such  usages.  But  as  it  would  be  absurd  to  say  that  any  one 
should  be  bound  to  a  condition,  under  whatever  name,  against  his  will  and  contrary 
lo  his  interest,  so  in  all  cases  where  there  is  a  warranty,  or  any  special  provision  in 
the  contract,  contrary  to  the  custom  of  the  trade,  such  custom  is  excluded  ;  the  parties 
having  varied  the  ordinary  mode  of  dealing:  and  the  custom,  as  a  mere  usage  of 
trade,  having  no  separate  legal  obligation,  the  expressed  will  contradicts  the  con- 
struction of  law,  and  the  limitation  or  enlargement  is,  of  course,  exempt.  No  usage 
of  trade,  therefore,  can  be  set  up  in  conti'avention  of  an  express  contract. 

"The  daj'S  of  grace  on  a  bill  of  exchange,  are  no  exemption  to  the  rule.  Bills  of 
exchange  are  purelj'  mercantile  contracts ;  days  of  grace  are  a  part  of  the  nature  of 
the  thing;  thej'  are  as  much  a  part  of  the  contract  in  a  bill  of  exchange,  as  the  act 
of  payment  itself.  They  are  not  incidental,  but  of  essence:  they  are  not  adseititious, 
but  the  thing  itself  With  respect  to  the  sale  of  goods,  if  the  contract  be,  tliat  they 
shall  be  paid  for  on  a  particular  daj-,  no  contract  can  dispense  with  such  a  term. 
Nevertheless,  in  ordinary  cases,  where  no  day  of  payment  is  expressed,  the  usage  of 


INTRODUCTIOK  3^ 


Origin,  History,  and  Importance  of  Commercial  Law. 


dread  of  that  reproach  and  loss  of  credit  which  would  follow  the 
detection  of  any  gross  irregularity.  It  is,  perhaps,  in  consequence 
of  this,  that  we  find  such  high  and  peculiar  sentiments  of  com- 
mercial honor  prevalent  among  English  merchants.  When  trade 
began  to  flourish  in  this  country,  those  occupied  about  it  soon  dis- 
covered that  the  law  had  jDrovided  but  few  rules  for  the  guidance 
of  their  transactions,  and  that  it  was,  therefore,  necessary  that  they 
should  themselves  adopt  some  regulations  for  their  own  government. 
Thus,  they,  in  early  times,  erected  a  sort  of  mercantile  republic,  the 
observance  of  whose  code  was  insured,  less  by  the  law  of  the  land, 
than  by  the  force  of  opinion  aixd  the  dread  of  censure.  The 
law  is  now  indeed  more  copious,  but  the  spirit  which  has  been  thus 

the  ti-ade  may  introduce  into  the  contract  a  particular  credit,  though  the  bargain,  in 
form  of  law,  raises  a  debitum  inpresenti.  But  the  usage  operates  in  that  case  because, 
not  being  accepted  by  express  words,  the  parties  are  presumed  to  contract  with  re- 
ference to  the  general  course  of  the  trade." 

Tliose  usages  which,  from  their  general  prevalence  and  long  continued  recog- 
nition among  merchants,  have  been  received  and  incorporated  into  the  law,  as  the 
custom  of  merchants,  must  not  be  confounded  with  the  particular  usages  of  trade. 
The  custom  of  merchants  is  applied  to  that  collection  of  rules  and  principles  of  law 
which  the  courts  received  originally  from  the  merchants,  but  of  which  they  now 
take  notice,  judicially,  and  which  are  binding  throughout  the  realm.  These  customs 
having  been  judicially  established,  are  no  longer  in  the  power  of  the  merchants,  and 
can  no  more  be  altered  or  superseded  by  the  acts  or  agreements  of  parties,  than  the 
other  rules  of  law.  But  wherever  in  any  course  of  business,  a  particular  usage  ob- 
tains, whicli  is  general,  uniform,  notorious,  reasonable,  and  consistent  with  the  rules 
of  law,  such  usage  will  be  presimied  to  have  entered  into  the  contemplation  of  all 
parties  contracting  in  reference  to  the  subject  matter  as  to  which  it  prevails,  unless 
the  contrary  is  shown.  This  principle,  although  most  frequently  applied  in  mercan- 
tile transactions,  is  not  restricted  to  them,  but  extends  to  contracts  in  all  depart- 
ments of  business,  mechanical,  agricultural,  and  professional,  upon  the  principle  that 
wlierever  the  knowledge  of  any  usage  or  custom  is  necessary  to  the  right  under- 
standing of  an  agreement,  it  would  be  unreasonable  to  deny  to  the  reader  the  light 
enjoyed  by  the  writer. 

The  existence  of  a  particular  usage  is  always  a  question  of  fact,  to  be  determined 
^y  '1  J"'T-  Where,  indeed,  it  has  been  frequently  proved,  it  may  become  so  far  incor- 
porated with  the  general  law,  that  the  courts  will  judicially  take  notice  of  it;  but 
its  nature  and  effect  will  remain  unaltered.  Wliether  it  is  proved  in  the  particular 
case,  or  imported  into  it  by  a  judicial  recollection  of  similar  evidence  given  before 
in  similar  cases,  it  will  be  for  the  jury  to  draw  the  inference,  that  the  particular 
contract  before  them  was  entered  into  with  reference  to  that  usage.  See  note 
A.  to  Vol.  65  E.  C.  L.  R.  967.  But  although  a  particular  usage  has  been  so  fre- 
quently recognized  b}' judicial  decision,  a?  to  render  proof  of  it  unnecessary,  evidence 


32  IXTRODUCTIOX. 


Origin,  History,  and  Importance  of  Commercial  Law. 


called  forth  has  ever  since  continued  to  pervade  our  mercantile 
community,  and  has  conduced  to  a  more  scrupulous  observance  of 
good  faith  and  punctuality  than  could  have  ever  been  enforced  even 
by  the  most  anxious  efforts  of  the  legislature. 

These  and  such  as  these  are  the  reflections  which  have  rendered 
the  author  of  this  work  exceedingly  averse  from  any  idea  of  redu- 
cing our  commercial  system  into  a  code,  by  which  the  energies  of 
the  mercantile  community  would,  he  apprehends,  be  shackled,  and 
prevented  from  operating,  as  they  now  most  usefully  do,  upon  the 
law,  and  working  out  its  improvement,  without  assistance  from  the 
legislature.  A  criminal  code  would  be  of  great  utility,  for  the 
rules  of  criminal  law  ought  to  be  not  only  definite,  but  inflexible, 


is  admissible  to  show  that  it  has  been  subsequently  altered.  Cookendorfer  v.  Pres- 
ton, 4  How  S.  C.  R.  317  ;  Renncr  v.  Bank  of  Columbia,  9  "Wheat.  582. 

The  opinion  has  been  expressed  b}'  tlie  highest  authority,  that  the  proposition 
frequently  laid  down  in  dicta  of  the  courts,  that  no  usage  can  be  established  which 
is  inconsistent  with  the  rules  of  law,  must  be  received  with  an  important  qualifica- 
tion. The  right  of  the  parties  to  a  contract,  to  waive  by  their  positive  stipulations 
the  application  of  any  of  the  rules  of  law  by  which  their  riglits  and  liabilities  may 
be  defined,  is  undoubted.  As  a  usage  when  established  affords  the  same  evidence  of 
intention  as  the  most  direct  language,  it  must  have  the  same  efi"ect.  Any  and  every 
rule  of  law,  tlierefore,  wliich  it  is  competent  to  the  parties  to  vary  or  restrain  by  an 
exprers  stipulation,  is  liable  to  be  affected  to  the  same  extent  by  an  existing  and 
valid  usage. 

Althougli  an  existing  usage,  in  reference  to  the  subject  matter  of  a  contract,  may 
be  regarded  as  its  key,  without  which  the  intention  of  the  parties  cannot  be  ascer- 
tained, yet  it  cannot  be  admitted  to  enlarge  or  restrict  the  clear  and  explicit  lan- 
guage of  a  contract  The  true  ofEc«  of  a  usage  or  custom  is  to  interpret  the  other- 
wise indeterminate  intention  of  the  parties,  and  to  ascertain  the  nature  and  extent 
of  their  contracts,  arising  not  from  express  stipulations,  but  from  mere  implications 
and  presumptions,  and  acts  of  a  doubtful  or  equivocal  chai'acter ;  or  to  ascertain  the 
true  meaning  of  particular  words  in  an  instrument  where  those  words  have  different 
senses.  The  peculiar  sense  or  meaning  which  it  is  proposed  by  the  evidence  to 
attach  to  the  words  of  the  contract,  must  not  vary  or  contradict,  either  expressly  or 
by  implication,  the  terras  of  the  written  instrument.  In  the  language  of  Lord  L3-nd- 
hurst  in  Blaokett  v.  R.  E.  Insurance  Co.,  2  Tyrrw.  266,  usage  may  be  admissible  to 
explain  what  is  doubtful,  but  is  never  admissible  to  contradict  what  is  plain.  Spar- 
tali  V.  Benecke,  10  C.  B.  R.  (70  E.  C.  L.)  213.  The  Reeside,  2  Sumn.  569.  Renner 
V.  Bank  of  Columbia,  9  "Wheat.  581.  Van  Ness  v.  Pacard,  2  Pet.  137.  Clark  v. 
Baker,  11  Mete.  186.'  Slacomber  v.  Parker,  13  Pick.  176.  Mutual  Safety  Ins.  Co 
•.■.  Hone,  2  Comst.  235.  Gross,  jNh-ers  &  Moore  v.  Criss,  3  Gratt.  262,  and  an  elaborate 
examination  of  the  American  authorities  in  the  note  to  1  Smith's  L.  Cases,  588. 


lA'TRODUCTION.  33 


Origin,  History,  and  Importance  of  Commercial  Law. 


incapable  of  extension,  save  bj  the  supreme  power  of  tlie  state. 
Ttie  whole  of  our  remedial  system,  including  the  formalities  of  ac- 
tions at  law,  and  suits  in  equity  and  in  the  ecclesiastical  and  admi- 
ralty courts,  would  be  a  very  proper  subject  for  codification,  for  it 
is  a  collection  of  arbitrary  rules,  which  are  then  best  when  most 
accessible.  The  codification  of  the  law  of  real  property  is  not 
worth  seeking  for.  Its  j)rinciples  and  practice  are  so  abstruse,  that 
no  code  would  render  them  intelligible  to  the  public,  while,  by  the 
profession,  they  are  already  understood  sufficiently.  But  the  codi- 
fication of  our  mercantile  law  would  be  a  national  evil."  It  would 
destroy  the  singular  and  fortunate  plasticity  of  a  system  whose 
rules  hitherto  have  been,  and  always  ought  to  be,  made  by  the 
merchant,  and  dictated  by  his  exigiencies." 


*  In  the  notes  to  this  work  great  prominence  has  been  given  to  the  decisions  of 
the  Supreme  Court  of  the  United  States.  We  have  taken  this  course,  not  only  be- 
cause of  the  intrinsic  value  of  those  decisions  and  the  eminent  reputation  of  that 
Court,  but  in  the  hope  of  their  eventual  reception  by  our  State  judiciaries  as  autho- 
ritative expositions  of  commercial  law.  This  disposition  has  been  manifested  in 
many  of  our  younger  States,  and  it  is  the  only  mode  by  which  our  people  can  obtain 
the  advantages  of  a  uniform  and  homogeneous  system  of  mercantile  law.  As  the  law 
now  stands,  the  interpretation  and  effect  of  a  mercantile  contract  between  citizens 
of  different  States,  will,  in  many  cases,  vary  with  the  tribunal  (State  or  Federal)  in 
which  suit  is  brought  to  enforce  it.  It  was  determined  by  the  Supreme  Court  of  the 
United  States  in  Swift  v.  T3-son,  16  Peters,  1,  that  the  decisions  of  the  local  courts 
upon  the  interpretation  and  effect  of  commercial  contracts  furnished  no  positive  rule 
to  govern  their  judgment,  and  would  be  followed  only  so  far  as  they  conformed  to 
the  general  principles  and  doctrines  of  commercial  jurisprudence;  and  the  principle 
established  in  that  very  case  imposed  a  responsibility  which  would  have  been  repu 
diated  by  the  State  court  if  the  case  had  been  brought  before  it.  A  similar  inconve- 
nience is  to  some  extent  felt  in  Great  Britain,  in  consequence  of  the  different  systema 
of  law  prevailing  in  England  and  Scotland. 


BOOK  THE  FIRST. 

OF    MEECANTILE    PERSONS, 


OF    MERCANTILE    PERSONS. 


Trade  may  be  carried  on  by  Individuals,  Partnerships,  or  Com* 
panies,  Corporations,  and  their  respective  Agents.  As  it  will,  tbere- 
fore,  be  necessary  to  devote  some  space  to  each,  of  the  above  classes 
of  the  mercantile  community,  this  book  will  be  divided  into  five 
chapters,  the  first,  treating  of  Sole  Traders ;  the  second,  of  Partner- 
ships ordinarily  so  called ;  the  third,  of  those  peculiar  and  extensive 
partnerships  denominated  Companies;  the  fourth,  of  Corporations 
formed  for  trading  purposes;  the  fifth,  of  persons  occupying  the 
relation  of  Principal  and  Agent. 


CHAPTER  I. 

OF     SOLE     TRADERS. 

The  word  Trader  is  used  in  the  bankrupt  laws  in  a  definite  and 
peculiar  sense.  For  the  general  purposes  of  law  it  seems  to  have 
a  wider  signification  than  is  either  there,  or  in  the  common  par- 
lance of  mankind,  attributed  to  it ;  and,  perhaps,  it  is  not  going  too 
far  to  say,  that  every  man  who  does  an  act  upon  which  any  of  the 
rules  of  mercantile  law  operate  becomes,  quoad  that  act,  a  trader, 
though  his  ordinary  pursuits  may  not  be  of  a  mercantile  charac- 
ter. Thus  it  is  laid  down  by  books  of  authority,  that  if  a  man 
draw  a  bill  of  exchange,  he  is,  for  the  purposes  of  that  bill,  a  mer- 
chant, (a) 

(a)  Com,  Dig.  Merchant,  A.  1.     The  French  law  defines  the  word  trader  as  fol- 


38  MERCANTILE  PERSONS. 


Sole  Traders. 


The  law  of  England,  following  in  this  respect  the  maxims  ot 
sound  and  liberal  policy,  licenses  every  individual,  who  is  desirous 
of  so  doing,  to  assume  the  character  and  functions  of  a  trader,  un- 
less he  fall  within  the  letter  of  some  special  prohibition,  which 
takes  his  case  out  of  the  ordinary  rule,  and  subjects  him  to  a  pecu- 
liar disqualification ;  nay,  such  is  the  anxiety  with  which  the  law 
watches  over  the  interests  of  trade  and  commerce,  that  it  will  not 
allow  a  man  to  deprive  himself  of  his  right  of  embarking  in  com- 
mercial enterprise.  A  bond  or  other  contract,  by  which  a  person 
binds  himself  generally  not  to  exercise  his  trade  or  business,  in  this 
country  is  merely  void.  (/;)  For  "  the  law,"  to  use  the  expressions 
of  Best,  0.  J.,  "  will  not  permit  any  one  to  restrain  a  person  from 
doing  what  his  own  interests  and  the  public  welfare  require  that  he 
should  do."(c)  A  partial  restraint  of  this  kind  will,  indeed,  be  up- 
held, provided  it  be  reasonable  in  its  nature  and  extent,  and  founded 
on  a  legal  consideration,  {d)  But  if  it  want  these  qualities  it  will 
be  void,  (e)  And  all  contracts  in  restraint  of  trade  are,  if  no  special 
circumstances  appear  to  show  them  to  be  reasonable,  invalid  in  the 
eye  of  the  law.  (/)*  Particular  personal  disqualifications,  how- 
lows  : — "  Sont  commerjans  ceux  qui  exercent  les  actes  de  commerce  et  en  font  leur 
profession  habituelle."     Co.  8,  85,  631,  s.  638. 

{b)  Mitchell  V.  Reynolds,  1  P.  Wms.  181,  1  Smith's  Leading  Cases,  171. 

(c)  Homer  v.  Ashford,  3  Bing.  328.  See  also  per  Parke,  B.,  Mallan  v.  May,  11  M. 
&  W.  653. 

{d^  Mitchell  V.  Rej'nolds,  uhi  supra;  Chesman  v.  Xainby,  2  Str.  739  ;  Hitchcock  v, 
Coker,  6  Ad.  &  E.  439 ;  Archer  v.  Marsh,  Ibid.  966 ;  Leighton  v.  Wales,  3  M.  &  W. 
545 ;  see  per  Parke,  B.,  Green  v.  Price,  13  M.  &  W.  698. 

(e)  See  Horner  v.  Graves,  7  Bing.  743  ;  Young  v.  Timmins,  1  Tyrwh.  226,  1  C.  & 
J.  331 ;  Mallan  v.  May,  ubi  supra. 

(/)  Horner  v.  Graves,  ubi  supra;  Ward  v.  Bj-rne,  5  M.  A  W.  548. 

*  An  exception  to  the  common  law  rule,  that  an  instrument  under  seal  imports  a 
consideration,  exists  where  the  condition  is  in  restraint  of  trade.  The  considera- 
tion in  such  case  must  appearon  the  face  of  the  instrument.  Parke,  B.,  Mallan  v. 
.May,  11  Mees  &  W.  665.;  Hiitton  v-  Harker,  7  Dowl.  739. 

The  opinion  at  one  time  entertained,  that  the  court  could  look  into  the  adequacy 
of  the  consideration,  has  been  overruled  by  the  recent  English  authorities,  which 
have  held  that  the  parties  must  judge  of  that  matter  for  themselves,  and  that  the 
court  has  no  judicial  perception  of  the  ratio  of  the  consideration  to  the  restriction. 
Archer  v.  Marsh,  6  Ad.  &  Ell.  966  ;  Hitchcock  v.  Coker,  6  Ad.  &  Ell.  439 ;  Atkyns  v. 
Kinnier,  4Excheq.  R.  776;  Tallis  z;.  Tallis,  18  E.  L.  &.  E.  R.  151.     What  constitutoa 


SOLE  TRADERS.  39 


Sole  Traders. 


I 


ever,  as  has  been  said,  exist,  which  incapacitate  the  individuals 
J".boring  under  them  from  engaging  in  commercial  pursuits.     It 
may  be  proper  to  adduce  one  or  two  examples  of  this  sort  of  dis- 
ability :  the  instances  of  most  usual  occurrence  are  to  be  found  in  I 
the  law  relating  to  the  capacity  of  aliens^  infants^  married  tvomen,  '< 
and  clergymen. 

An  alien  ranks  either  under  the  head  of  alien  friend  or  that  of 
alien  enemy^  i.  e.  the  nation  to  which  he  belongs  is  either  at  ^^mce  ' 
or  war  with  this  kingdom.  In  the  former  case  he  may  trade  in 
this  country  as  freely  as  any  British  subject,  indeed  his  safety  while 
doing  so  is  the  subject  of  a  special  clause  in  Magna  Charta.  In 
order  to  enable  him  to  trade  with  more  ease  and  advantage  he  was 
permitted  to  hold  a  lease  for  years  of  a  house,  for  "  without  habita- 


a  reasonable  restraint  is  a  question  of  law,  and  one  upon  ■which  the  courts  seem  in- 
clined to  relax  the  strictness  of  the  ancient  rule.  There  are  many  partial  restraints 
on  trade  which  it  is  for  the  benefit  of  the  public  at  large  to  enforce :  as  where  a  shop 
in  a  particular  place  is  sold,  with  a  stipulation  on  the  part  of  the  vendor  not  to 
trade  in  the  same  place.  This  is  in  effect  the  sale  of  the  good-will,  and  offers  an  en- 
couragement to  trade,  by  allowing  a  party  to  dispose  of  all  the  fruits  of  his  industry. 
Parke,  B.,  Mallan  v.  May,  11  Mees  &  Wels,  6G3.  The  rule  which  the  courts  seem  dis- 
posed to  lay  down,  as  a  test,  to  determine  the  reasonableness  of  any  particular  re- 
straint, is  to  consider  whether  the  restraint  is  larger  and  wider  than  the  protection 
of  the  party  with  whom  the  contract  is  made,  can  possibly  require.  If  it  goes  be- 
yond this,  it  is  unnecessary,  oppressive,  unreasonable  in  the  eye  of  the  law,  and 
therefore  void.  Mitchell  v.  Reynolds,  1  P.  Wms.  181 ;  Hitchcock  v.  Coker,  6  Ad.  & 
Ell.  438  ;  Ward  v.  Byrne,  5  Mees  &  W.  548  ;  Proctor  v.  Sargent.  2  Man.  &  Gr.  31. 

It  has  been  finally  determined  in  England,  that  a  restraint  reasonably  limited  as 
to  space,  but  enduring  for  the  life  of  the  party  restrained,  may  be  valid  as  the  only 
effectual  mode  of  securing  to  the  covenantee  the  benefit  of  the  good-will  of  his  trade. 
Hitchcock  V.  Coker,  6  Ad.  <t  Ell.  438,  1  N  tfc  P  '796,  in  the  Exchequer  Chamber,  re- 
versing the  judgment  of  the  Queen's  Bench  ;  Pemberton  v.  Vaughan,  10  Q.  B.  R.  81 
(59  E.  C.  L.  R.);  Mallan  v.  May,  11  Mees  &  "W.  653.  The  doctrine  was  still  farther 
extended  in  the  recent  case  of  Elves  v.  Crofts,  10  C.  B.  R.  (70  K  C.  L.)  241.  A 
butcher,  on  assigning,  for  the  residue  of  a  term,  certain  premises  upon  which  he  had 
carried  on  his  business,  together  with  the  fixtures  and  the  good-toill  of  the  trade, 
covenanted  with  the  purchaser  that  he  would  not  at  any  time  thereafter,  either  by 
himself,  or  as  agent,  or  journeyman  for  another,  set  up,  exercise,  or  be  employed 
in,  the  trade  of  a  butcher,  within  five  miles  from  the  premises  thereby  assigned.  It 
was  held  that  this  covenant  did  not  cease  to  operate  on  the  expiration  of  the  term, 
or  on  the  covenantee's  ceasing  by  himself  or  his  assigns  to  carry  on  the  business  as- 
signed. "  If  the  covenant,"  says  Wilde,  C.  J.,  "  is  binding  to  its  full  extent  when  made, 
its  signification  cannot  be  varied  by  any  subsequent  occurrence:  and  to  hold  other 


40  MERCANTILE  PERSONS. 


Sole  Traders. 


tion  he  cannot  merchandise  or  trade."(5f)  And  though  there  was 
an  ancient  statute,  32  Hen.  8,  c.  16,  which  avoided  leases  of  houses 
and  shops  granted  to  alien  artificers  and  handicraftsmen^  yet  it  was 
very  strictly  construed,  (A)  and  now  by  7  &  8  Vict.  c.  Q(^^  s.  5,  any 
alien  friend  may  hold  lands  and  houses  for  the  purposes  of  residence 
or  occupation,  or  any  business,  trade,  or  manufacture,  for  a  term 
not  exceeding  21  years. 

But  an  alien  enemy  is  incapable  of  trading  here,  except  by  the 
King's  license,  {%)  which  must,  if  granted,  be  very  strictly  pur- 
sued. (;) 

Infants  and  married  loomen  are  incapable  of  binding  themselves 

)  by  any  description  of  mercantile  contract :  an  infant  cannot  even 

state  an  account  or  give  a  cognovit.  {Ic)     But  there  is  this  difference 

between  the  cases  of  an  infant  and  a  married  woman,  that  the  for- 

{g)  Co.  Litt.  2,  ct  nolas. 

(h)  See  Jevens  v.  Han-idge,  1  Wins.  Saund.  7,  ct  notas.  Pilkington  v.  Peach,  2 
Shovrer,  135.  Wotton  v.  StefFenoni,  12  M.  &  "W.  129.  Vide  tamcn  Lapierre  v.  Mcln 
tosh,  8  Ad.  &  Ell.  875. 

(i)  See  Kensington  v.  Inglis,  8  East,  2'!' 3. 

(j)  See  Vandyke  v.  Witmore,  1  East,  475. 

(k)  Oliver  v.  Woodroffe,  4  M.  &  W.  650. 

wise,  would  be  to  render  its  im])ort  uncertain,  and  to  impair  its  efficiency  for  that 
protection  which  the  law  contemplates  as  just  Cases  might  be  conceived,  in  which, 
notwithstanding  the  facts  found  by  the  jury  (in  this  case),  the  good-will  assigned 
might  not  be  at  once  extinguished ;  and  if  considerations  of  time  or  degree  be  per- 
mitted to  affect  the  right  to  enforce  such  a  covenant,  its  value  would  be  diminished, 
and  the  saleable  quality  of  good-will  would  be  affected." 

Whether  a  total  restj?iction  on  trade,  limited  only  as  to  time,  can  in  any  case  be 
supported,  does  not  seemto  be  definitively  settled.  Such  a  restraint  was  declared 
unreasonable  in  Ward  v.  Byrne,  5  Mees  &  W.  548,  on  the  ground,  that  where  a  limit 
as  to  space  is  imposed,  the  public  do  not  lose  altogether  the  services  of  the  party  in 
the  particular  trade,  nor  within  the  limited  space  will  they  be  deprived  of  the  bene- 
fit of  the  trade  being  carried  on  ;  but  in  the  case  of  a  general  restriction,  limited  onlj- 
as  to  time,  the  public  are  altogether  losers  for  that  time  of  the  services  of  the  indi- 
vidual, and  derive  no  benefit  in  return.  This  view  does  not  seem,  however,  alto- 
gether consistent  with  the  decision  of  Lord  Langdale  in  Whittaker  v.  Howe,  3  Beav. 
383. 

The  student  will  find  a  discussion  of  the  general  doctrine  in  the  following  Ameri- 
can cases:  Pierce  v  Fuller,  8  Mass.  22o  ;  Pierce  v:  Woodward,  6  Pick.  296  ;  Nobles  v. 
Bates,  7  Cow.   307;  Chappel  v.  Brockway,  21  Wend.  158;  Pike  v.  Thomas,  4  Bibb. 
486  ;  Bowser  v.  Bliss,  7  Black,  344. 


SOLE  TRADERS.  41 


Sole  Traders. 


mer  may  at  full  age  ratify  the  contract,  (Z)  which  the  latter  cannot 
do :  of  course,  therefore,  neither  of  them  can  support  the  character 
of  a  sole  trader.  By  the  custom  of  the  City  of  London,  however,  a 
married  woman  may  be  there  a  sole  trader ^{m)  and  when  a  woman'? 
husband  is  civilly (n),  although  not  physically  defunct,  she  may 
carry  on  trade,  as  if  she  were  iifeme  sole^  for  her  own  support,  and 
in  either  of  these  cases  may  become  a  bankrupt, (o) 

Clergymen  occupying  any  spiritual  employment  were  by  stat.  57 
Geo.  3,  c.  99,  prohibited  from  carrying  on  any  trade  or  buying  and 
selling  for  lucre,  upon  pain  of  forfeiting  the  value  of  the  goods  so 
bought  or  sold,  and  the  contracts  entered  into  by  them  in  any  such 
trade  or  dealing  rendered  utterly  void.  This  act  became  the  sub- 
ject of  much  discussion  on  the  occasion  of  the  celebrated  case  of 
Hall  V.  FranHin,(j))  in  which  the  Court  of  Exchequer  expressed 
their  opinion  that  a  joint-stock  banking  company,  having  beneficed 
clergymen  among  its  members,  could  not  maint-ain  an  action 
against  the  drawer  of  a  bill  indorsed  to  the  company.  This  occa- 
sioned the  immediate  enactment  of  stat.  1  Yict.  c.  10,  which  ren- 
dered valid  partnerships  of  more  than  six  persons  formed  or  to  be 
formed  before  the  end  of  the  then  next  session,  although  consisting 
partly  of  spiritual  persons. 

The  act  of  57  Geo.  3,  c.  99,  is  now  itself  repealed  by  1  &  2  Yict. 
c.  106,  by  sections  29,  30,  and  31  of  which  the  subject  is  now  regu- 
lated, {q) 

There  were  formerly  nume];ous  disabilities  imposed  by  statutes 
which  forbade  the  exercise  of  certain  trades  to  all  persons  who  had 
not  previously  served  an  apprenticeship  thereto  :(?•)  and  there 
were  other  disabilities  imposed  by  the  customs  and  laws  of  corjoo- 
rate  towns,  which  prohibited  the  exercise  of  particular  trades  by 


(!)  Williams  v.  Moore,  11  M.  &  "W".  256.     See  note  to  Harrison  v.  Fane,  1  M.  & 

551. 

(m)  See  a  full  account  of  this  custom  in  Beard  v.  Webb,  2  B.  &  P.  93. 

(»i)  See  per  Parke,  B.,  in  Barden  v.  De  Keverberg,  2  M.  &  W.  64. 

(o)  See  post,  Book  4,  cap.  3,  see,  1. 

{p)  3  Mee.  &  W.  259. 

(q)  See  them  in  App. 

(r)  See  R.  v.  Kilderb}',  1  Wms.  Saund.  300,  et  notas. 


42  MERCANTILE  PERSONS. 


Sole  Traders. 


Strangers  witliin  the  territories  of  tlie  respective  corporations. (s) 
The  former  class  is,  however,  repealed  by  stat.  64  Geo.  3,  c.  96,  and 
the  latter  is  in  great  part  destroyed  by  sec.  14  of  stat.  5  &;  6  "Wm. 
4,  c.  76,  entitled,  "  An  Act  to  provide  for  the  regulation  of  Munici- 
pal Corporations  in  England  and  Wales." 

(s)  See  Shaw  v.  Pope,  2  B.  &  Ad.  465.  Shaw  v.  Poynter,  2  Ad.  &  Ell.  312. 
Clarke  v.  Denton,  1  B.  <fe  Ad.  92.  Simson  v.  Moss,  2  B.  &  Ad.  6-4.^  Mayor  of  Lei- 
cester V.  Burgess,  5  B.  <fc  Ad.  246. 


CHAPTER  II. 

OE    PARTNERS. 

Sect.  1.  Partnership — what. 
2.  How  formed. 
8.  How  dissolved. 
4.  Bights  of  partners,  inter  se. 
6.  JRiglits  of  third  persons  against  partners. 
6.  Rights  of  partners  against  third  pjersons. 


SECTIOIsr  1 . — Partnersh  ip — ivhat.^ 

Partnership  is  the  result  of  a  contract,  whereby  two  or  more 
persons  agree  to  combine  property  or  labor  for  the  purpose  of  a 
common   undertaking  and  the  acquisition  of  a  common  profit.f 

*  "  The  Law  of  Partnership  is  a  subject  of  general  interest.  With  the  duties,  obli- 
gations, and  responsibilities  of  this  peculiar  connection,  every  mercantile  man  should 
be  acquainted.  It  is  a  species  of  connection  which  pervades  the  mercantile  world 
— which  has  existed  and  will  exist  in  all  ages  and  nations.  It  is  a  word  of  most  ex- 
tensive usage ;  it  comprehends  equally  the  union  of  a  day,  and  those  venerable 
guilds,  and  ancient  associations,  which,  in  the  country  whence  our  laws  have  been 
derived,  have  existed  for  centuries ;  it  applies  at  once  to  the  ephemeral  operations 
of  adventurers,  whose  projects  commence  and  terminate  in  the  compass  of  a  few 
hours,  and  to  the  mighty  transactions  of  that  company  of  merchants,  which,  com- 
mencing with  a  factory  on  the  shores  of  India,  has  overthrown  kingdoms,  and  from 
their  ruins  cemented  a  splendid  empire.  The  inducement  to  its  formation  results 
from  the  combination  of  qualities  and  the  concurrence  of  circumstances  necessary  to 
successful  commercial  adventure.  It  is  a  connection  than  which  none  more  close  can 
exist  among  men.  It  places  in  the  power  of  him  with  whom  you  form  it,  your 
property  and  your  reputation.  His  virtues  and  his  skill,  in  unison  with  your  own, 
may  raise  you  to  the  pinnacle  of  prosperity.  His  folly,  or  his  crimes,  may  strip 
you  of  every  flourishing  branch  and  leaf,  and  leave  you  a  naked,  withered,  and  dis- 
honored trunk.  It  should  be  formed,  tiierefore,  with  little  less  care  than  the  mar- 
riage tie,  to  which  it  has  been,  by  a  late  Chancellor,  not  inaptly  compared." — Laio 
Journal,  Vol.  I. 

f  Professor  Parsons,  in  his  recent  work  on  Contracts,  Vol.  I.  p.  149,  makes  the  fol- 


44  MERCANTILE  PERSONS. 


Partnership — what. 


There  may  be  a  ^partnership  in  one  transaction  as  "well  as  in  a 
continuing  business,  and  between  persons  out  of  trade  as  well  as 
in  trade,  since,  in  either  case,  there  may  be  a  combination  of  prop- 
erty or  labor,  in  order  to  a  common  undertaking  and  a  common 
profit,  (a) 

This  community  of  profit  is  the  criterion  whereby  to  ascertain 
whether  a  contract  be  really  one  of  partnership,  for  one  partner 
may  stipulate  to  be  free  from  loss,  and  the  stipulation  will  hold 
good  as  between  himself  and  his  companions,  {h)  though  it  will  not 
diminish  his  liability  to  strangers,  (c)  So  one  partner  may  con- 
tribute all  the  money,  all  the  stock,  c^  all  the  labor  necessary  for 
the  purposes  of  the  firm.  But  if  there  be  not  a  community  of 
profit,  there  is  no  real  partnership ;  {cl)  while,  on  the  other  hand, 

(a)  Ux  parte  GeHar,  1  Rose,  297.  Salomons  v.  Nissen,  2  T.  R.  6Y4.  Societatem 
coire  solemus  aut  totorum,  quam  Gr£cci  specialiter  Koivuviav  appellant,  aut  uniua 
aliciijus  negotiationis.     Inst.  3,  26. 

(i)  Fere'lay  v-  Plornderne,  Jae.  144.  Gilpin  v.  Enderb}-,  5  B.  <fe  A.  954.  Bond  v. 
Pittard,  3  M.  &  W.  35*7 ;  see  18  Ves.  300,  unless,  indeed,  such  stipulation  be  inserted 
as  a  mask  to  disguise  usury.  Jestons  v.  Brooke,  Cowp.  '793.  Morse  v.  "Wilson,  4  T. 
R.  353. 

(c)  "Waugh  V.  Carver,  2  H.  Bl.  235.  1  Smith's  Lead.  Cases,  491.  Jac.  147,  per 
Ld.  Eldon. 

(J)  Hoare  v.  Dawes,  Douglas,  371.  Coope  v.  E3're,  1  II.  BL  37.  Finckle  v.  Sta- 
cey,  Sel.  Ca.  eh.  9.  Many  societies,  such  for  instance  as  clubs,  so  far  resemble  part- 
nerships, that  each  member  is  bound  by  certain  acts  of  the  rest,  done  in  furtherance 
of  the  common  object.  See  Delauney  v.  Strickland,  2  Stark.  41G.  But  these  are 
not  pai'tnerships,  though  possessing  some  of  the  attribiites  thereof;  the}'  are,  in 
reality,  mere  cases  of  principal  and  agent.  Flemyng  v.  Ilector,  2  M.  &  W.  172. 
Todd  V.  Emly,  7  M.  &  W.  427,  8  M.  &  "W.  505.  And  the  same  remark  seems  to  be 
applicable  to  persons  "who  become  members  of  a  provisional  committee  for  the 
purpose  of  promoting  a  railway  or  other  work,  though  the  end  they  propose  to 
themselves  may  be  individual  profit.  By  simply  consenting  to  become  members  of 
such  a  committee,  and  allowing  their  names  to  be  published  as  such,  they  do  not 
authorize  the  rest  of  the  committee,  or  the  ofRcers,  to  bind  them  by  contracts  oven 
for  necessaries  to  prosecute  the  project.  Reynell  v.  Lewis,  15  M.  &  "W.  517.  Cooke 
V.  Tonkin,  16  L.  J.,  Q.  B.,  153.     See  contra,  Barnett  v.  Lambert,  15  M.  &  "W.  489. 

lowing  valuable  suggestions : — "  The  power  of  each  partner  to  represent  and  bind  the 
rest,  and  to  dispose  of  the  partnership  property,  is  sometimes  regarded  as  arising  from 
the  agency  which  all  confer  upon  each  ;  and  sometimes  from  the  community  of  in- 
terest, whereby  no  partner  owns  any  part  of  the  partnership  property  exclusively  of 
the  rest,  but  each  partner  owns  the  whole  in  common  with  all  the  others.  We  think 
it  rests  upon  both  of  these  foundations  together.     It  is  true  there  may  be  a  co- 


PARTNERS.  45 


Partnership — what. 


where  sucli  community  of  profit  exists,  each,  of  the  sharers  in  it  is, 
and  may  be  treated  by  the  creditors  of  the  whole  body  as  a  partner, 
although  he  may  have  stipulated  with  his  companies  not  to  be  re- 
sponsible for  the  engagements  entered  into  by  them  with  strangers, 
to  whom  he,  notwithstanding,  will  be  liable  ;  and  very  justly  so  ; 
for  by  taking  a  j)art  of  the  profits  he  takes  from  the  creditors  a 
part  of  that  fund  which  is  the  proper  security  to  them  for  the  pay- 
ment of  their  debts  ;(e)  and  on  this  ground  it  is  that  a  dormant 
partner^  that  is  to  say,  one  who  is  a  sharer  in  the  concern,  but  does 
not  appear  to  the  world  as  such,  is  held  responsible  for  its  engage- 
ments.(/)* 

{e)  Per  Eyre,  C.  J.,  Waugh  v.  Carver,  2  H.  Bl.  235.  Barry  v.  Nesham,  16  L.  J. 
K.  P.  21.     See  ex  parte  Rowlandson,  1  Rose,  89,  and  17  Ves.  412. 

(/)  Robinson  v.  AVilkinson,  3  Price,  538.  Wintle  v.  Crowther,  1  Cr.  &  Jer.  816, 
1  Tyrw.  210.  But  though  a  stranger  may  sue  such  a  partner  along  with,  the  rest, 
yet  he  is  not  obliged  to  do  so,  on  account  of  the  difficulty  of  discovering  him.  Mul- 
lett  V.  Hook,  M.  &  M.  88.  De  Mautort  v.  Saunders,  1  B.  &  Ad.  398,  overruling  Du- 
bois V.  Ludert,  1  Marsli.  2-18.  But  see  Bonfield  v.  Smith,  12  M.  &  W.  405.  See  also 
ex  parte  Hamper,  17  Ves.  412.     JEx  parte  Hodgkinson,  19  Ves.  294. 

partnership  where  one  or  more  of  the  partners  has  no  interest  in  the  capital  stock, 
by  agreement  among  themselves.  But  even  then  all  own  together  the  profits,  and 
po  much  of  the  funds  or  capital  of  the  firm  as  consists  of  profits.  Partners  are, 
undoubtedl}-,  some  way  agents  of  each  other.  But  the  principle  of  agency  alone 
will  not  explain  the  whole  law  of  their  mutual  responsibility.  Out  of  the  combination 
of  this  principle,  with  those  which  grow  out  of  the  community  of  property  and  of 
interest,  the  law  of  partnership  is  founded.  And  this  law  may  often  be  illustrated 
by  a  reference  to  the  principles  of  agency ;  but  must  still  be  regarded  as  consisting 
of  a  distinct  system  of  rules  and  principles  peculiar  to  itself." 

*  In  many  of  the  states  there  are  laws  authorizing  the  formation  of  limited  part- 
nerships, and  protecting  the  special  partner  from  responsibility  in  solido,  upon  cer- 
tain conditions.  A  substantial  compliance  with  the  statutory  requisitions  is  deemed 
essential  to  the  validity  of  such  partnerships.  Besides  New  York,  where  a  great 
many  decisions  have  been  made  upon  this  contract,  limited  partnerships  exist  in 
Massachusetts,  Pennsylvania,  Maryland,  Virginia,  South  Carolina,  Georgia,  Alabama, 
Ohio,  Tennessee,  Mississippi,  Indiana,  and  Louisiana;  and  probably  in  the  other 
states,  except  New  Hampshire  and  North  Carolina.  The  law  in  reference  to  limited 
partnerships,  so  far  as  it  has  been  expounded  by  the  American  courts,  is  very  fully 
discussed  in  the  recent  work  of  Mr.  Troubat. 

In  No.  2  of  the  very  able  series  of  articles,  published  in  the  American  Jurist,  upon 
the  Codification  and  Reform  of  the  Law,  there  are  some  suggestions  upon  this  sub- 
ject which  we  have  deemed  of  such  interest  and  importance  to  the  mercantile  com- 
munity as  to  extract  at  length  : — 


^^  LIERCAiniLE  TERSONS. 


' 


Partnership — what. 


If  A.  and  B.  agree  together  to  contribute  eacli  a  sum  of  money 
for  tlie  purchase  of  a  lot  of  goods,  wliich  they  intend  afterwards  to 
divide,  in  this  case,  after  the  purchase  of  the  goods  and  before  the 
division,  they  are  joint-owners,  not  partners.  But  if,  instead  of 
dividing,  they  sell  them  again,  and  divide  the  gain  accruing  upon 
the  re-sale,  now  there  is  a  community  of  profit,  and  they  become, 
in  the  legal  sense  of  that  word,  iXLriners.{fj)     However,  though  the 

(g)  The  working  of  a  mine,  colliery,  or  other  real  property  of  that  description, 
is  looked  on  to  some  extent  as  a  trade,  and  where  several,  having  a  common  interest 
in  such  propertj',  work  it  in  common,  and  sell  the  produce  for  their  common  benefit, 
they  become  partners.  Crawshay  v.  Maule,  1  Swanst.  495.  Jeffreys  v.  Smith,  1  Jac- 
&  Walk.  298.  Hawken  v.  Bourne,  8  Mee.  &  Welsh.  703.  Tred^st.u  v.  Bourne,  6  M. 
&  W.  461.  Ralph  v.  Harvey,  1  Q.  B.  845.  See  2  Atk.  630.  But  mining  concerns 
though  partnerships  to  most  purposes,  are  not  so  to  all.  See  Vice  v.  Lady  Anson,  7 
B.  <fe  C.  409.  For  they  are  not  subject  to  dissolution  on  the  death  or  bankruptcy  of 
any  of  the  partners,  and  the  shares  are  transferable  without  the  consent  of  the  other 
partners.  Fereday  v.  Wightwick,  1  Russ.  &  Mylne,  45.  "We  shall  see  presently  that 
partners  in  a  mine  have  not  in  general  the  power  of  binding  one  another  by  bills  of 
exchange. 


"It  is  provided  in  substance  by  these  statutes,  '.hat  there  shall  be  (on  thft  com- 
pliance with  certain  rules  of  registry  and  notice}  partnerships,  the  members  of 
which  shall  be  liable,  in  different  degrees,  to  those  who  contract  with  them — a 
general  partner  wlio  shall  be  subject  to  a  full  and  general  accountability  to  creditors 
and  others,  and  a  special  partner,  who  shall  be  only  liable  to  that  extent  that  he 
shall  have  contributed  to  the  partnership  stock,  which  is  to  be  ascertained  by  refer- 
ence to  the  registry.  Hence  results  the  injustice  of  the  law.  A  small  establishment 
commences  with  the  capital  of  which  it  has  notified  the  public.  In  the  progress  of 
time,  its  prosperity  increases,  and  its  capital  is  augmented.  The  stock  of  the  pro- 
tected partner  increases  perhaps  tenfold,  but  tlie  day  of  adversit}-  comes,  and  then 
he  withdraws  behind  his  registered  accountabilit}-.  He  gives  up  his  interest  in  the 
property,  but  as  he  has  during  the  season  of  prosperous  trade  been  receiving  profits 
on  a  stock  vastly  extended  beyond  its  original  amount,  why  should  his  losses  be 
limited  to  the  small  sum  originally  furnished?  It  would  s>>em  reasonable  that  the 
chance  of  loss  should  correspond  with  the  chance  of  profit  Such  will  be  the 
exemption,  and  the  result  on  the  supposition  of  perfect  good  faith ;  but  the  temp- 
tations to  fraud,  and  the  difficulty  of  detecting  it^  are  greatly  increased  by  this  law. 
He  may  withdraw  his  accumulated  capital,  and  the  extent  of  his  liability  is  only 
the  sum  which  lie  originally  furnished.  We  think  no  action  at  law  could  reach  liim. 
The  statute  protects  liim,  and  if  it  is  said,  that  a  court  of  equity  will  follow  the  fund 
which  he  has  withdrawn,  still  it  may  be  replied,  tliat  the  necessitj-  of  resorting  to 
the  extraordinary  jurisdiction  of  that  tribunal,  demonstrates  the  inexpediency,  as 
also  the  inadequacy  of  the  law.  But  there  is  no  justice  in  making  the  amount  of 
capital  furnished  decide  the  extent  of  liabilitj-.     The  capital  is  the  basis  of  the  part 


PARTNERS.  47 


Partnership — what. 


profit  of  partners  must  be  joint,  they  may,  if  they  think  fit,  arrange 
that  it  shall  be  unequally  divided. (A) 

Further,  it  is  to  be  observed,  that,  to  constitute  such  a  corrvniu-- 
nitij  of  jirojit  as  is  here  intended,  a  partner  must  not  only  share  in  | 
the  profits  of  his  companions,  but  must  share  in  them  as  a  iprinci- 
;£alj  i.  e,  he  must  not  be  a  mere  agent,  factor,  or  servant,  receiving, 
in  lieu  of  wages,  a  sum  proportioned  to  the  profit  gained  by  his 
employers, (^)  or  a  certain  portion  of  a  fund  which  includes  the 

(//)  Per  Ld.  Loughborough,  Coope  v.  Eyre,  1  BL  Bl.  48.  Fremont  v.  Coupland,  2 
Bing.  171.  Ex  oarte  Langdale,  18  Ves.  300.  Si  nihil  de  partibus  lucri  et  damni 
nominatim  conveuirit  sequales  scilicet  partes  et  in  lucro  et  in  danino  spectantur : 
ouodsi  expresste  fuerint  partes,  h"ae  servari  debent.  Inst.  3,  tit.  26,  §  1.  It  is  not 
necessary  that  a  partner's  share  should  be  ascertained,  but  its  not  being  so  is  a  cir- 
cumstance tending  to  show  the  non-existence  of  the  partnership;  j^er  Bosanquet,  J., 
in  Howell  v.  Brodie,  6  Bing.  K  C.  50. 

(i)  Dixon  v.  Cooper,  3  Wils,  40.  Wilkinson  v.  Frazier,  4  Esp.  182.  Mair  v.  Glen- 
nie,  4  M.  <fe  S.  240.  Dry  v.  Boswell,  1  Camp.  330.  R.  v.  Hartley',  Russ.  &  Ry.  139. 
Benjamin  v.  Porteus,  2  II.  Bl.  590.  Perrott  v.  Bryant,  1  Y.  &  Coll.  68.  Wish  v. 
Small,  ib.  331.  Ilesketh  v.  Blanchard,  4  East,  144.  Rawlinson  v.  Clark,  15  II.  & 
W.  292,  and  see  Withington  v.  Herring,  3  M.  &  P.  30.  Geddes  v.  Wallace,  2  Bligh, 
270.  Sed  vide  ex  parte  Rowlandson,  1  Rose,  91.  £x  parte  Langdale,  18  Ves.  300. 
Ex  parte  Watson,  19  Ves.  459.  Smith  v.  Watson,  2  B.  «fe  C.  401.  Green  v.  Beeslej-, 
2  Bing.  N.  C.  110.  So  a  person  receiving  a  per  centage  on  sales  effected  through 
his  influence  is  not  liable  as  a  partner.     Pott  v.  E^-ton,  15  L.  J.  C.  P.  257. 

nership  transactions,  but  the  trade  is  bj'^  no  means  necessarily  limited  to  the  amount 
of  capital.  Purchases  are  often  made  extensively  on  credit,  and,  in  a  prosperous 
course  of  trade,  such  transactions  may  be  sustained,  and  the  profits  may  be  large. 
The  limited  partner  shaves  the  benefit,  and  runs  no  risk  of  loss  from  reverses.  Ha 
derives  profit  from  the  credit  of  the  partnership,  but  is  protected  against  loss  from 
reverses.  He  derives  profit  from  the  credit  of  the  partnership,  but  is  protected 
against  loss  beyond  a  limited  sum.  The  actual  capital  of  the  partnership  often  con- 
sists of  the  sum  which  he  furnishes,  and  the  remainder  of  the  stock  in  trade  is  the 
result  of  the  credit  of  the  partnership.  In  this  he  shares  in  proportion  to  his  inter- 
est in  the  actual  capital.  In  the  enjoyment  of  this  advantage  lie  incurs  no  risk,  for 
he  is  liable,  when  a  bankruptcj'  happens,  only  to  the  extent  of  his  recorded  advance- 
ment, which,  in  comparison  with  his  actual  interest,  may  be  small.  When  a  mer- 
cantile house  thus  limited  becomes  bankrupt,  it  seldonr.  happens  that  the  natiire  of 
the  partnership  is  known,  especially  after  it  has  been  long  in  existence,  and  creditors 
are  astonished  to  find  that  there  are  responsible  partners  wlio  are  protected  from 
their  debts.  If  it  is  thought  desirable  to  sustain  or  introduce  this  law,  the  statutes 
should  be  guarded  by  provisions,  rendering  the  partners,  whose  liability  is  limited, 
responsible  (when  on  a  bill  of  discovery,  or  otherwise,  it  shall  appear  that  they  have 
received  pii)fits)  to  the  amount  which  they  shall  have  received." 


48  MERCANTILE  PERSONS. 


Partnership — what. 


profits,  but  is  not  dependent  on  them  for  existence.  Still,  if  a  ser- 
'vant  or  agent  stipulate  for  a  share  in  the  i^rofits^  and  so  entitle  him- 
self  to  an"  account  of  them,  he  becomes,  as  to  third jiersons^  a  part- 
ner, (j)  though,  in  questions  between  himself  and  his  employer,  he 
would  not  be  so  considered. (/c)  This  distinction  between  the  lia- 
bility of  an  agent  remunerated  out  of  the  profits,  and  that  of  one 
remunerated  by  a  sum  proportioned  to  the  profits,  is  certainly  ex- 
tremely fine.  It  is,  however,  established  upon  high  authority. 
"It  is  clearly  settled,"  said  Lord  Eldon  in  ex  parte  IIamper,{l) 
"though  I  regret  it,  that  if  a  man  stipulates  that  he  shall  have  as 
the  reward  of  His  labor,  not  a  specific  interest  in  the  business  but  a 
given  sum  of  money,  even  in  proportion  to  a  given  quantum  of  the 
profits,  that  will  not  make  him  a  partner ;  but  if  he  agrees  for  a 

»  part  of  the  profits  assucJi^  giyii^S  ^^i^i  a  right  to  an^^account,  he  is^ 

I  as  to Jhird  persons,  a  ,p_artner."(m)'^ 

(j)  Smith  V.  Watson,  2  B.  &  C.  407.  JS:c  j.arte  Rowlandson,  1  Rose,  91.  Ex 
parte  Langdale,  18  Ves.  809.     Green  v.  Boesley,  2  Bing.  X.  C.  108. 

(it)  See  Geddes  v.  Wallace,  2  Bligh,  270.     Rex  v.  Hartlej',  Russ.  &,  Ry.  139. 

{I)  17  Ves.  112. 

(m)  See  the  expression  of  his  Lordsliip  in  the  same  case,  17  Ves.  494,  and  see  ex 
parte  Rowlandson,  19  Ves.  461. 

*  It  is  impossible  so  to  reconcile  the  various  English  and  American  cases  -which 
have  turned  on  the  question  of  what  interest  in  the  results  of  an  adventure  will 
create  a  partnership  therein,  so  as  to  deduce  from  them  any  uniform  rule  of  con- 
struction. The  courts  seena  to  have  been  embarrassed  by  a  struggle  between  the 
general  principles  which  regulate  the  law  of  contracts,  and  tlie  autliority  of  certain 
technical  distinctions  established  in  the  early  cases.  The  intention  of  the  parties  is 
considered,  inter  se,  to  be  the  key  of  this  as  of  all  other  contracts ;  but  there  are 
cases  in  which  the  responsibility  of  a  partner  has  been  imposed,  at  the  instance  of 
creditors,  on  a  party  who  was  employed  as  an  agent,  and  who  was  clothed,  not  with 
the  equal  authority  of  a  principal,  but  only  the  subordinate  discretion  of  a  deputy, 
and  this,  upon  the  ground  of  his  participation  m  tlie  profits  of  tlie  business.  Indeed, 
it  seems  to  be  settled  by  the  great  weight  of  authority,  that  wherever  a  party  has 
stipulated  for  a  share  in  the  profits,  (whether  gross  or  net,)  so  as  to  entitle  him  to  an 
account  and  specific  lien,  or  a  preference  in  paj-ment  over  other  creditors,  (thus  giv- 
ing him  the  full  benefit  of  the  profits  of  the  business,  without  a  corresponding  risk, 
in  case  of  loss,)  he  will  be  held  liable  to  th'.rd  persons  as  a  partner.  Wilde,  J.,  in 
Denny  v.  Cabot,  6  Met.  92.  Evei'ett  v.  Chapman,  6  Conn.  347.  Champion  v.  Bost- 
wick,  18  Wend.  175.  Everett  v.  Coe,  5  Denio  180.  Taylor  v.  Terene,  5  Harr.  &  J. 
505.  Smith  v.  Watson,  2  B.  &  C.  407.  Ex  parte  Rowlandson,  1  Rose,  91.  Green  v. 
Beesley,  2  Bingh.  K  C.  110.  Ex  parte  Langdale,  18  Ves.  300.  Smith's  Leading 
Cases,  Vol.  I.  p.  506,  and  notes  of  American  editor,  836,  837. 


PARTNERS.  49 


Partnei'ship — what. 


It  is  almost  needless  to  observe,  that,  in  every  question  respect- 
ing the  contract  of  ]3artnersLip,  if  the  legislature  have  dictated  no 
particular  course,  and  the  law  adopted  no  peculiar  regulation 
founded  on  the  nature  of  the  subject,  we  must  be  guided  by  those 
principles  which  govern  contracts  in  general.  Thus,  each  of  the 
parties  to  it  must  be  competent,  and  therefore,  the  cohtract  of  part- 
nership, if  attempted  to  be  concluded  by  an  infant,  will  be  void- 
able at  his  full  age,  {n)  and  void  if  by  a  feme  covert,  (o)  or  alien 

(n)  Holmes  v.  Blogg,  1  Moore,  466,  8  Taunt.  35  &  508.  "Warwick  v.  Bruce,  2  M. 
&  S.  205.  Corpe  v.  Overton,  10  Bingh.  252.  He  mvist  elect  to  avoid  within  a  rea- 
sonable time  after  his  full  age,  and  give  notice  thereof  to  the  world,  otherwise  he 
will  be  liable  on  partnership  contracts  made  after  his  attaining  twentj-one.  Goode 
V,  Harrison,  2  B.  &  A.  150.  But  not  on  those  made  during  his  non-age,  unless  he 
confirm  them  after  his  full  age  in  writing.     Stat.  9  G.  4,  c.  14,  s.  5. 

(o)  But  semble  that  a  feme  covert,  trading  as  she  may  do  by  the  custom  of  the  Ci(y 
of  London,  may  be  a  partner.     See  Beard  v.  Webb,  2  B.  &  P.  93. 

The  case  supposed  is  that  of  a  mere  salary,  but  so  charged  on  profits  as  to  create 
not  merely  a  riglit  of  action  dej^ending  on  the  personal  responsibility  of  the  debtor, 
but  an  interest  in  the  resulting  property  or  its  proceeds,  amounting  to  a  jus  ad  rem, 
or  in  re,  in  which  case  a  partnership  will  arise  by  legal  inference,  and  without  regard 
to  intention.  But,  if  the  stipulation  is  for  a  remuneration  in  proportion  to  profits, 
or  out  of  profits,  whether  gross  or  net,  without  conferring  any  proprietary  interest 
in  the  capital  stock  or  accruing  credit,  the  contract  does  not  create  a  partnership, 
contrary  to  the  intention  of  the  parties.  Loomis  v.  Marshall,  12  Conn.  69.  Burckle 
V.  Eckhart,  3  Comst.  132.  Bradley  v.  White,  10  Met.  303.  Vanderburgh  v.  Hull,  20 
Wend.  70.  Denny  i;.  Cabot,  6  Met.  82.  Wilkinson  v.  Jett,  V  Leigh.  115.  Bartlett 
V.  Jones,  2  Strobh.  471.  Dunham  v.  Rogers,  1  Barr,  255.  See,  also,  cases  collected 
and  the  distinction  clearly  pointed  out  in  note  of  American  editor  of  Smith's  Leadino- 
Cases,  Vol.  L  p.  837,  and  the  recent  English  case  of  Stocker  v.  Brockelbank,'  5  E.  L. 
&  E.  R.  67.  Judge  Story,  in  his  Commentaries  on  Partnership,  p.  38,  comments  very 
forcibly  on  the  assumption  that  there  exists  any  absolute  rule  of  law  requiring  the 
court  to  pronounce  an  agency  to  be  a  partnership,  contrary  to  the  truth  of  the  facts 
and  the  intention  of  the  parties.  His  opinion  seems  to  be,  that  a  participation  in 
the  profits  should  merely  raise  a  presurajjtion  of  law  that  the  contract  is  one  of 
partnership,  which  will  prevail  in  the  absence  of  controlling  circumstances,  but  may 
be  controlled  by  them. 

This  doctrine  seems  to  be  much  more  consistent  with  the  general  principles  and 
analogies  of  the  Law  Merchant  than  the  artificial  notion  that  a  proprietarj^  interest 
in  the  profits,  although  conferred  as  a  compensation  for  services  as  an  agent,  shall 
fix  upon  the  recipient,  in  favor  of  creditors,  the  responsibilities  of  a  principal. 
The  basis  of  the  whole  doctrine,  and,  as  it  seems  to  the  editor,  the  point  of  departure 
from  true  principle,  is  the  proposition  of  Chief  Justice  De  Grey,  in  the  leading  case 
of  Grace  v.  Smith,  2  Henr.  Blacks,  998:  "That  every  man  who  has  a  share  of  the 
4 


50  SIERCANTILE  PERSONS. 


Partnei'ship — what. 


enemy.  So,  if  the  undertaking  be  illegal,  the  contract,  upon_  ordi 
nary  principles  of  law,  is  void,  and  that  whether  it  be  to  do  a  thing, 
improper  in  itself,  or  rendered  so  by  the  positive  prohibition  of  the 
legislature,  {p) 

Though  partnership  is,  as  between  the  partners  themselves,  the 
result  of  a  contract,  yet  a  man  may,  without  entering  into  any  con- 

{p)  Aubert  v.  Maze,  2  B.  A  P.  371.  Mitchell  v.  Cockburn,  2  H.  Bl.  379.  Booth 
V.  Ilodson,  6  T.  R.  405.  De  Begnis  v.  Armistead,  10  Bing.  107.  Duvergier  v.  Fellows, 
10  B.  C.  826.  Armstrong  v.  Lewis,  2  Cr.  <fe  Mee.  274.  Gordon  v.  Howden,  12  CI.  <fe 
Fin.  237. 


profits  of  a  trade,  ought  also  to  bear  his  share  of  the  loss,  and  that  whoever  takes 
part  of  the  profits,  takes  part  of  the  fund  on  which  the  creditors  of  the  trader  rely 
for  payment."  No  authority  was  claimed  for  tliis  doctrine  under  anj-  peculiar  cus- 
tom of  merchants ;  it  is,  therefore,  to  be  tried  by  the  general  rules  and  analogies  of 
the  law.  It  assumes  the  existence  of  an  interest  in  the  assets  of  a  partnership, 
belonging  to  its  creditors,  and  amounting  to  a  quasi  lien.  But  not  only  was  the 
partnership  propertj'  free  from  any  lien  in  behalf  of  social  creditors,  at  law,  but  not 
even  in  courts  of  chancery  has  it  been  treated  as  a  trust  fund  for  their  benefit.  The 
preference  of  the  social  creditor  is  worked  out  solely  through  the  medium  of  the 
equities  subsisting  between  the  parties  themselves.  In  the  eye  of  the  law,  tlie  social 
creditor  of  a  partner  stood  upon  the  same  footing  with  his  private  creditor.  Both 
were  supposed  to  have  trusted  the  debtor,  simply  upon  the  credit  of  his  personal 
responsibility.  The  law,  therefoi-e,  which  did  not  confer  upon  the  social  creditor 
any  legal  interest  in  the  social  assets,  could  not  consistentlj-  make  the  supposition  of 
such  an  interest  the  foundation  of  a  right  to  charge  third  persona. 

The  rule  in  question  may  be  supposed  to  rest  for  its  support  upon  the  old  maxim 
that  he  who  receives  the  benefit  should  bear  the  burthen.  But  the  facts  do  not 
justify  an  application  of  the  maxim.  An  agent  compensated  by  profits  does  not 
derive  any  immediate  advantage  from  the  purchase  for  which  it  is  sought  to  make 
him  responsible.  His  benefit  results  from  a  distinct  and  independent  consideration 
which  he  subsequently  advances;  to  wit,  his  own  time,  skill,  and  labor. 

The  rule  is  inconsistent  with  the  doctrine  of  the  common  law,  which  allows  a 
debtor  to  discriminate  between  his  creditors,  preferring  one  to  another.  An  agent 
to  be  compensated  out  of  profits,  only  occupies  the  position  of  a  preferred  creditor. 
If  a  factor  may  hwy  or  sell  goods  for  his  principal,  and  hold  a  lien  upon  the  proceeds 
ror  his  indemnitj',  without  thereby  rer.dering  himself  liable  to  an}'  third  party,  why 
should  any  other  agent  incur  a  larger  responsibility,  because  he  lias  sought  to  pro- 
tect himself  from  loss  bj'  a  stipulation  which  secures  to  him  a  similar  lien. 

The  true  criterion  of  liability  is  furnished  by  the  general  law  of  contracts.  No 
man  can  be  bound  by  a  contract,  unless  he  has  entered  into  it  personall}',  or  through 
the  intervention  of  an  an  authorized  agent.  Partnership  is  a  mutual  agency.  Par- 
ticipation in  the  profits  can  do  no  more  than  raise  a  presumption  that  the  party 
enjoj'ing  it  is  a  principal:  is  is  not  in  itself  conclusive  evidence  of  that  relation. 


PARTISTIRS.  51 


Partn  ershi  p — what. 


tract,  impose  upon  himself  the  liabilities  of  a  partner  with  regard 
to  third  persons ;  for  the  law  of  England  is,  that  he  who  lends  his 
name  and  credit  to  a  firm,  and,  as  the  phrase  is,  hold  himself  out 
to  the  world  as  a  partner  therein,  is  liable  for  its  engagements; 
and  that  whether  he  have  any  real  interest  in  the  firm  or  not,  for 
it  would  be  highly  prejudicial  to  commerce  to  allow  a  wealthy 
man,  by  the  loan  of  his  name,  to  give  other  persons  a  factitious 
credit  in  the  world,  and  then  refuse  to  satisfy  creditors  who  had 
made  their  advances  upon  the  faith  of  his  apparent  responsibility.(2') 
Such  a  man  is  usually  called  a  nominal  partner.  And  it  has  been 
said  to  make  no  difference  in  his  liability,  that  the  creditor  of 
the  firm  who  seeks  to  charge  him  was  not  aware  of  such  holding 
out  at  the  time  that  he  made  his  advance. (r)  In  order  to  fix  a 
person  with  responsibility  of  this  description,  no  particular  mode 
of  holding  himself  out  to  the  world  as  a  partner  is  required.  If  he 
do  acts,  no  matter  of  what  kind,  sufficient  to  induce  others  to  be- 
lieve that  he  is  a  partner,  he  will  be  chargeable  as  such ;  ex.  gr.^  if 
he  accept  bills  drawn  on  the  firm,(s)  or  describe  himself  as  having 
a  joint  interest  in  its  property.(^)  But  a  man  who  describes  him- 
self, as  partner  with  another  in  a  j^firticular  kind  of  transaction, 
ex..  gr.^  in  discounting  bills,  does  not  thereby  hold  himself  out  as 
his  general  partner  in  any  other  business  Avhich  he  may  happen  to 
profess  ;(u)  and  if  the  acts  relied  on  as  constituting  a  holding  out 
were  done  without  the  knowledge  or  default  of  the  person  thereby 


{q)  Guidon  v.  Robson,  2  Camp.  302.     Waiigh  v.  Carver,  2  H.  Bl.  235. 

(r)  Young  v.  Axtel,  cited  2  H.  Bl.  242.  The  justice  of  this  rule  is  questionable, 
and  the  expression  of  Mr.  Parke,  in  Dickinson  v.  Valpy,  10  B.  &  C.  140,  are  op- 
posed to  it.  Ilis  Lordship  says,  "  If  it  could  have  been  proved  that  the  defendant  had 
held  himself  out  to  be  a  partner,  not  to  the  workl,  for  that  is  a  loose  expression,  but  to 
tlie  plaintiff  himself,  or  under  such  circumstances  of  publicity  as  to  satisfy  ajui-y  that 
the  plaintiff  knew  of  it  and  believed  1dm  to  be  a  partner^  he  would  be  liable,"  <tc.  See 
also  Shott  V.  Stealfield,  1  M.  &  Rob.  8,  which  militates  against  :t,  and  Ford  v.  "Whit- 
marsh,  1  Ilurlst.  &  Walms.  3.  Ex.  Mich.  1840.  See  the  direction  in  Wood  v.  The 
Duke  of  Argyll,  6  M.  &  G.  028,  and  per  Cresswell,  J.,  p.  932,  and  Lake  v.  The  Duke 
of  Argyll,  6  Q.  B.  447. 

(i)  Spencer  v.  Billing,  3  Camp.  310.     See  10  B.  &  C.  140. 

(t)  Parker  v.  Barker,  1  B.  &  B.  9,  3  Moore,  226.  See  also  Good  v.  Harrison,  5  B. 
&  A.  147.     Swan  v.  Steele,  7  East,  210. 

{u)  De  Berkom  v.  Smith,  1  Esp.  29.  Ridgway  v.  Philip  and  Broadhurst,  5  Tyrwh 
121.     IC.  M.  ifeR.  415. 


52  MERCANTILE  PERSONS. 


Partnership — how  formed. 


represented  as  a  partner,  or  if  it  can  be  proved  that  the  party  seek 
ing  to  charge  him  had  notice  of  the  real  circumstances  of  the  case, 
he  will  not  be  auswerable.(t') 

But  a  person  holding  himself  out  to  the  world  in  the  manner 
above  described,  though  he  may,  for  the  benefit  of  others,  be  treated 
as  a  partner,  is  not,  properly  speaking,  such ;  for  partnership  is,  as 
we  have  seen,  the  result  of  a  particular  species  of  contract,  into 
which  he  has  never  entered. 

We  will  now,  therefore,  proceed  to  inquire,  first,  how  this 
contract  of  partnership  may  be  formed ;  secondly,  how  it  may  be 
dissolved.  "We  will  afterwards  consider  what  are  the  rights  and 
liabilities  of  partners,  as  between  themselves,  and  what,  as  between 
them  and  third  persons. 

Section  II. — How  formed. 

It  must  be  formed  by  the  intervention  of  all  the  persons  to  be 
bound  by  it :  one  partner  may,  as  we  shall  see,  bind  another  for 
many  purposes  without  his  knowledge,  but  there  must  be  consent 
of  every  individual  member  of  the  firm  to  authorize  the  introduc- 
tion of  a  new  one  ]{id)  so  necessary  is  this  consent,  that  the  exec- 
utors of  a  deceased  partner  are  not  allowed  to  occupy  his  place,(a:) 
unless  there  be  a  stipulation  in  the  contract  of  partnership,  that 
they  shall  do  so,  in  which  case  modus  et  conventio  vincunt  legem. 
But,  if  there  be  any  thing,  in  the  very  nature  and  constitution  of 
the  partnership,  which  renders  it  impossible  that  the  members 
could  have  expected,  or  intended,  the  consent  of  the  whole  body 
to  be  applied  for  upon  the  occasion  of  each  change ;  as  where  a 
company  was  to  be  formed  with  a  capital,  divided  into  12,000 
shares ;  and  script  receipts  were  given  to  the  intended  shareholders, 
which  receipts  were  publicly  sold  to  strangers ;  and  any  persons 

(«)  Fox  V.  Clifton,  6  Bingh.  VT6,  9  Bingh.  118.  Alderson  v.  Pope,  1  Camp.  404. 
n.     Minnet  v.  Whitnej',  5  Bro.  P.  C.  489. 

(w)  Ex  parte  Barrow,  2  Rose,  225,  and  see  M'Neil  v.  Reid,  9  Bingh.  68.  But  a 
partner  may  assign  his  share.  Bray  v.  Fromont,  6  Madd.  5.  Jeffrey  v.  Smith,  3  Rusa. 
151.  And  an  action  at  law  may  be  maintained  in  an  agreement  for  the  sale  of  it 
Tempest  v.  Kilncr,  2  C.  B.  300. 

(x)  Pearce  v.  Chamberlain,  2  Yes.  33. 


PARTiS'EES.  53 


Partnership — how  dissolved. 


producing  them  and  paying  a  second  instalment  on  tlieir  shares 
were  allowed  to  execute  the  deed  of  partnership,  so  that  the  power 
of  transferring  script  to  any  one  could  not  but  have  formed  part  of 
the  original  design ;  such  a  case  would  not,  it  seems,  be  governed 
by  the  rule  which,  in  ordinary  cases,  restrains  partners  from  |)art- 
ing  with  their  shares  without  each  other's  consent.  (?/)  Eespecting 
the  formation  of  the  contract,  it  need  only  further  be  observed, 
that  it  is  not  one  of  those  which  the  law  requires  to  be  in  writing, 
and  may  therefore  either  be  concluded  by  mere  words,  or  inferred 
from  the  acts  of  the  parties,  (z) 

Section  III. — How  dissolved. 

Let  us  next  see  how  the  contract  of  partnership  may  be  dis- 
solved. It  often  happens,  that  at  the  time  of  its  formation,  the 
parties  expressly  agree  that  it  shall  endure  but  for  a  stated  period ; 
there  may  also  happen  cases,  in  which,  though  there  be  no  express 
provision,  an  implied  contract  as  to  its  duration  may  arise :  for  in- 
stance, partners  may  purchase  leasehold  interests  of  such  a  descrip- 
tion as  to  raise  a  fair  presumption  that  they  intended  to  continue 
the  partnership  as  long  as  those  leases  should  endure,  (a)  K  a  limit 
to  the  term  of  partnership  be  thus  prefixed,  the  contract  will,  of 
course,  dissolve  on  its  arrival.  It  may  likewise  be  dissolved  at  any 
time  by  mutual  consent,  and  courts  of  equity  have  power  to  put 
an  end  to  it  by  their  decree,  a  power  which  they  will  exercise  in 
case  the  partnership  undertaking  turn  out  impracticable,  (6)  or 
liopelessly  embarrassed^  (c)  or  one  of  the  partners  become  an  incu- 
rable lunatic,  {d)  or  be  guilty  of  gross  misconduct,  such  as  refusing 

(y)  Fox  V.  Clifton,  9  Bingh.  119. 

{z)  Peacock  v.  Peacock,  16  Ves.  49.     Aldersou  v.  Cla_y,  1  Stark.  405. 

(a)  See  Crawsliay  v.  Maule,  1  Swanst  521. 

\b)  Baring  v.  Dix,  2  Cox,  212.     See  Waters  v.  Taylor,  2  V.  tfe  B.  299. 

(c)  Bailey  v.  Ford,  13  Sim.  495. 

[d)  Baring  v.  Dix,  1  Cox,  212.  See  Waters  v.  Taylor,  2  V.  &  B.  299.  Sayer  v. 
Bennet,  Mont.  Part.  Vol.  i.  Append.  18.  Sadler  v.  Lee,  6  Be  v.  324.  Lunacy  of  a 
partner  is  not  ipso  facto  a  dissolution,  but  only  ground  upon  which  equity  will  de- 
cree one.  Jones  v.  Noy,  2  Mj'.  &  K.  125.  Kirby  v.  Carr,  3  Y.  &  Coll.  184.  Besch  v. 
Frolich,  1  Pli.  172.  Sander  v.  Sander,  2  Coll.  276;  and  if  the  articles  provide  that 
the  partnership  may  be  dissolved  upon  notice,  such  notice,  if  given  to  the  lunatic^ 
will  be  effectual.     Robertson  v.  Lockie,  15  L.  J.  C.  C.  379. 


54  MERCANTILE  PERSONS. 


Partnership — how  dissolved. 


to  account  for  his  receipts,  or  to  submit  bis  deabngs  to  the  exami- 
nation of  bis  companions,  (e)  But  to  induce  tbe  court  to  interfere 
in  tbis  manner  tbere  must  be  some  serious  reason  given  ;  tbe  ex- 
istence of  comparatively  unimportant  disputes  and  squabbles  will 
not  be  sufficient  (/)  If  no  limit  was  originally  fixed,  it  is  called 
&,  partnership  at  will,  and  may  be  dissolved  at  tbe  individual  plea- 
sure of  eitber  party,  at  even  a  moment's  notice,  {g)  In  all  cases, 
it  is  dissolved  by  tbe  bankruptcy  of  any  one  of  tbe  partners,  fol- 
lowed by  adjudication,  (A)  by  bis  outlawry,  or  attainder  of  treason 
or  felony,  for  tbe  first  of  tbese  disqualifies  bim  for  tbe  duties  of  a 
partner,  and  tbe  otber  strips  bim  of  all  civil  capacity,  (i)  It  baa 
been  tbougbt  that  a  sale  of  tbe  common  stock  under  a  separate 
execution  against  one  of  tbe  partners,  would  amount  to  a  dissolu- 
tion of  tbe  partnersbip.(y)*     Tbe  deatb  of  one  of  tbe  partners 


(e)  See  Goodman  v.  Whitcombe,  1  Jac.  &,  "Walk.  592.  Chapman  v.  Beach,  ibid. 
594.     Marshal  v.  Bolman,  2  Jac.  &,  "Walk.  200. 

(/)  "VVray  v.  Hutchinson,  2  My.  &.  K.  235. 

(t/)  Nerot  V.  Burnard,  4  Russ.  260.  Peacock  v.  Peacock,  16  Ves.  50.  Feather- 
Btonhaugh  v.  Fenwick,  17  Ves.  298,  and  per  Parke,  J.,  Heath  v.  Evans,  4  B.  &  Ad. 
175. 

(/()  Fox  V.  Hanbury,  Cowp.  445.  Ex  parte  Smith,  5  Yes.  295.  But  Bankruptcy 
does  not  necessarily  vacate  the  office  of  director  of  a  joint-stock  company,  Plielpe  v. 
Lyle,  11  Ad.  &  E.  113,  unless  it  be  subject  to  the  provisions  of  the  statue  6  <fe  7  Vict, 
c.  110,  s.  29. 

(i)  Publicatione  quoquc  distrahi  soeietatem,  manifestum  est,  scilicet  si  universa 
bona  socii  publiceutur ;  nam,  cum  in  ejus  locum  alius  succedat,  pro  mortuo  habetur. 
Irst  3.  26.  7. 

(j)  "Waters  v.  Taylor,  2  V.  &  B.  299. 


*  "If  all  the  interest  of  a  partner,"  says  Chancellor  Kent,  "be  seized  and  sold 
on  execution,  that  fact  -will  likewise  terminate  the  partnership,  because  all  his  share 
of  the  joint  estate  is  transferred  by  act  of  law  to  the  vendee  of  the  sheriff,  who  be- 
comes a  tenant  in  common  with  the  solvent  partners.  I  have  not  met  with  any 
adjudication  of  the  point  in  the  English  law,  though  it  is  frequently  assumed  ;  but  it 
follows  from  the  sale  of  his  interest  as  a  necessary  consequence,  and  is  equivalent  in 
that  respect  to  a  voluntary  assignment."  Such  also  was  the  rule  of  tbe  civil  law. 
Mr.  Justice  Story  seems  to  think  that  the  partnership  is  dissolved  to  tbe  extent  of 
the  right,  title,  and  interest  levied  upon  and  sold  under  the  execution.  "  If  the  levy 
is  a  part  of  the  partnership  property,  there  is  a  severance,  pro  tanto,  of  the  partner- 
ship interest  therein :  if  of  the  whole,  then  there  is  a  severance  of  the  entirety." 
Story  on  Partn.  443. 


PARTNERS.  55 


Partnership — ^liow  dissolved. 


operates  of  course  as  a  dissolution,*  since  we  have  seen  that  his 
executors  cannot  represent  him ;  (/c)  and  so  will  the  marriage  of  a 
female  partner,  since  her  husband  would  otherwise  be  introduced 
into  the  firm  without  the  consent  of  her  co-partners.  {!) 

Whenever  any  of  the  above  circumstances  happen,  the  entire 
firm,  though  it  consist  of  never  so  many,  is  dissolved,  unless  the 
contrary  has  been  in  express  terms  provided  for,  {m)  though  the  re- 
maining partners  may  of  course  come  to  a  new  agreement,  to  carry 
on  the  business  upon  the  old  terms.  And  herein  our  law  adopts  the 
maxim  of  the  civilians,  cum  aliquis  renuncizverit  societatl  solvitur  soci- 
ctas ,  the  reason  of  which  is  thus  expressed  by  M.  Pothier,  "  Traite 
du  contrat  de  societe/'  cap.  8:  "Za  raison  est  que  les  qualites  person- 
elks  de  chacun  des  associes  entrent  en  consideration  dans  le  contrat  de 
societeP  A  reason  upon  which  the  laAV  of  England  sometimes  acts 
in  pronouncing  other  contracts  dissolved  on  the  secession  of  a  party 
whose  personal  qualification  may  have  been  the  chief  inducement 
to  enter  into  them,  (n) 


(Ar)  Si  consensu  plurium  soeietas  contracta  sit,  morte  unius  socii  solvitur,  est/ 
plures  supersint.     Inst.  3.  26.  5. 

(i)  See  Nerot  v.  Burnand,  4  Russ.  260.  "Wrexham  v.  Huddlestone,  1  Swanst, 
517.  n. 

(-/Ai)  Crawshay  v.  Collins,  15  Ves.  228.  Kinder  v.  Taj-lor,  (Jow.  Part.  240.  Craw- 
shay  V.  Maule,  1  Swanst.  509,  in  notis.  Si  quis  ex  sociis  mole  debiti  prregravatus 
bonis  suis  cesserit,  et  ideo  propter  publica  et  privata  debita  substantia  ejus  V£eneat, 
solvitur  soeietas.     Inst  3.  26.  8. 

(rt)  Robinson  v.  Sharp  and  another,  2  B.  <fe  Ad.  303.  Griffiths  v.  Griffiths,  2  Hare, 
587,  where  "Wigrara,  V.  C,  held  that  the  retirement  of  one  member  of  a  firm  of  at- 
torneys discharged  their  retainer  bj'  a  client 


*  A  partnership  may  continue  by  express  agreement  after  the  death  of  one  of  the 
partners.  Gratz  v.  Bayard,  11  Ser.  <fe  Raw.  41.  But  unless  a  positive  stipulation  to 
that  effect  is  inserted  in  the  articles  of  agreement,  a  partnership,  although  formed  for 
a  certain  number  of  years,  is  dissolved  by  the  death  of  one  member  before  the  expi- 
ration of  the  term.     Scholefield  v.  Eichelberger,  1  Peters'  Rep.  586. 

The  member  of  a  partnership  may  authorize  his  executor  by  his  last  will  and 
testament  to  carry  on  the  business  of  the  firm  after  his  death.  But  the  executor  can 
not  do  so  without  incurring  a  personal  responsibility  to  future  creditors,  which  will 
be  the  more  onerous,  as  the  general  assets  of  the  testator  will  not  be  bound  for  such 
debts,  without  the  clearest  evidence  upon  the  face  of  the  will,  of  an  intention  to  fix 
upon  them  such  a  liability.  Bur  well  v.  Mandeville's  executor,  2  How,  560.  Ex  parte 
Garland,  10  Ves.  110. 


5G  MERCANTILE  PERSONS. 


Rio-lits  and  Liabilities  of  Partners  among  themselves. 


The  above  are  the  modes  in  which  a  partnership  may  be  deter- 
mined, as  hetween  the  partners  themselves ;  for  those  who  desire  to 
end  it  as  toSrangers,  should  give  notice  to  the  world  of  its  dissolu- 
tion, otherwise  they  hold  themselves  out  as  beiug  still  in  conjunc- 
tion with  their  late  partners,  and  will  continue  to  be  bound  by  their 
CDgagements.  (o)  The  mode  of  giving  this  notice  will  be  hereafter 
described,  when  we  come  to  speak  of  the  time  at  which  the  liability 
of  partners  to  third  persons  determines. 


Section  IY. — Rights  and  LiaJnlities  of  Partners  l  mong  themselves. 

It  was  proposed  to  consider,  in  the  third  place,  the  rights  of 
partners  against,  and  theu'  liabilities  to,  one  another. 

They  are  jointly,  (2?)  and,  in  the  absence  of  evidence  to  the  con- 
trary, are  taken  to  be  equally,  {q}*  interested  in  the  partnership 
stock  and  effects,  subject  to  the  application  of  a  maxim,  which  will 
hereafter  be  discussed,  viz.,  "t/us  accrescendi  inter  mercatores  locum 
non  hahety  (?')  But  equit}^,  which  exercises  a  peculiar  jurisdiction 
over  the  accounts  of  partners,  looks  on  the  right  of  each  in  the  joint 
stock  as  subject  to  the  state  of  those  accounts;  so  that,  as  between 
himself  and  his  companions,  his  valuable  interest  may  amount  to 
little  or  nothing,  nay,  he  may  be  indebted  to  the  concern  of  which 
he  is  a  member ;  for  it  is  to  be  observed,  that  a  partnership  is  held 
in  equity  so  far  distinct  from  the  individuals  composing  it,  that 
each  of  them  may  buy  or  borrow  from  the  firm,  and  the  firm  from 

(0)  Parkin  v.  Carutliers,  3  Esp.  248.     Graham  v.  Hope,  Peake,  15-4. 

(p)  In  the  absence  of  agreement,  a  partner's  right  seems  like  that  of  other  joint- 
owners-  if  there  be  two,  an  midlvided  moiety;  if  three,  a  third,  and  so  on.  A  con- 
trary doctrine  was  once  acted  upon  at  N.  P.,  Peacock  v.  Peacock,  2  Camp.  45,  and 
see  S.  C.  16  Ves.  49,  but  has  since  been  disapproved  of  by  high  authority.  See  16 
Ves.  56  where  it  is  laid  down  that  the  presumption  is  that  the}'  share  equally.  But 
see  Howell  v.  Brodie,  6  Bing.  N.  C.  50.  Sharpe  v.  Cummings,  2  Dowl.  &  L.  504,  and 
the  observations  of  Lords  Wynford  and  Brougham  in  Thompson  v.  Williamson,  7 
Bligh,  N.  S.  432. 

(q)  Farrar  v.  Beswick,  1  M.  &  Rob.  527  See  the  rule  of  the  civil  law,  ante,  p. 
i1,  note  (/(). 

(r)  Vide  Book  2. 


S.  P.  Conwell  v.  Sandidge,  5  Dana,  21 L 


PARTNERS.  51 


Rights  and  Liabilities  of  Partners  among  themselves. 


him,  vice  versa,  (s)  and  although  each  partner,  acting  as  such,  can, 
as  we  shall  hereafter  see,  bind  the  joint  stock,  by  dealing  with 
strangers  in  the  name  of  the  firm,  yet  he  cannot  do  so  by  an  act  of 
his  own  individual  account  to  a  larger  extent  than  his  own  interest. 
Thus,  though  the  goods  may  be  taken,  and  Jiis  share  therein  sold 
for  his  own  private  debt ;  yet  the  purchaser  from  the  sheriff  buys 
only  that  to  which  the  defendant  is  (as  between  himself  and  his 
companions)  justly  entitled,  (^)  and  the  rule  is  the  same  if  he  be- 
come individually  a  bankrupt,  (w)" 

(s)  "But  though  these  terms  creditor  and  debtor  are  so  used,  nothing  can  be  more 
inconsistent  with  the  law  of  partnership  than  to  consider  the  situation  of  either  party 
as  in  any  degree  resembling  the  situation  of  those  from  whom  the  appellation  has 
been  so  borrowed.  The  supposed  creditor  has  no  means  of  compelling  payment  of 
his  debt,  and  the  supposed  debtor  is  liable  to  no  proceedings  either  at  law  or  in 
equity,  assuming  always  that  no  separate  security  has  been  given."  Per  Ld.  Cotten- 
ham,  C.  Richardson  v.  Bank  of  England,  4  M.  i;  C.  112. 

{t)  Haydon  v.  Ilaj'don,  3  Salk.  392.  Chapman  v.  Koops,  3  B.  &  P.  289.  John- 
eon  V.  Evans,  7  M.  <fe  G.  240. 

(m)  West  V.  Skip,  1  "Ves.  242.  Holderness  v.  Shackles,  8  B.  &  C.  612.  There  are 
several  peculiar  rules  adapted  to  the  use  of  a  bankrupt  partner  ;  these  will  be  treat- 
ed of  in  the  Fourth  Book,  under  the  head  of  Bankruptcy. 

*  The  law  is  laid  down  in  the  late  case  of  Johnson  v.  Evans,  7  Mann  &  Grang. 
(49  E.  C.  L.)  240.  "  It  is  an  admitted  general  rule  of  law,  that  the  judgment  cred- 
itor of  any  partner  may  take  in  execution  against  that  partner,  as  well  his  separate 
propertj-,  as  his  share  or  interest  in  all  the  personal  property  of  the  partnership, 
that  is  tangible  and  capable  of  being  seized  ;  and  it  is  undoubtedly  true  that  in  order 
to  make,  and  for  the  purpose  of  making,  the  execution  effectual  against  the  share  of 
the  debtor  partner,  in  the  joint  property,  the  sheriff  must  seize  the  whole,  the  share 
of  the  two  partners  being  undivided.  Such  seizure  of  the  whole,  it  is  obvious,  arises 
fi'om  the  necessity  of  the  case;  just  as  if  a  man  purchases  an  undivided  moiety  of  a 
chattel  that  is  indivisible,  he  cannot  in  any  way  take  possession  of  that  moiety  with- 
out taking  possession  of  the  whole.  But  neither  in  the  one  case  nor  the  other  does 
such  taking  possession  of  the  whole  convey  any  interest  or  property  whatever  in 
the  other  part-owner's  share.  The  seizure  of  the  whole,  which  is  made  of  necessity, 
leaves  the  property  of  the  solvent  partner,  and  the  possession  also,  which  follows 
the  property  in  chattels,  just  where  it  was  before,  in  the  solvent  partner." 

There  is  great  conflict  among  the  authorities  as  to  the  mode  in  which  a  separate 
creditor  of  one  partner  may  make  his  execution  available  against  the  interest  of  the 
debtor  partner  in  the  partnership  assets.  It  seems  to  have  been  held  in  Alabama 
that  the  sheriff  might  take  exclusive  possession  of  the  partnership  property,  for  the 
purpose  of  making  sale  of  the  debtor  partner's  interest.  Moore  v.  Sample,  3  Alab. 
N.  S.  317.  The  same  rule  was  recognized  by  J.  Dewey,  in  Reid  v.  Howard,  2  Mete. 
39.     In  Phillips  v.  Cook,  24  "Wend.  389,  it  was  decided,  after  an  elaborate  examina- 


58  MERCANTILE  PERSONS. 


Rights  and  Liabilities  of  Paftners  among  themselves. 


To  ascertain  each  partner's  share  in  the  joint  stock,  it  is  prima- 
rily important  to  know  what  property  is  comprehended  within  that 
denomination.  Now  it  by  no  means  follovvs,  that  because  property 
has  been  used  or  risked  for  the  service  of  the  firm,  it  is,  therefore, 
partnership  property  ;  it  may  be  the  sole  property  of  any  one  of 
the  partners  ;  thus  if  A.,  being  the  owner  of  a  parcel  of  goods,  pro- 
pose to  B.  that  they  should  exert  themselves  jointly  in  selling 
them,  and  divide  the  profit ;  B.,  although  a  partner  in  the  profits, 
is  not  so  in  the  goods,  nor  are  they  any  part  of  the  joint  stock,  but 
the  sole  property  of  A.,  risked  by  him  for  the  service  of  the  part- 

tion  of  the  authorities,  that  upon  an  execution  against  one  of  two  partners,  the 
sheriff  may  seize  the  entire  partnership  effects,  or  so  much  thereof  as  may  be  neces- 
sary to  satisfy  the  execution,  and  sell  the  interest  of  the  partner  against  -whom  the 
execution  has  issued,  and  against  the  -will  of  the  other  partner  deliver  the  property 
sold  to  the  purchaser ;  and  that  the  other  partner  or  his  assigns  cannot  bring  an 
action  of  trespass  against  him  for  thus  delivering  the  property  sold  to  the  purchaser. 
The  same  rule  prevails  in  Indiana.     Burgess  v.  Atkins,  5  Black,  337. 

On  the  other  hand,  in  New  Hampshire,  it  has  been  held,  that  the  sheriff,  on  a 
demand  against  one  partner  for  his  private  debt,  cannot  seize  the  goods  of  the  part- 
nership, and  exclude  the  other  partners  from  the  possession.  The  specific  property 
of  a  partnership,  it  was  said,  could  not  lawfully  be  taken  and  sold  to  satisfy  the  pri- 
vate debt  of  one  partner.  The  creditor  can  have  no  greater  right  than  the  debtor 
himself  has  individually:  which  is  a  right  to  a  share  of  the  surplus.  Gibson  v. 
Stevens,  7  N.  Ilamp.  352 ;  Morrison  v.  Blodgett,  8  N.  H.  238. 

The  editors  of  the  American  Leading  Cases,  Vol.  I.  p.  487,  after  a  very  instruct- 
ive examination  of  the  decided  cases,  submit  the  following  remarks : — "  The  whole 
discussion  resolves  itself  into  the  question,  whether  a  partner's  interest  in  partner- 
ship effects  can  be  seized  upon  at  all,  under  a  common  law  execution.  That  it  may, 
principle,  policy,  and  authority  agree :  the  first,  because  the  partner  has  a  legal  in- 
terest in  possession,  which  is  a  leviable  estate  •  the  second,  because  otherwise  a  debtor 
by  merely  entering  into  a  partnership  might  screen  all  his  property  from  his  cred- 
itors; and  the  third,  by  a  series  of  cases,  and  a  continued  practice  from  the  earliest 
times.  If  an  execution  can  be  sustained  at  all,  there  is  no  mode  in  which  it  can  be 
done  but  by  a  seizure  of  the  goods  and  a  levy  and  sale  of  the  partnership  interest" 

Whether  a  court  of  equity  will  interpose  to  prevent  a  sale  by  the  sheriff  of  the 
vmascertained  interest  of  one  partner,  and  upon  whose  application,  is  a  point  upon 
which  the  highest  judicial  authority  is  in  conflict.  "\Ve  quote  the  following  obser- 
vations from  the  work  of  Mr.  Justice  Story  on  Partnership  : — 

"  In  case  of  the  seizure  of  the  joint  property  for  the  separate  debt  of  one  of  the 
partners,  a  question  has  arisen,  whether  a  court  of  equity  ought  to  interfere,  upon  a 
bill  for  an  account  of  the  partnership,  to  restrain  the  sheriff  from  a  sale,  or  the 
vendee  of  the  sheriff  from  an  alienation  of  the  property  seized,  until  an  account  is 
taken,  and  the  share  of  the  partner  is  ascertained.  Mr.  Chancellor  Kent  has  decided 
in  Moody  v.  Payne,  2  J.  C.  R.  548,  that  an  injunction  for  such  a  purpose  ought  not  to 


PAKTNERS.  59 


Rights  and  Liabilities  of  Partners  among  themselves. 


nersliip.  (i-)*  But  still  partnerships  may  and  do  exist,  in  which  all 
the  capital  is  contributed  by  one,  and  nothing  but  his  labor  by  the 
other  ;  who,  nevertheless,  is  entitled  to  consider  the  capital  as  joint 

(i/)  Smith  V.  'Watson,  2  B.  &  C.  401.     Meyer  v.  Sharpe,  5  Taunt.  4*7.     See  ex  parU 
Hamper,  lY  Ves.  404.     "Wedderburn  v.  "Wedderburn,  4  M.  &  Cr.  41,  1st  point. 

issue  to  restrain  a  sale  by  the  sheriff,  upon  the  ground  that  no  harm  is  thereby  done 
to  the  other  partners;  and  the  sacrifice,  if  any,  is  the  loss  of  the  judgment  debtor 
only.  But  that  does  not  seem  to  be  a  sufficient  ground  upon  which  such  an  injunc- 
tion should  be  denied.  If  the  debtor  partner  has,  or  will  have,  upon  a  final  adjust- 
ment of  the  accounts,  no  interest  in  the  partnership  funds ;  and  if  the  other  partners 
have  a  lien  upon  the  funds,  not  only  for  the  debts  of  the  partnership,  but  for  the 
balance  ultimately  due  to  them ;  it  may  most  materially  affect  their  rights,  whether 
a  sale  take  place  or  not.  For,  it  may  be  extremely  difficult  to  follow  the  property 
into  the  hands  of  the  various  vendees:  and  the  lien  of  the  other  partners  may,  per 
haps,  be  displaced,  or  other  equities  arise  by  intermediate  bona  fide  sales  of  the 
property  in  favor  of  the  vendees,  or  other  purchasers  without  notice ;  and  the  part- 
ners may  have  to  sustain  all  the  chances  of  anj'  supervening  insolvencies  of  the  im- 
mediate vendees.  To  prevent  multiplicity  of  suits  and  irreparable  mischiefs,  and  to 
insure  an  unquestionable  lien  to  the  partners,  it  would  seem  perfectly  proper,  in 
cases  of  this  sort,  to  restrain  any  sale  by  the  sheriff.  And  besides,  it  is  also  doing 
some  injustice  to  tlie  judgment  debtor,  by  compelling  a  sale  of  his  interest  under  cir- 
cumstances, in  which  there  must  generally,  from  its  uncertainty  and  litigious  char- 
acter, be  a  very  great  sacrifice,  to  his  injury.  If  he  has  no  right,  in  such  a  case,  to 
maintain  a  bill  to  save  his  own  interest,  it  furnishes  no  ground  why  the  Court  should 
not  interfere  in  his  favor,  through  the  equities  of  the  other  partners.  This  seems 
(notwithstanding  the  doubts  suggested  by  Mr.  Chancellor  Kent)  to  be  the  true  result 
of  the  English  decisions,  on  this  subject;  which  do  not  distinguish  between  the  case 
of  an  assignee  of  a  partner  and  that  of  an  executor  or  administrator  of  a  partner,  or 
of  the  sheriff,  or  of  an  assignee  in  bankruptcj'." 

The  student  will  find  the  authorities  on  the  question  reviewed  in  an  interesting 
essay  in  the  American  Law  Magazine. 

*  The  investment  of  partnership  funds  in  real  estate  for  partnership  purposes, 
impresses  upon  it,  in  the  eye  of  the  Court  of  Equity,  the  character  of  personality,  as 
between  the  partners  themselves  and  their  creditors.  "Whether  it  is  to  be  treated  as 
real  or  personal  estate,  where  the  controversy  arises  between  the  heirs  and  personal 
representatives  of  a  deceased  partner,  is  a  question  of  more  difficult}',  and  upon  which 
there  is  great  diversity  of  judici  il  opinion.  In  England,  the  doctrine  can  hardly  be 
considered  as  settled  the  high  names  of  Thurlow  and  Grant  and  Shadwell  being 
arrayed  against  those  of  Eldon  and  Leech  and  Alderson.  Story  on  Partn.  129,  and 
cases  there  cited.  The  weight  of  American  authority  leans  towards  considering  real 
estate  under  such  circumstances  as  personal,  even  between  the  heirs  and  distributees 
of  the  deceased  partner.  Pierce's  Adams  v.  Trigg's  Heirs,  10  Leigh,  406.  Sigourney 
V.  Munn,  7  Conn.  11.  Kent's  Comm.  3  vol.  39,  and  cases  there  cited ;  and  American 
Leading  Cases,  vol.  1,  p.  327.  But  see  contra  Buchan  v.  Sumner,  2  Barb.  Ch.  E.  165 
Yeatman  v.  Woods,  6  Yerg.  20 ;  Goodburn  v.  Stevens,  5  Gill.  1. 


y 

60  .MERCANTILE  PERSONS. 


Rights  and  Liabilities  of  Partners  among  themselves. 


stock,  and  claim  an  equal  share  of  it  or  its  produce,  (iv)  The  law 
in  all  these  cases  moulds  itself  to  the  intention  of  the  parties  when 
that  can  be  ascertained,  and  is  conformable  in  this  respect  to  the 
doctrine  laid  down  bj  continental  jurists,  (a;)* 

In  the  conduct  of  partners  towards  each  other,  the  most  scru- 
pulous fidelity  must  be  observed,  and  its  observance  is  enforced  by 
courts  of  equity.  Thus,  one  is  not  allowed  to  stipulate  for  any 
private  advantage  at  the  expense  of  the  rest ;  if  he  do,  he  will  be 
prevented  from  enjoying  it,  or  compelled  to  hold  it  as  a  trustee  for 

(w)  Reid  V.  Hollingshead  4  B.  &  C  SG? 

(x)  See  Potliier,  Contrat.  de  Societe,  cap.  2,  sec.  I. 


Mr.  Bisset,  in  his  Treatise  on  the  Law  of  Partnership,  deduces  from  an  elaborate 
examination  of  the  English  cases,  the  following  general  conclusions : — 

1.  That  in  the  absence  of  any  specific  agreement  to  the  contrary',  real  estate,  pur- 
chased with  partnership  funds,  for  parinershij)  purposes,  is  converted  out  and  out  into 
personal  estate,  and  therefore  goes  to  tlie  personal  representative,  and  not  to  the  heir 
of  a  deceased  partner.  (Townsend  v.  Devagnes,  1  Mont.  Part,  notes,  97.  Phillips  v 
Phillips,  1  Myln  &  Keen,  649 ;  Broom  v.  Broom,  3  Mj-l.  &  Keen,  443.  Morris  v. 
Kearsley,  2  You.  &  Coll.  139.) 

2.  That  real  estate  p-.irchased  with  partnership  property,  but  not  for  partnership 
purposes,  is  not  converted  into  personalty.     (Randall  v.  Randall,  8  Sim.  529.) 

3.  That  real  estate,  brought  into  partnership  by  a  partner,  under  an  agreement 
that  during  the  partnership,  and  if  necessary  for  2">artnership  purposes,  after  the  ex- 
piration thereof,  it  should  be  considered  as  personal  estate,  but  not  purchased  v,'ith 
partnership  funds,  and  not  required  to  be  sold  for  payment  of  debts,  or  for  any  of 
the  other  purposes  of  the  partnership,  is  not  converted  into  personal  estate  as  be- 
tween heirs  and  personal  representatives.     (Cookson  v.  Cookson,  8  Sim.  529.) 

4.  The  real  estate  devised  to  partners  is  not  partnership  property,  though  used 
for  pai'tnership  purposes.     (Phillips  v.  Phillips.     M.  S.) 

5.  That  though  partners  purchase  with  partnership  funds,  the  equity  of  redemp- 
tion of  mortgages  devised  to  them,  the  equity  of  redemption  follows  the  mortgage, 
and  does  not  become  partnership  property.     (S.  C.) 

At  law,  however,  real  estate  owned  by  a  partnership,  is  held  by  them  subject  tc 
the  ordinary  incidents  of  land  held  in  common.  (Coles  v.  Coles,  15  Johns.  159 ; 
Hoxie  V.  Carr  et  als,  1  Sumn.  174.  Burnside  v.  Merrick,  4  Mete.  537.  Dyer  v.  Clart, 
5  Met.  662  ;  Feck  et  als,  I'.Fislier,  7  Cush.  386  ;  Goodburn  v.  Stevens,  5  Gill.  1 ;  Pugh 
V.  Currie,  5  Alab.  N.  S.  446 ;  Lawrence  v.  Taj-lor,  5  Hill,  111.) 

*  What  is  the  rule  of  he  civil  law  where  partners  have  contributed  unequjil 
portions  to  the  capital  s>.ock,  and  the  contract  of  partnership  is  silent  as  to  the  ap- 
portionment of  profits,  is  discussed  in  Towner  v.  Lane's  Administr.,  9  Leigh,  262i 
Judge  Brolcenhoroucrh  inclines  to  the  opinion  that  the  English  writors  have  miscon 
fitrued  the  a»vil  law  rule. 


part]si:rs.  (31 


Eights  and  Liabilities  of  Partners  among  themselves. 


their  benefit. (3/)*  "It  is  clear,"  said  Sir  William  Grant,  M.  E., 
"  that  one  partner  cannot  treat  privately,  and  behind  the  backs  of 
his  co-partners,  for  a  lease  of  the  premises  where  the  joint  trade  is 
carried  on ;  if  he  do  so,  and  obtains  a  lease  in  his  own  name,  it  is 
a  trust  for  the  partnership."  (2)  Nay,  a  partner  must  not  place 
himself  in  a  situation  likely  to  give  him  an  interest,  or  even  a  bias 
against  the  discharge  of  his  duty ;  (a)  all  which  results  from  that 
broad  principle  of  equity,  that  from  every  person  standing  in  a  sit- 
uation of  trust  and  confidence  with  respect  to  another,  a  conduct 
marked  with  the  most  scrupulous  good  faith  shall  be  required ;  and 
it  is  almost  superfluous  to  observe,  that,  in  the  case  of  partnership, 
good  faith  dictates  not  merely  abstinence  from  all  deceit  and  injury, 
but  zealous  co-operation  in  the  objects  of  the  concern,  honorable 
exactness  in  keeping  accounts,  and  readiness  to-  submit  them  to  in- 
spection ;  and  surely,  considering  that  each  partner  is  the  accredited 
agent  of  the  rest,  and  has  power  to  bind  them  to  all  contracts  within 
the  scope  of  the  joint  trade,  no  one  can  blame  the  strictness  with 
which  this  good  faith  is  required  by  courts  of  equity,  which  will 
even  declare  the  partnership  dissolved,  in  case  of  any  very  flagrant 
breach  thereof.  This  is,  however,  done  with  great  reluctance,  {b) 
and  the  contract  of  partnership  has  been,  not  unaptly,  compared 
by  an  eminent  judge  to  that  of  marriage  ;  since  the  parties  to  each 
take  one  another  for  better  and  for  worse,  and  must  not  call  at 

(f/)  Russell  V.  AustA^ick,  1  Sim.  52.  Maddeford  v.  Aiistwiek,  ibid.  S9,  and  see 
Somerville  v.  Macka}',  16  Ves.  382.     Fawcett  v.  "Whitehouse,  1  Rnss  &  Mylne,  132. 

(z)  Featherstonhaugh  v.  Fenwick,  17  Ves.  298,  2  How.  Suppl.  4*78.  The  civil  law 
went  even  further.  Plane,  si  quis  callide  in  hoc  renuntiaverit  societati,  ut  obveniens 
aliquod  lucrum  solus  habeat .  .  .  cogitur  hoc  lucrum  communicare.     Inst.  3.  26.  4. 

(a)  Glassington  v.  Thwaites,  1  Sim.  &  Stu.  133      Burton  v  Wookey,  6  Madd.  36t. 

(6)  See  Wray  v.  Hutchinson,  2  Myl.  <fe  K.  235. 

*  Partners  are  not  entitled  to  charge  each  other,  or  the  firm  of  which  they  are 
members,  for  their  service  in  the  co-partnership  business,  unless  there  is  a  special 
agreement  to  that  effect ;  or  where  such  an  agreement  can  be  implied  from  the  course 
of  business  between  the  co-partners,  as  by  making  such  allowances  in  the  adjustment 
of  the  accounts  from  time  to  timfe  during  the  continuance  of  the  partnership,  or  from 
the  nature  of  the  service  performed  being  such  as  it  is  not  usual  for  one  co-partner 
to  perform  without  receiving  a  separate  compensation  therefor.  Each  pai'tner,  ia 
the  management  of  the  common  business,  is  attending  to  his  own  interest  therein,  ai 
well  as  to  the  interest  of  his  co-partner.  (Caldwell  v.  Lieber,  T  Paige  Rep.  604, 
See  also  Patton's  Ex'ors  v.  Calhoun's  Ex'ors,  4  Grat.  138.) 


62  MERCANTILE  PERSONS. 


Rights  and  Liabilities  of  Partners  among  themselves. 


every  turn  upon  the  law,  to  rectify  the  consequence  of  their  own 
want  of  foresight. 

It  has  been  already  observed,  that  a  partnership  is  oflen  con- 
tracted in  writing ;  such  an  agreement  usually  goes  by  the  name  of 
Articles  of  Partnership  ;*  where  these  exist,  they  must  of  course, 

*  The  following  form,  which  mdj  be  adapted  to  suit  the  circumstances  of  any 
ease,  is  taken  from  the  appendix  to  the  excellent  work  of  Bisset  on  Partnership. 

DEED  OF  PARTNERSHIP  BETWEEN  TWO   PERSONS. 
(general  form.) 

Tliis  indenture,  made  the day  of between  A.  B.  of of  the  one  part, 

and  C.  D.  of of  the  other  part,  witnesseth  that  in  consideration  of  the  mutual 

trust  and  confidence  which  the  said  A.  B.  and  C  D.  have  in  each  other,  each  of  them, 
the  said  A.  B.  and  C.  D.,  doth  for  himself,  his  heirs,  his  executors,  and  administra- 
tors, covenant  with  the  other  of  them,  his  executors  and  administrators,  b}'  these 
presents  in  manner  following,  that  is  to  say : 

I.  That  they,  the  said  A.  B.  and  C.  D.,  will  be  partners  in  the  business  of 

Nature  of  business  and  com-    fj-om  the  day  of ,  for  the  term  of  fourteen 

mencement  and  duration  of 

partnersbip.  years  thence  next  ensuing. 

II.  Tiiat  if,  nevertheless,  either  of  the  said  partners  shall  be  desirous  to  determine 

Proviso  for  dissolution  upon  and  dissolve  the  said  partnership  at  the  end  of  seven  years 
notice  at  the  end  of  tlie  first                               .                    ■,           n  i^  -i 

seven  years.  from  the  said  day  of ,  and  of  such  his  desire 

shall  give  not  less  than  six  calendar  months  previous  notice  in  writing  to  the  other 

of  them  ;  or  shall  leave  such  notice  at  the  place  where  the  said  business  shall  for  the 

time  being  be  carried  on ;   then,  and  in  such  case,  the  said  partnership  shall  cease 

and  determine  upon  the  expiration  of  the  said  seven  years. 

III.  Tliat  if  either  of  the  said  partners  shall  be  guilty  of  any  breach  or  non-ob- 
Power  of  eitlier  partner  to  servance  of  any  of  the  stipulations  contained  in  the  twelfth, 
on'br«JhTce"tail''cov^^^  thirteenth,  fourteenth,  and  fifteenth  articles  hereinafter 
nants  by  the  otlier.  mentioned,  the  other  of  the  said  partners  shall  be  at  liberty, 
if  he  shall  think  fit,  within  three  calendar  months  after  the  same  shall  have  become 
known  to  him,  to  dissolve  the  said  j>artnership,  by  giving  to  the  partner  who  shall 
so  offend,  or  leaving  in  the  counting-house,  or  other  place  where  he  shall  usually  carry 
on  business,  notice  in  writing,  declaring  the  said  partnership  to  be  dissolved  and  de- 
termined ;  and  the  said  partnership  shall,  from  the  time  of  giving  or  leaving  such 
notice,  or  from  any  other  time  to  be  therein  appointed  for  the  purpose,  absolutely 
cease  and  determine  accordingly ;  without  prejudice,  nevertheless,  to  the  remedies 
of  the  respective  partners,  for  the  breach  or  non-observance  of  all  or  any  of  the 
covenants  or  agreements  contained  in  these  presents,  at  any  time  or  times  before  the 
determination  of  the  said  partnersl  ip.  And  the  partner  to  whom  the  said  notice 
shall  be  given,  shall  be  considered  as  quitting  the  business,  for  the  benefit  of  the 
partner  who  shall  give  the  said  notice. 

Style  of  film.  IV.  That  the  form  and  style  of  said  partnership  shall  be 

Place  of  business.  V.  That  the  business  of  the  said  partnership  shall  be  carried 

on  at ,  or  at  such  other  place  or  places  as  the  partners  shall  here  after  determine^ 


PARTNERS.  OS 


Rights  and  Liabilities  of  Partners  among  themselves. 


as  far  as  they  will  go,  be  acted  on,  for  modus  et  conventio  vincunt 
legem:  their  terms,  however,  are  explained,  and  their  deficiencies 
sup23lied  by  reference  to  the  above  principles,  which  they  them- 

VI.  That  the  capital  of  said  partnership  shall  consist  of  the  sum  of  $ ,  to 

be  brought  into  the  said  business  by  the  said  A.  B.  and  C.    Proportions  in  which  part- 

°  .  •■Ill        "S''*  '■'*  ^^  interested  in  cap- 

D.,  in  equal  proportions ;    and  the  said  capital,   and  the    ital  and  profit. 

profits  arising  therefrom,  shall  (subject  as  hereinafter  mentioned)  be  employed  in  the 

6aid  business :  and  the  said  A.  B.  and  C.  D.  shall  be  entitled  to  and  interested  in  the 

said  capital,  and  so  much  of  the  gains,  profits,  and  produce  thereof,  as  shall  remain 

after  all  payments  hereinafter  directed,  to  be  made  thereout,  shall  have  been  made, 

in  equal  proportions. 

VII.  That  the  said  A.  B.  and  C.  D.,  respectively,  shall  be  at  liberty  from  time  to 

time  to  draw  out  of  the  moneys  of  the  said  partnership,  any    Partners  may  draw  out  cer- 

j.  f        j.\  r  ix.  i.1       tain    money  for  their  own 

sum  or  sums,  not  exceedmg  the  sum  of  $ per  month,    use,  subject  to  a  proviso  for 

for  their  own  separate  use  ;  but  in  case  at  the  end  of  any    refunding  in  case  of  excess. 

year,  it  shall  appear  upon  taking  the  general  annual  account,  that  the  net  profits  of 

Buch  year  shall  not  have  amounted  to  the  sum  of  $ ,  (the  total  amount  drawn 

out  by  both  parties  during  the  year,)  then,  and  in  such  case,  immediately  after  such 

general  account  shall  have  been  taken,  each  of  them,  the  said  A.  B.  and  C.  D.,  shall 

repay  to  the  said  partnership  the  excess  (if  any)  of  the  amount  of  the  sums  which 

he  shall  have  actually  received,  over  the  sum  which  he  shall  have  been  entitled  to 

receive  as  his  share  of  the  net  profits  of  said  business  during  such  year. 

VIII.  That  each  of  them,  the  said  A.  B.  and  C.  D.,  will  diligently  employ  himself 

in  the  business  of  the  said  partnership,  and  be  faithful  to    Parties   to   attend   to   tlie 
.  .  .  -     .  business,  and  be  laithful  to 

the  other  m  all  transactions  relating  to  the  same,  and  give  a    each  other. 

true  account  of  the  same,  and  all  letters  and  things  which  may  come  to  his  hands  or 

knowledge  concerning  the  said  partnership  to  the  other,  as  the  same  shall  be  required. 

IX.  That  neither  of  them,  the  said  A.  B.  and  C.  D.,  will  either  by  himself,  or 

with   any  other  person  or  persons  whomsoever,  either  di-    Not  to  engage  in  any  other 

,1  •     ]•       ii  •      ii,       u      •  e  /t.1       business.or employ  tlio  part- 

rectly   or   indirectly,  engage  m  the   business   of ,  (the    „„ship  moneys  except  on 

business  of  this  partnership,)  or  in  any  business  except  the    account  of  the  partnership. 

business  of  the  said  partnership,  and  upon  account  thereof;  and  that  neither  of  them 

will,  without  the  consent  in  writing  of  the  other,  employ  any  of  the  monej's  or  effects 

of  the  said  partnership,  or  engage  the  credit  thereof,  except  upon  the  account  and 

for  the  benefit  of  the  said  partnership. 

X.  Tliat  neither  of  them,  the  said  A.  B.  and  C.  D.,  will  take  any  apprentice,  or 
hire  or  dismiss  any  clerk  or  servant  in  the  business  of  the  or  hire  or  dismiss  any  ser- 
partnership,  without  the  consent  of  the  other  of  them.  "^'1°''  *<=.,  without  consent. 

XI.  That  in  all  cases  where  there  shall  be  occasion  to  give  any  bond,  note,  bill,  or 
other  security,  for  the  payment  of  any  sum  or  sums  of  money,    Both  partners  shall  sign  sc- 
on account  of  the  said  partnership,  (except  where  the  con-    curiiies  for  money, 
trary  shall  in  the  common  course  of  business  be  unavoidable,)  the  same  shall  be  re- 

spoctivelv  signed  and  executed  by  both  of  them,  the  said  A.    And    any  partner  signing 

Bj  n"  r\  J  i.1     i.  -i-     -ii  i-  ii  1     11     •  I      alone,  shall    be    sepafatoly 

.  and  O.  D. ;  and  that  it  either  oi  them  shall  give  any  such    liable. 

security,    (except  in  the  cases  before  mentioned,)   which  shall  not  be  signed   and 


(54  MERCANTILE  PERSONS. 


Rights  and  Liabilities  of  Partners  among  themselves. 


selves  indeed,  in  many  parts,  do  little  other  than  express,  (c)  They 
generally  point  out  the  objects  of  the  partnership  ;  the  time  at 
which  it  is  to  commence,  which  if  no  other  be  specified,  is  from 

(c)  See  on  Partnership  Articles,  Jarmau's  Conveyancing,  Vol.  7,  and  Cory  on  Ac- 
counts. 


executed  by  the  other  of  them,  the  same  shall  be  deemed  to  be  given  on  the  separate 

account  of  the  partner  so  giving  it,  and  he  shall  satisfy  the  same  out  of  his  own  se 

parate  estate,  and  shall  indemnify  the  other  of  them  from  all  expenses  on  account 

thereof. 

XIL  That  if  either  of  them,  the  said  A.  B.  and  C.  D.,  shall  at  any  time  during 

Any  partner  lending  or  giv-    the  continuance  of  the  said  partnership,  lend  any  of  the  mo- 

ing  credit  to  any  person  jjgyg  qj,  deliver  upon  credit  any  of  the  goods  belonging  to 
wliom  the  other  shall  have         -'   '  '  -'  °  o     o 

forbidde]!  him  to  trust,  or    the  said  partnership,  to  any  person  or   persons,  whom  the 

MunTo  "the'^Ct.Lrsh'ip,^or    other  of  them  shall  have,  previously  by  notice  in  writing,  for- 

coinpouiiding  debts  due  to  jjj^jjen  him  to  trust ;  or  shall  borrow  or  take  up  any  money 
the    partnership,    to   make  _  r        j  j 

good  the  deficiency.  whatsoever  on  account  of  said  partnership,  or  compound  any 

debt  or  debts  which  shall  be  due  to  said  partnership,  without  the  consent  in  writing 
of  the  other,  then,  and  in  such  case,  tlie  partner  so  lending  or  delivering  upon  credit 
such  money  or  goods,  shall  pay  to  the  said  partnership  so  much  ready  money  as  the 
full  value  or  amount  of  the  money  or  goods  which  he  shall  so  lend  or  deliver  upon 
credit  as  aforesaid  ;  and  the  partner  so  borrowing  money  on  account  of  the  said  part- 
nership shall  make  good  unto  the  said  partnership  the  whole  of  the  money  so  bor- 
rowed ;  and  the  partner  so  compounding  debts  shall  make  good  unto  the  said  partner- 
ship the  whole  of  such  moneys  and  debts  as  he,  or  any  other  person  by  his  order  or 
authority,  shall  give  any  receipt  for 

XIIL  That  if  either  of  them,  the  said  A.  B.  and  C.  D.,  shall  at  any  time  buy, 
Neither  partner  without  the    order,  or  contract  for  any  goods  or  articles  e.\-ceeding  the 

consent  of  tlie  other,  to  en-      ^        f  ^ without  the  previous  consent  in  writing  of 

terinto  any  contract  above  ■»  i  & 

a  certain  amount.  the  other,  in  such  case  the  other  shall  have  the  option  either 

to  take  such  goods  or  articles  on  account  of  the  said  ^partnership,  or  to  let  the  same 

remain  the  separate  property  of  the  partner  who  shall  have  so  bought,  ordered,  or 

contracted  for  the  same. 

XIV.  That  each  of  them,  the  said  A.  B.  and  C.  D.,  will  punctually  pay  and  dis- 

Each  to  pay  his  separate  charge  his  separate  debts,  and  indemnify  the  other  of  them, 
debts  and    indemnify  part-  .  .  .  . 

nership  against  them.  and  the  capital  and  property  of  the  said  partnership,  agamst 

the  same,  and  all  expenses  or  injury  of  any  kind  on  account  thereof. 

XV.  That  books  of  account  shall  be  kept  by  the  said  partners,  and  proper  entries 

Books  of  account  to  be  made  therein  of  all  the  moneys,  goods,  effects,  debts,  sales, 
kept,  and  each  party  to  have  .  ^   »  o  >  ,  ,  , 

access  thereto.  purchases,  receipts,  payments,  and  all  other  transactions  of 

the  said  partnership ;  and  that  the  said  books  of  account,  together  with  all  bonds, 

notes,  bills,  assurances,  letters  and  other  writings  belonging  to  the  said  partnex'ship, 

shall  be  kept  at  the  counting-house  in aforesaid,  or  in  such  other  place  where 

the  business  of  the  partnership  shall  be  carried  on,  and  each  of  the  said  partuei-a 

shall  have  free  access  at  all  times  to  examine,  and  copy  out  the  same. 


PARTNERS.  (55 


Rights  and  Liabilities  of  Partners  among  themselves. 


the  date  of  the  articles ;  {d)  that  at  which  it  is  to  end  ;  the  amount 
of  capital  and  the  proportions  in  which  it  is  to  be  advanced  by,  and 
in  which  the  profits  of  the  trade  are  to  be  distributed  amono-  the 

(d)  Williams  v.  Jones,  5  B.  &  C.  108. 

XVI.  That  on  the day  of in  the  year  — ■ — ,  and  on  the day  of 

in  every  succeeding  year  during  the  existence  of  the  part-    -Annual    accounts    to    bo 
,  .  /•  11         1  .-1  .         T  .    •  •,•         taken,    and     a     valuation 

nership,  a  lull  and  particular  account  and  rest  in  writing    taken. 

shall  be  made  and  taken  by  the  said  partners  of  all  the  stock  in  trade,  moneys,  credits, 
and  things  belonging,  due,  or  owing  to  the  said  partnership,  and  of  all  debts  due  or 
owing  from  the  same,  and  of  all  such  other  matters  or  things,  as  are  usually  compre- 
hended in  annual  accounts  of  the  like  nature,  taken  by  persons  engaged  in  the  busi- 
ness of ;  and  that  a  just  valuation  or  appraisement  shall  be  made  of  all  the 

particulars  included  in  such  account  which  require  and  are  capable  of  valuation  or 
appraisement :  and  that  this  said  annual  account,  or  a  sufficient  abstract  thereof,  re- 
ferring to  the  particulars  in  the  ordinaiy  books  of  the  partnership,  shall  be  entered 
in  two  books,  and  signed  in  each  of  such  books,  by  each  of  them,  the  said  A.  B.  and 
C.  D.,  within  tliree  calendar  months  after  the  time  appointed  for  taking  thereof  re- 
spectively, and  that  after  such  signature,  each  of  the  said  partners  shall  take  one  of 
the  said  books  into  his  custody,  and  shall  be  bound  and  concluded  by  every  such 
account  respectively,  unless  some  manifest  error  shall  be  discovered  therein  within 
twelve  calendar  months  next  ensuing,  and  be  signified  by  either  of  the  partners  to 
the  other  of  them,  and  then  and  in  such  case,  such  error  shall  be  rectified. 

XVII.  That  within'six  calendar  months  after  the  expiration  of  the  said  partner- 
ship, a  full,  true,  and  particular  account  in  writing  shall  be  Mode  In  whicli  final  account 
made  and  taken  by  the  said  A.  B.  and  C.  D.  of  all  the  stock  and  affairs  wound  up.  ' 
in  trade,  moneys,  credits,  effects,  and  things  then  belonging  to  said  partnership,  and 
of  all  moneys  and  debts  due  or  owing  by  the  said  partnership,  and  of  all  liabilities 
of  the  said  partnership;  and  a  just  valuation  or  appraisement  shall  be  made  of  all 
the  particulars  included  in  such  account  which  are  capable  of  valuation  or  appraise- 
ment ;  and  immediately  after  such  last  mentioned  account  shall  have  been  so  taken 
and  settled,  the  said  partners  shall  pay,  or  make  due  provision  for  the  payment  of  the 
debts  owing  by  the  said  partnership,  and  for  meeting  all  the  liabilities  thereof;  and 
the  balance  of  the  said  stock  in  trade,  moneys,  credits,  effects,  <fec.,  then  belonging  to 
the  said  partnership,  shall  be  divided  between  the  said  A.  B.  and  C.  D.  in  equal 
shares ;  and  such  instruments  in  writing  shall  be  executed  by  the  said  A.  B.  and  C.  D. 
respectively,  for  getting  in  the  outstanding  effects  and  credits  of  the  said  partnership, 
and  for  indemnifying  each  other  concerning  the  premises,  and  for  vesting  the  sole 
property  in  the  said  respective  shares  of  and  in  the  said  stock  in  trade  and  effects  in 
each  of  the  said  partners,  to  whom  respectively  the  same  shal'l  upo.n  such  division 
belong,  and  for  releasing  to  each  other  all  claims  on  account  of  the  said  partnership 
as  are  usual  in  cases  of  the  like  nature,  such  instruments  respectively  to  be  at  the 
expense  of  the  person  requiring  the  same ;  and  if  any  question  shall  arise  as  to  the 
propriety  of  any  instrument  required  by  either  party,  such  question  shall  be  referred 
to  arbitration 

5 


66  ]\IERCANTILE  PERSONS. 


Rights  and  Liabilities  of  Partners  among  themselves. 


partners,  who  stipulate  therein  for  the  due  performance  of  their 
respective  duties.  It  is  sometimes  also  provided,  that  differences 
among  them  shall  be  ended  bj  the  vote  of  the  majority,  and, 
almost  always,  that  an  account  shall  be  taken  annually  of  the  debts 
and  effects  of  the  partnership,  and  a  particular  mode  of  winding  up 
affairs  pursued  upon  its  dissolution,  in  general,  either  by  turning 
all  the  effects  into  money,  and  dividing  them,  which  is  the  course 
pursued  by  courts  of  equity  if  there  be  no  stipulation  on  the  sub- 
ject, or  by  the  transfer  of  one  partner's  share  to  the  other  at  a 
valuation.*     Sometimes  also   it   is   agreed,  that  the  executor,  or 

XVIII.  That  in   case  either  of  said  partners  shall  die  during  the  terra  of  said 

T  r   J    M    „r  „!n,„,    partnership,  his  executors  or  administrators  shall,  if  such 

In  case  of    death  or  either    r  i>  > 

partner  during  term.provis-  death  shall  happen  before  the  day  hereinbefore  appointed 
ion  for  ascertaining  the  sum     ,       ,,        o     .  i  -     i  ,-,i    i     .       .,  ■■    , 

to  be  paid  to  Lis  representa-    for  the  nrst  general   account,    be   entitled   to   the   capital 

*''''^**  brought  in  by  such  deceased  partner,  or  if  the  same  shall 

happen  after  the  day  hereinbefare  appointed  for  the  first  annual  account,  shall  be 
entitled  to  such  sum  of  money  as  the  share  of  the  deceased  partner  of  and  in  the 
Btock  in  trade,  moneys,  credits,  and  effects  of  the  partnership  shall  ujjon  the  then  last 
general  annual  account  amount  to,  or  as  such  share  -would  have  amounted  to,  in  case 
8uch  account  had  been  taken  at  the  proper  time.  And  in  either  case,  the  executors 
or  administrators  of  the  deceased  partner  shall  also  be  entitled  to  an  allowance  after 
the  rate  of  —  per  cent,  per  annum,  upon  the  capital,  or  share  of  stock  in  trade,  of 
the  deceased  partner,  in  lieu  of  profits,  from  the  commencement  of  the  said  partner- 
ship, or  from  the  then  last  general  annual  account,  as  the  case  maj^  be,  to  the  time  of 
such  death,  and  the  surviving  partner,  his  executors  or  administrators,  shall  pay  such 

allowance  in  lieu  of  profits  on  demand:  and  shall  within next  after  the  death 

of  the  deceased  partner  execute  and  deliver  to  his  executors  or  administrators,  a 
bond  in  a  penalty  double  the  principal,  conditioned  for  the  payment  of  the  said  prin- 
cipal sum  to  which  they  shall  become  entitled  as  aforesaid,  with  interest  as  before 
fixed  thereon,  from  such  death,  within months. 

XIX.  That  the  surviving  partner,  his  executors  or  administrators,  shall  also  cxe- 
Proviso  for  execution  of  pro-  <^ute  and  deliver  a  bond  on  a  sufficient  penalty-,  to  the  exe- 
perindemnities,and  releases,  tutors  or  administrators  of  the  deceased  partner,  for  indem- 
nifying them,  and  the  estate  of  the  deceased  partner,  from  the  debts,  engagements  and 
liabilities  of  the  said  partnership  at  or  after  such  decease,  and  from  all  expenses  on 
account  of  the  same ;  and  the  executors  or  administrators  of  the  deceased  partner 
shall  release  and  assign  unto  the  surviving  partner,  his  executors  or  administrators, 
all  their  share,  right,  title,  and  interest  of,  in  and  to  the  stock  in  trade,  moneys,  credits, 
and  effects  of  the  said  partnership,  and  empower  and  enable  him  and  them,  as  much 
as  in  them  lies,  to  recover  and  receive  the  same. 

In  witness,  Ac. 

*  The  propriety  of  inserting  such  a  stipulation  in  the  articles  of  agreement  is  very 
manifest.     A  compulsory  sale  is  often  a  harsh  mode  of  settlement,  but  it  is  now  tha 


PARTNERS.  67 


Rights  and  Liabilities  of  Partners  among  themselves. 


other  person  appointed  in  the  will  of  a  partner,  shall  succeed  him. 
Where  there  is  such  a  clause,  its  general  effect  appears  to  be  to 
give  the  executor,  or  appointee,  his  option  whether  he  will  remain 
a  member  of  the  firm,  or  have  its  affairs  wound  up,  and  his  share 
ascertained  and  paid  to  him.  (e)  And  he  will  be  entitled  to  a 
reasonable  time,  and  an  inspection  of  the  partnership  accounts  to 
assist  him  in  his  election.  (/)  Yet  upon  principle  it  seems,  and 
probably  would  be  decided,  that  where  it  is  clear  that  the  testator 
intended  him  to  have  no  option,  he  must  either  conform  and  carry 
on  the  trade,  or  relinquish  his  claim  to  any  benefit  under  the  will 
appointing  him  ;  {g)  and  it  behooves  him  to  consider  very  warily, 
for  if  he  once  become  a  member  of  the  firm,  though  but  in  trust 
for  others,  he  will  be  liable,  like  any  other  partner,  for  its  engage- 
ments, both  in  person  and  property,  and  may  even  become  bank- 
rupt, (/i)  It  has  been  usual  to  stipulate,  that  disputes  between  part- 
ners shall  be  referred  to  arbitration,  but  whether  this  can  be  enforced 
has  been  much  questioned  ;  for  it  is  said  that  courts  of  equity  will 
not  allow  their  jurisdiction  to  be  ousted  by  any  such  private 
arrangement ;  {i)  and  equity  will  not  decree  a  specific  performance 
of  it.  {j)     Lord  Eldon  has  suggested,  that  where  such  a  covenant  is 

(c)  Kershaw  v.  Matthews,    1  Russ.   3C1 ;   2  Russ.   62.     Madgwick  v.  Wimble,    6 
Beav.  495. 

(/)  Pigott  V.  Bayley,  MeClell.  &  Younge,  569. 

{g)  See  Lord  Eldon's  observations  in  Crawshay  v.  Maule,  1  Swanst.  512. 

{h)  Wightman  v.  Townroe,  1  M.  &  S.  412.     Ex  parte  Richardson,  Buck.  202. 

(i)  Kill  V.  Hollister,  1  Wi.s.  129.     See  Tattersall  v.  Groote,  2  B.  <fe  P.  131. 

(j)  Price  V.  Williams,  6  Ves.  818.     Agar  v.  Macklew,  2  Sim.  &  Stu.  418. 

established  doctrine  that  either  party  has  a  right  to  insist  upon  it,  whether  the  disso- 
lution be  caused  by  death  or  otherwise.  "  One  partner  has  no  claim  upon  the  indi- 
vidual proportion  of  any  specific  article,  nor  can  he  insist  upon  an  exclusive  right  in 
it;  but  he  is  entitled  only  to  a  general  arrangement  of  the  partnership  concern,  and 
for  that  purpose  to  an  account  of  the  produce  of  the  aggregate  joint  effects.  He 
cannot  separate  his  share  from  the  bulk  of  the  joint  property,  nor  compel  his  co- 
partner to  accept  what,  according  to  a  valuation,  his  interest  may  be  worth.  That 
is  not  a  mode  in  which  a  Court  of  Equity  winds  up  the  affairs  of  a  partnership.  But 
in  every  case  in  which  it  interferes  in  closing  the  transactions  of  a  firm,  it  directs  the 
value  of  the  whole  of  the  joint  property,  whether  real  or  personal,  to  be  ascertained 
in  the  way  in  which  it  can  be  best  ascertained,  viz.,  by  a  sale,  and  its  conversion  into 
money."  Gow.  on  Part  234.  Featherstonhaugh  v.  Fenwick,  19  Ves.  298.  Crawshay 
V  Collins.  15  Ves  218 


(38  MERCANTILE  PERSONS. 

Rights  and  Liabilities  of  Partners  among  themselves. 

inserted,  liquidated  damages  for  its  breach  should  also  be  agreed 
on  ;  since  otherwise,  a  court  of  law,  even  if  it  would  entertain  the 
action,  might  find  dif&cultj  in  awarding  more  than  a  nominal  sum 
to  the  plaintiff;  for  perhaps  he  would  have  failed  before  the  arbi- 
trators, had  thej  been  appointed,  {k) 

It  only  remains  to  observe,  that  equity,  in  construing  these 
instruments,  looks  mainly  to  the  intention  of  the  parties  as  evi- 
denced by  their  conduct,  and  if  it  find  that  some  of  the  provisions 
have  been  purposely  and  uniformly  disregarded,  will  even  consider 
them  totally  dispensed  with.  "  There  would,"  said  Lord  Eldon,  in 
the  case  of  Jachson  v.  jSedgivicJc,  (T)  "  be  no  dif&culty  in  applying 
the  articles  to  the  particular  business  with  reference  to  which  they 
were  framed.  But  if  the  parties  engaged  in  business  in  which 
their  application  would  work  injustice,  then  I  say,  that  these  arti- 
cles, though  they  contain  a  general  reference  to  other  business,  are 
not  such  as  would  have  been  prepared  with  relation  to  that  specific 
business,  and  that  engaging  in  that  business  affords  a  reason  for  not 
performing  the  stipulations." 

Our  last  inquiry  under  this  head,  is  as  to  the  mode  in  which 
the  mutual  rights  of  co-partners  may  be  enforced  and  vindicated, 
an  object  which  must  of  course  be  effected,  in  general,  by  appli- 
cation to  some  court  of  law  or  equity. 

As  to  the  remedy  at  laiv.*  If  there  be  a  covenant  by  deed,  or 
a  special  undertaking  not  by  deed,  {rii)  for  the  performance  of  the 
duty  neglected,  an  action  may  be  brought  upon  such  covenant  or 
undertaking,  (72)     Assumpsit  too  may  be  maintained  by  a  partner 

{fc)  See  Street  v.  Rigby,  6  Ves.  815. 

(l)  1  Swanst.  460.     See  also  England  v.  Curling,  8  Beav.  129. 
(m)  BroTVTi  v.  Tapscott,  6  M.  &  W.  119. 

(«)  Want  V.  Reece,  1  Bingh.  18.  In  Bedford  v.  Brutton,  1  Bingh.  K  C.  399,  the 
plaintiff  and  defendants  were  members  of  a  joint-stock  compan}-,  plaintiff  agreed  to 

*  The  doctrines  of  the  text  in  reference  to  remedies  at  law  between  partners 
have  been  frequently  considered  and  approved  in  the  American  courts.  Lawrence 
V.  Clark,  9  Dana's  R.  257.  Killam  v.  Preston,  4  Watts  &  Serj.  14.  Lamalere  v.  Case, 
1  Wash.  C.  C.  R.  435.  Clark  v.  Dibble,  16  Wend.  601 ;  6  Gratt.  354.  Glover  v.  Tuck, 
24  Wend.  153.  Haskell  v.  Adams,  1  Pick.  59.  Van  Ness  v.  Forest,  8  Cranch  30 
Pope  V.  Randolph,  13  Alab.  214.  Bonaffe  et  als.  v.  Fenner  et  al,  6  Sme.  &  Mars.  212i 
See  also  Cross  v.  Cheshire,  6  L.  &  E.  R.  517. 


PARTNERS.  GQ 


Rights  and  Liabilities  of  Partners  among  themselves. 


for  cash  which,  he  advanced  to  his  co-partner  before  the  partner- 
ship, and  in  order  to  its  formation ;  (o)  or  which  he  has  paid,  since 
its  dissolution,  to  a  stranger  who  had  not  due  notice  of  that  event, 
and  to  whom  therefore  his  late  partner  was  able  to  render  him 
liable,  though  he  had  no  interest  in  the  dealing  by  which  such  lia- 
bility accrued  to  him.  {p)  So  also  he  may  recover  for  work  done 
for  the  firm  before  he  became  a  member  of  it.  (q)  Where  an  ac- 
count has  been  taken  and  a  balance  struck,  a  partner  may  sue  at 
law  for  what  appears  to  be  due  to  him  'on  such  balance  from  his 
companion ;  and  that  whether  the  account  was  taken  by  the  parties 
themselves,  or  through  the  medium  of  a  court,  or  of  an  arbitrator :  (r) 
and,  though  it  was  once  laid  down  that  an  express  promise  to 
pay  such  balance  must  be  proved,  in  order  to  sustain  the  action,  (s) 
yet  Gibbs,  C.  J.,  and  subsequently  the  full  Court  of  Exchequer,  has 
decided  for  the  sufficiency  of  an  implied  one.  (t)  There  may  also 
be  special  bargains,  by  which  particular  transactions  are  insulated 
and  separated  from  the  joint  account,  so  as  to  entitle  one  partner 
to  sue  at  law  on  them  against  another  ;  (u)  and  these  decisions  are 
analogous  to  the  rule  of  law  respecting  other  accounts  lying  peculi- 
arly within  the  jurisdiction  of  equity,  which  cannot  indeed,  while 
open,  bft  made  the  subject  of  a  suit  at  law,  (v)  yet  if  a  specific  sum  be 
admitted  by  the  trustee  to  be  due,  that  is  recoverable  by  action,  (tv) 

deniise  Vnd  to  defendants  as  trustees  for  the  company,  and  defendants  covenanted 
to  pay  ))im  rent,  and  by  a  separate  deed,  jilaintiff  and  the  other  members  of  the  com- 
pany covenanted  to  indemnify  defendants  for  acts  done  by  them  as  trustees.  Held, 
that  pla-intifi^  though  a  member  of  the  company,  might  sue  defendants  on  their 
covenant. 

(o)  Venning  v.  Leckie,  13  East,  7.     Elgie  v.  "Webster,  5  M.  &  W.  518. 

(p)  Osborn  v.  Harper,  5  East,  225.     Hutton  v.  Eyre,  1  Marsh.  603. 

(y)  Lucas  v.  Beach,  1  M.  <fe  G.  417. 

(r)  Moravia  v.  Levy,  2  T.  R.  483,  n.  Foster  v.  Allanson,  ibid.  479.  Winter  v. 
Whi*«,  1  B.  &  B.  350.  See  Henley  v.  Soper,  8  B.  &  C.  16.  Brown  v.  Tapscott,  6  M. 
&  W.  119.     Carr  v.  Smith,  5  Q.  B.  128. 

(s)  Fremeut  v.  Coupland,  2  Bingh.  170 ;  9  B.  M.  318. 

(i!)  Rackstraw  v.  Iniber,  Holt,  K  P.  C.  368.     Wray  v.  Milestone,  5  M.  &  W.  21. 

(m)  Jackson  v.  Stopherd,  4  Tyrwh.  335  ;  2  C.  <fe  M.  361.  Coffey  v.  Brian,  10  B.  M. 
M5  ;  3  Bingh.  54.  Wray  v.  Milestone,  5  M.  &  "W.  21.  Elgie  v.  Webster,  5  M.  &  W. 
518.      Vide  tamen  Robson  v.  Curtis,  10  B.  M.  341. 

(y)  Case  v.  Roberts,  Holt,  500. 

(w)  Roper  v.  Holland,  3  Ad.  &  E.  99.     Remon  v.  Hayward,  2  Ad.  &  E.  666. 


70  MERCANTILE  PERSONS. 


Rights  and  Liabilities  of  Partners  among  themselves. 


A  partner  may  maintain  an  action  on  the  note  or  acceptance  of 
his  companion,  (x)  though  for  value  received  on  the  partnership 
account :  and  it  was  once  thought,  that  one  partner  who  had  been 
sued,  and  obUged  to  pay  damages  incurred  by  the  wiiole  firm, 
might  maintain  an  action  against  the  rest  for  contribution.  (?/)  But 
this  is  now  settled  otherwise,  excepting  where  the  partnership  is 
only  in  an  isolated  transaction.  (2) 

For  the  general  rule  of  law  is,  that  oetween  partners,  whether 
they  are  so  in  general,  or  for  a  particular  transaction  only,  no  ac- 
count can  be  taken  at  law,  («)  nor  action  maintained  for  work  and 
labor,  or  money  expended  on  account  of  the  partnership ;  the  rea- 
son for  which  seems  to  be,  that  a  court  of  law  could  not  in  such 
cases  do  complete  justice,  since  the  forms  of  an  action  would  not 
permit  it  to  enter  on  such  an  investigation  of  the  entire  state  of  the 
partnership  accounts  as  would  be  necessary,  in  order  to  ascertain 
the  fair  and  real  claims  of  the  contending  parties. 

When,  however,  it  is  said  that  no  account  can  at  law  be  taken 
between  partners,  this  must  be  understood  to  mean  that  it  cannot 
be  taken  in  any  of  the  forms  of  action  ordinarily  adopted;  for  in 
the  action  of  account  such  an  investigation  may  be  obtained  even 
at  law,  and  this  course,  after  having  become  entirely  obsolete,  has 
begun,  within  the  last  year  or  two,  to  be  occasionally  resorted  to, 
probably  in  consequence  of  the  delays  of  courts  of  equity.*  And, 
indeed,  by  the  substitution  of  an  arbitrator  for  the  auditors  who 
regularly  would  be  assigned  by  the  Court,  the  action  of  ac- 
count seems  capable  of  being  rendered  a  very  efficient  mode  of 
remedy,  (h) 

(x)  Preston  v.  Striitton,  1  Anst.  50 ;  see  4  Bingh.  15L  Fox  v.  Frith,  10  M.  &  "W. 
131. 

(.y)  See  Abbott  v.  Smith,  2  Bl.  9-47.    "Woolley  v.  Batte,  2  Carr.  <t  P.  417. 

{z)  Sadler  v.  Nixon,  5  B.  &  Ad.  936.  See  Wilson  v.  Cutting,  10  Bingh.  436.  Pear- 
son V.  Skelton,  1  M.  &  "W.  504.     Brown  v.  Tapscott,  6  M.  &  W.  119. 

(a)  See  Bovill  v.  Hammond,  6  B.  <fe  C.  149.  Accord.  Uolmes  v.  Higgins,  1  B.  <fe  C> 
V4.    Brown  v.  Tapscott,  6  M.  &  W.  119.     Wilson  v.  Curzon,  15  M  <fe  W.  532. 

(6)  See  a  recent  example,  Baxter  v.  Hozier,  5  Bingh.  N.  C.  288 ;  and  Sturton  v. 
Richardson,  13  M.  &  W.  17. 

*  But  this  action  does  not  lie  except  in  the  case  of  a  mei'cantile  partnership 
McMurray  v.  Rawson,  3  Hill,  59. 


PARTNERS.  71 


Riglits  and  Liabilities  of  Partners  among  themselves. 


In  the  case  of  a  joint-stock  banking  company,  and  also  of  a 
joint-stock  company  established  since  the  first  day  of  November^  1844, 
the  rule  that  a  partner  cannot  sue  the  firm,  or  the  firm  a  partner, 
is,  as  will  be  seen  in  the  next  chapter,  to  some  extent  abrogated. 

As  to  the  remedy  in  Courts  of  Equity.^ — If  there  be  so  flagrant 
a  violation  of  any  covenant  contained  in  Articles  of  Partnership, 
as  to  call  for  a  dissolution  of  the  entire  contract,  equity  will,  as  we 
have  seen,  enforce  that  dissolution  by  its  decree ;  but  where  there 
is  a  covenant,  and  therefore  a  remedy  at  law,  it  has  a  strong  dis- 
inclination to  interfere  in  any  case  of  less  importance :  (c)  unless, 
perhaps,  under  circumstances  of  peculiar  aggravation  and  hard- 
ship ;  {d)  especially  if  the  remedy  at  law  were  inadequate  to  com- 
pensate the  party  injured,  for  then  one  of  the  ordinary  grounds  of 
equitable  jurisdiction  would  exist. 

As  courts  of  law  cannot,  at  least  in  the  ordinary  forms  of  action, 
examine  the  accounts  of  partners  among  themselves,  it  follows  that 
courts  of  equity  will  do  so,  for  otherwise  there  would  be  a  defect 
of  justice.  But  whether  one  partner  can  file  a  bill  against  another, 
praying  for  an  account  without  a  dissolution  of  the  partnership, 
has  been  questioned.  Lord  Eldon  seems  to  have  thought,  and.  Sir 
L.  Shadwell  decided,  that  he  could  not ;  (e)  but  Sir  John  Leach 
sustained  the  contrary  opinion,  (/)  which,  from  Lord  Cottenham's 
judgment  in  Wallworth  v.  Holt^  4  M.  &  C.  619,  seems  to  be  the 

(c)  Marshal-  v.  Colman,  2  Jac.  &  "W.  266. 

(J)  Ibid. 

(e)  Forman  v.  Ilomfray,  2  Ves.  &,  Bea.  329.  Loscombe  v.  Russell,  4  Simon,  10. 
See  also  Knebell  v.  White,  2  Y.  <fe  C.  16,  and  Richardson  v.  Bank  of  England,  4  M. 
&  C.  170. 

(/)  Harrison  v.  Armitage,  4  Madd.  14.3.  Richards  v.  Davis,  2  R.  &  Myl.  347, 
and  see  Lord  Cottenham's  judgment  in  Wallworth  v.  Holt,  4  M.  &  C.  619.  Richard- 
son V.  Hastings,  1  Beav.  323.  Deeks  v.  Stanhojie,  14  Sim.  57.  Harvey  v.  Bignold,  8 
Beav.  343. 

*  Courts  of  equity  will  not  ordinarily  decree  the  specific  execution  of  a  contract 
to  form  a  partnership,  as  tlie  utility  of  such  an  association  depends  in  a  great  mea- 
sure upon  unanimity  of  views  and  feelings.  And  this  indisposition  is  peculiarly 
great  where  no  period  has  been  prescribed  for  its  duration.  But  there  are  many 
cases  where  the  jurisdiction  will  be  exercised,  as  when  it  is  necessary  to  prevent 
gross  injustice. — Crawshay  v.  Maule,  1  Swanst.  Rep.  513.  Birchett  et  al.  v.  Boiling,  5 
Monf  442.     Story  on  Partn.  286. 


72  MERCANTILE  PERSOXS. 


Eiglits  and  Liabilities  of  Partners  among  themselves. 

better  one,  at  all  events  where  the  account  is  not  sought  with  the 
mere  object  of  a  division  of  profits.  Therefore,  when  one  partner 
is  violating  the  partnership  contract  for  the  fraudulent  purpose  of 
compelling  a  dissolution,  and  has  excluded  his  co-partner  from  the 
books  and  refused  to  give  any  account,  the  Court  will  entertain  a 
bill,  which  has  for  its  object  the  enabling  of  the  latter  to  have  the 
benefit  of  the  articles  without  a  dissolution,  and  will  grant  him 
relief,  and  some  account  as  incidental  to  it.  {g)  And  if  in  a  con- 
tinuing partnership,  a  few  have  an  interest  in  a  particular  subject- 
matter,  adverse  to  the  rest,  and  claim  the  benefit  of  that  interest 
for  themselves,  a  bill  in  equity  may  be  filed  against  those  few  by 
one  or  more  of  the  other  parties  on  behalf  of  himself  and  all  the 
rest,  praying  an  account  respecting  it,  without  praying  even  a  ge- 
neral account.  (A) 

On  decreeing  a  dissolution  and  taking  the  account,  the  Court 
has  power  to  order  a  sale  of  the  partnership  effects  and  a  division 
of  the  produce,  (z)  in  the  proportion  to  which  it  considers  each 
partner  entitled ;  in  fixing  which,  it  takes  into  consideration,  not 
merely  the  balance  upon  all  transactions  completed  at  the  period 
of  the  dissolution,  but  also  such  as  were  at  that  time  pending,  and 
from  which  profit  or  loss  has  since  resulted.  (J)  Nay,  if  one  part- 
ner die,  or  become  bankrupt,  which,  we  have  seen,  causes  the  im- 
mediate dissolution  of  the  concern,  and  the  remaining  partners 
continue  to  trade  with  the  joint  stock,  the  representatives  of  their 
late  partner  will  be  entitled  to  a  portion  of  the  profits,  since  his 
property  was  made  use  of  in  order  to  acquire  them,  and  thus  ex- 
posed to  the  risks  of  bankruptcy  and  insolvenc}^  (/c) 

We  have  seen  that,  in  cases  of  misconduct,  equity  will  some- 
times interfere,  by  decreeing  a  dissolution  of  the  partnership  and 
restraining  the  offender  from  a  repetition  of  his  ill-behavior  by 
injunction.     In  some  cases  too,  where  one  partner  seeks  to  exclude 

(^f)  Fairthorne  v.  "Weston,  3  Hare,  38Y. 

(Ji)  Richardson  v.  Hastings,  uh.  sup.,  per  Lord  Langdale,  M.  R.  Harvey  v.  Bignold, 
8  Beav.  343. 

{i)  Crawshay  v.  Collms,  15  Ves.  218.  Wilson  v.  Greenwood,  1  Swanst.  471.  Fea« 
therstonhaugh  v.  Fenwick,  17  Ves.  298. 

(_;')  Jackson  v.  Sedgwick,  1  Swanst.  468. 

{k)  Crawshay  v.  Collins,  15  Ves.  218,  2  Russ.  325.  See  Brown  v.  De  Tastet^  Jbc 
292.     "VVedderburn  v.  Wedderburn,  4  M.  &  C.  47. 


PARTNERS.  73 


Rights  of  third  Persons  against  Partners. 


another  from  that  share  of  the  concern  to  which  he  is  entitled,  the 
Court  will  appoint  a  receiver  of  the  partnership  stock,  {I)  but  with 
reluctance,  since  such  a  step  can  scarcely  be  taken  without  injury 
to  the  trade,  (m) 


SECTI02T  Y. — Bights  of  third  Persons  against  Partners. 

Next,  as  to  the  rights  of  third  persons  against  the  partnership. 
It  is  a  general  rule,  that  each  partner  is  the  accredited  agent  of  the 
rest,  whether  they  he  active,  nominal,  or  dormant,  and  has  authority  as 
such  to  hind  them,  either  hy  simple  contracts  respecting  the  goods  or 
business  of  the  firm,  or  hy  negotiable  instruments  circulated  in  its  hehalf 
to  any  person  dealing  bond  fide,  (n)* 

{I)  ■Wilson  V.  Greenwood,  1  S-wanst.  471.     Peacock  v.  Peacock,  16  Ves.  49. 

(?»)  Goodman  v.  Whitcombe,  1  Jac.  &  "Walk.  589.  Oliver  v.  Hamilton,  2  Anst. 
453.     Richards  v.  Davies,  2  Russ.  &  M.  347.     Madgwick  v.  Wimble,  6  Beav.  495. 

(w)  Yere  v.  Ashby,  10  B.  &  C.  288.  Bond  v.  Gibson,  1  Camp.  185.  Wiutle  v. 
Crowther,  1  0.  <fe  J.  316.     Thicknesse  v.  Bromilow,  2  C.  &  J.  425. 


*  "The  distinction  between  general  and  special  partnerships,"  says  Mr.  Justice 
Van  Ness  in  Livingston  v.  Roosevelt,  4  Johns.  Rep.  251,  "  is  probably  coeval  with 
their  existence.  A  general  rule  applicable  to  both  is,  that  in  transactions  relating  to 
the  joint  concern,  one  of  several  partners  may  bind  the  rest.  Thus,  he  may  sign 
notes,  endorse  or  accept  the  bills  for  the  common  benefit,  and  without  consulting  the 
rest  in  every  particular  case.  But  in  the  case  of  a  special  partnership  this  power 
can  only  be  legally  exercised  within  the  compass  of  that  particular  business  to 
which  the  partnership  relates.  It  is  circumscribed  as  the  partnership  itself.  It  is 
therefore  analogous  to  that  which  is  conferred  on  an  agent,  appointed  for  a  special 
purpose,  who  if  he  exceeds  his  authority  cannot  bind  his  principal.  This  analogy  is 
complete  in  all  cases  wnere  third  persons  have  dealings  with  a  special  partner  with 
notice  that  he  is  such.  And  accordingly,  it  has  been  repeatedly  ruled,  that  when- 
ever such  a  partner  pledges  the  partnership  funds  or  credit,  in  a  transaction  which 
is  known  to  be  unconnected  with,  and  not  fairly  or  reasonably  within  the  compass 
of  the  partnership,  it  is  fraudulent  and  void.  They,  however,  to  entitle  themselves 
to  the  protection  of  this  rule  of  law,  must  not  do  or  consent  to,  or  suffer  any  thing 
to  be  done,  which  may  hold  them  out  to  the  world  as  general  partners;  and  it 
would  always  be  prudent  and  proper  to  give  public  notice  to  tlie  community  that 
the  jjartnership  is  special,  and  of  the  particular  species  of  traffic  or  business  to  which 
it  is  confined."  Tlie  powers  of  a  general  partner  may  be  restrained  by  stipulations, 
inserted  in  the  articles  of  partnership,  to  that  effect.  But  these  stipulations  will 
not  be  permitted  to  affect  the  rights  of  third  persons  who  deal  with  the  partnership 


74  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


Although  it  may  have  been  agreed  amoug  themselves,  that  he 
shall  have  no  such  authorit}-,  (o)  yet  will  they  be  bound,  unless  the 
party  dealing  with  him  have  notice  of  the  arrangement ;  Qj)  and,  in 
order  to  engage  the  firm,  it  is  not  necessary  that  all  its  members 
should  be  specified ;  for  a  partnership  comprising  several,  as  A., 
and  B.,  and  C,  may  carry  on  trade  in  the  name  of  one,  as  A.,  or 
in  the  name  of  "A.  and  C."  or  evenin  a  fictitious  name,  or  that  of 
a  mere  stranger,  and  when  any  of  these  methods  is  adopted,  the 

(o)  South  Carolina  Bank  v.  Case,  8  B.  <&  C.  427. 

(p)  Minnet  v.  AVliinery,  5  Bro.  P.  C.  489.     Willis  v.  Dyson,  1  Stark.  164     Hawken 
w.  Bourne,  8  M.  &  W.  703. 


in  ignorance  of  these  limitations.  Sandilands  v.  Marsh,  2  Barn.  &  Aid.  673.  Wind- 
ship  u  Bank  of  the  United  States,  5  Peters'  Rep.  561.  United  States  Bank  ii.  Bin- 
ney,  5  Mason,  176.  In  the  case  of  Livingston  v.  Roosevelt,  from  which  the  preced- 
ing language  is  quoted,  it  was  held  by  the  Court,  that  a  note  executed  by  one  part- 
ner in  a  sugar  refinery,  on  the  purchase  of  a  lot  of  brandy,  in  the  name  of  the  firm, 
was  not  obligatory  upon  them,  being  out  of  the  course  of  their  usual  business. 

Upon  these  principles  have  proceeded  the  cases  which  deny  to  the  individual  mem- 
bers of  a  professional  partnership,  as  in  the  practice  of  law  or  physic,  the  authority 
to  execute  negotiable  instruments  in  tlie  name  of  the  firm,  for  the  purpose  of  raising 
money.     Crosthwait  v.  Ross,  1  Hump.  23.     Breckenridge  v.  Shrive,  4  Dana,  375. 

The  authority  of  each  partner  to  bind  the  firm  by  anj'^  engagement  or  contract, 
within  the  scope  of  the  partnership  business,  exists  as  Avell  in  the  case  of  dormant  as 
of  open  and  avowed  partnerships.  And  if  the  active  partner  has  used  the  name  of 
the  dormant  partner  to  raise  money  ostensibly  for  the  business,  it  is  not  necessary 
for  the  creditor  to  show  that  it  went  to  the  use  of  the  firm,  in  order  to  chai-ge  the 
dormant  partner.  If  this  were  otherwise,  there  would  be  a  difference  between  the 
responsibility  of  a  dormant  partner,  and  one  whose  name  was  to  the  articles.  This 
doctrine  was  declared  in  the  cases  of  the  United  States  Bank  v.  Binnej-,  5  Mason's  C. 
C.  R.  176,  Etheridge  v.  Binney,  9  Pick.  Rep.  272,  and  Winship  v.  Tlie  Bank  of  the 
United  States,  5  Peters'  Rep.  529.  In  the  last  case  Mr.  Justice  Baldwin  dissented 
from  the  opinion  of  the  Court.  "  The  plaintiff,"  saj's  he,  "  who  seeks  to  make  those 
persons  parties  to  a  note,  whose  names  do  not  give  it  currency  or  credit,  can  only  do 
so  by  affirmative  proof  of  interest  in  profits,  previous  authority,  or  subsequent  recog 
nition.  It  is  true  that  when  a  dormant  partner  is  discovered  he  is  liable  ;  but  then 
he  must  be  shown  to  be  one  by  an  interest  in  the  subject  matter  of  the  note.  Till 
this  is  brought  home,  he  is  no  party  to  it.  I  know  of  no  authority  for  saying  that 
the  mere  existence  of  a  partnership,  composed  of  names  not  avowed  or  pledged  to 
the  public,  makes  them  liable  when  discovered,  for  any  other  contracts  than  those 
in  which  they  have  an  interest ;  one  who  suffers  his  name  to  be  used  on  paper,  ia 
liable  as  a  partner,  though  there  is  in  fact  no  existing  partnership;  but  the  man 
who  does  not  suffer  his  name  to  be  pledged,  is  bound  only  by  virtue  of  his  interest" 


PARTNERS.  75 


Rights  of  third  Persons  against  Partners. 


pledge  of  the  partnership's  name  binds  the  whole  firm ;  {q)  nay,  to 
such  an  extent  is  this'rule  carried,  that  where  two  firms  have  a 
common  partner  and  a  common  name,  each  one  can  bind  the  other 
to  the  payment  of  negotiable  securities,  drawn,  indorsed,  or  accept- 
ed in  that  common  name,  (r) 

Let  us  examine  the  rule  above  laid  down  a  little  more  minutely. 
I  have  said  that  each  partner  may  bind  the  rest  hj  simple  contracts, 
for  he  cannot  by  deeds,  unless  he  have  express  authority  bij  deed  for 
that  purpose,  (5)*  not  even  though  the  contract  of  partnership  were 

(^)  "Wintle  V.  Crowther,  1  C.  <&  J.  316,  1  Tyrwh.  21a. 

(r)  Swan  v.  Steele,  7  East,  210.     Baker  v.  Charlton,  1   Peake,  80.     See  Lloyd  i 
Ashb}-,  2  B.  (&  Ad.  23. 

(/)  Harrison  v.  Jackson,  7  T.  R.  207.  Hall  v.  Bainbvidge,  1  M.  &  G.  42 ;  but  se« 
Ball  V.  Dunsterville,  4  T.  R.  313,  where  it  was  held  that  if  both  are  present  and  one 
seal,  it  is  sufficient. 


*  There  has  been  a  disposition  among  the  modern  authorities  to  relax  the  strict- 
ness of  the  ancient  rule  upon  this  subject.  After  an  elaborate  examination  of  all  the 
cases,  the  principle  has  been  affirmed  in  the  Supreme  Courts  of  Massachusetts  and 
Pennsylvania,  and  by  the  Superior  Court  of  the  City  of  New  York — Gram  v.  Seton, 
1  Hall,  262.  Cady  v.  Shepperd,  11  Pick.  400.  Bond  v.  Aitkin,  6  Watts  &  Serg.  168 
— that  one  partner  may  bind  his  co-partner  by  a  contract  under  seal,  in  the  name, 
and  for  the  use  of  the  firm,  in  the  course  of  the  partnership  business,  provided  the 
co-partner  assents  to  the  contract  previously  to  its  execution,  or  afterwards  ratifies 
and  adopts  it;  and  this  assent  or  adoption  may  be  by  parol.  This  conclusion  was 
declared  to  be  founded  on  principles  of  justice  and  policy,  and  supported  by  the 
general  tenor  of  the  adjudged  cases  in  this  country  and  in  England.  The  opinion  of 
C.  J.  Jones,  in  the  case  of  Gram  v.  Seton,  is  referred  to  with  great  respect,  if  not  ap- 
probation, by  Judge  Story,  in  his  work  on  Partnership.  It  is  also  sustained  by  the 
decisions  in  Maine,  Kentucky,  Alabama,  and  South  Carolina.  Pike  v.  Bacon,  21, 
Maine,  280;  Lucas  v.  Saunders,  1  McMul.  311  ;  McCart  v.  Lewis,  2  B.  Monr.  267; 
Hatch  V.  Crawford,  2  Porter,  54.  But  in  Tennessee,  in  the  late  case  of  Turbevil  & 
Darden  v.  Rj'an,  1  Hump.  113,  the  court  adhered  to  the  ancient  rule,  and  considered 
the  cases  to  which  we  have  referred  as  repudiating  the  doctrine  laid  down  by  Lord 
Kenyon  in  Harrison  v.  Jackson,  7  Term  Rep.  207.  The  rule,  however,  that  one  part- 
ner cannot  bind  his  co-partner  by  deed,  does  not  apply  to  a  conveyance  of  property 
by  deed,  where  such  instrument  was  wholly  unnecessary  to  transfer  the  title,  as,  for 
example,  a  mortgage  of  the  goods  of  the  firm.  Tapley  v.  Butterfield,  1  Mete.  515. 
Anderson  v.  Tompkins,  1  Brok.  Cir.  R.  456.  Sale  v.  Dishman's  Ex.,  3  Leigh,  548. 
Lawrence  v.  Taylor,  5  Hill,  107.  Forkner  v.  Stuart,  6  Gratt.  197.  The  student  will 
find  the  American  cases  on  this  subject  fully  collated,  and  the  leading  distinctions 
traced  out,  in  the  1st  vol.  of  the  American  Leading  Cases,  page  286.  In  Mississippi, 
Jt  has  been  held  that  a  bond  signed  by  one  r'artner,  in  the  partnership  name,  with- 


76  MERCANTILE  PERSOXS. 


Rights  of  third  Persons  against  Partners. 


under  seal,  if  it  do  not  contain  a  specific  power  to  that  eflfect ;  {t) 
nor  though  the  others  afterwards  acknowledge  his  authority ;  (w) 
and  if  he  execute  such  instruments,  he  will  himself  be  bound, 
though  they  will  not.  (v)  These  observations,  however,  apply  to 
cases  where  the  deed  is  in  the  nature  of  a  grant ;  for,  it  would 
seem,  that  one  partner  can  execute  a  valid  release  by  deed  in  the 
name  of  the  firm,  and  this  distinction  appears  conformable  to  gen- 
eral principles  of  law,  (lu)  since  it  is  clearly  settled,  that  "if  a  party 
by  his  own  act  be  barred  from  recovery  in  an  action,  he  cannot,  by 
joining  other  persons  as  plaintiffs,  undo  his  own  act  and  acquire  a 
right  to  recover."  (x)  It  must  be  observed,  also,  that  though  one 
partner  cannot,  unless  authorized  by  deed,  bind  the  remaining 
members  of  the  firm  by  deed,  so  as  to  render  them  liable  in  cove- 
nant or  as  obligors,  yet  there  may  be  cases  in  which  the  deed  may 
bind  their  interest  as  a  writing,  in  the  same  manner  as  the  deed  of 
an  agent  not  himself  authorized  by  deed  has  been  held  to  bind  his 
principal  as  an  instrument  in  writing,  (y) 

Moreover,  the  contract  must  be  respecting  the  partnership  busi- 
ness. "  In  partnerships,  both  partners  are  authorized  to  treat  for 
each  other  in  every  thing  which  concerns,  or  properly  belongs  to, 
the  joint  trade,  and  will  bind  each  other  in  transactions  with  every 
one  who  is  not  distinctly  informed  of  any  particular  circumstances 

(0  Ibid. 

(m)  Steiglitz  V.  Eggington,  Holt,  N.  P.  C.  141. 

(v)  Elliott  V.  Davies,  2  B.  <k  P.  338. 

(w)  See  1  Ilolle,  Abr.  410.  Bayley  v.  Llo^-d,  7  Mod.  250.  Ruddock's  case,  6  Co 
252.  Perry  v.  Jackson,  4  T.  R.  516.  Hawkshaw  v.  Parkins,  2  Swanst.  544;  and  see 
Arton  V.  Booth,  4  Moore,  192.     Furnival  v.  "Weston,  1  Moore,  856. 

(x)  "Wallace  v.  Kelsall,  8  Dowl.  847.  7  M.  &  W.  264.  But  a  covenant  by  one 
partner  not  to  sue  could  not  be  pleaded  as  a  release  in  an  action  b}'  both.  "Walms* 
ley  V.  Cooper,  11  A.  &  E.  216. 

(y)  Hunter  v.  Parker,  7  M.  &  W.  322. 


out  authorit}',  is  absolutreiy  void,  and  not  merely  voidable ;  and  though  such  bond 
may  become  obligatory,  by  the  subsequent  acquiescence  of  the  party  not  signing  it, 
that  acquiescence  is  only  evidence  that  the  other  partner  was  empowered  to  sign  the 
joint  name.     Doe  ex  dem  of  Smith  v.  Tupper,  4Sm.  &  M.  261. 

By  an  act  of  Congress,  1823,  a  bond  given  and  sealed  by  one  partner  in  the  name 
of  the  firm,  for  the  payment  of  duties  on  goods  imported  for  and  belonging  to  the 
partnership,  is  made  binding  upon  all  the  members  of  the  partnership. 


PARTNERS.  77 


Rights  of  third  Persons  against  Partners. 


that  may  vary  the  case.  On  the  other  hand,  when  the  transaction 
has  no  apparent  relation  to  the  partnership,  then  the  presumption  is 
the  other  way,  and  the  partnership  will  not  be  bound  by  the  act  of 
one  of  the  partners  without  special  circumstances."  (2)  Such  is  the 
general  rule,  but  it  is  not  easy  to  draw  the  line,  and  say  what  mat- 
ters are  and  what  are  not  sufficiently  akin  to  the  partnership  busi- 
ness. "It  has,"  said  Abbot,  L.  C.  J.,  " undoubtedly  been  held, 
that,  in  a  matter  wholly  unconnected  with  the  partnership,  one 
partner  cannot  bind  the  other ;  but  the  true  construction  of  the  rule 
is  this,  that  the  act  and  assurance  of  one  partner  made  ivith  reference 
to  business  transacted  hy  the  firm^  will  bind  all  the  partners ;"  (a) 
and  in  that  case  a  navy  agent,  whose  business  is  not  to  deal  in  an- 
nuities, was  held  to  bind  his  firm,  by  guaranteeing  the  payment  of 
an  annuity  which  he  had  j^urchased  for  a  customer.  On  the  other 
hand,  one  partner  cannot  bind  another  by  a  submission  to  arbitra- 
tion, without  some  authority  beyond  that  which  flows  from  the 
general  relation  of  partnership,  (6)*  nor,  it  was  thought,  to  the  pay- 
ment of  a  sum  by  way  of  liquidated  damages,  (c)  This  last  propo- 
sition has,  however,  been  denied  by  the  Court  of  Exchequer,  in 
Beckham  v.  Brake,  9  M.  &  W.  79,  and  in  cam.  Scacc,  11  M.  &  W.  315. 
Whatever  may  be  the  full  extent  of  the  protection  afforded  to 
co-partners  by  this  part  of  the  rule,  it  follows  from  it,  at  least,  as 
an  undoubted  consequence,  that  they  cannot  be  bound  by  any  con- 
tract made  with  their  partner  as  an  individual,  and  on  his  own  ac- 
count, though  he  may  afterwards  impart  to  them  the  benefit  derived 
from  it.{d)    Thus,  a  several  note  or  acceptance  by,  or  a  several 


(is)  Per  Eyre,  C.  J.,  m  ex  parte  Agace,  2  Cox,  312.  Armitage  v.  "Winterbottom,  1 
M.  &  G.  180,  1  Scott,  ]Sr.  R.  23. 

(a)  Sandilands  v.  Marsh,  2  B.  <fe  A.  673,  and  see  Hooper  v.  Lusby,  4  Camp.  66. 
Marsh  v.  Keating,  1  Bingh.  N.  C.  198.     Hasleham  v.  Young,  5  Q.  B.  833. 

(6)  Stead  v.  Salt,  10  Moore  395.  Adams  v.  Bankhart,  1  C.  M.  &  R.  681,  5  Tyrwh. 
425.  See  Armitage  v.  Winterbottom,  1  M.  &  G.  130;  1  Scott,  K  R.  23.  See  also 
Hambridge  v.  De  la  Crouee,  16  L.  J.,  C.  P.  85. 

(c)  Beckham  v.  Knight,  4  Bingh.  N,  C.  243.  Sed  vide  Beckham  v.  Drake,  9  M.  & 
W.  79,  which  disagrees  with  it  in  this  respect,  and  S.  C.  in  error,  11  M.  &  W.  315. 

(d)  Beckham  v.  Knight,  4  Bingh.  N.  C.  243 ;  and  in  error,  1  M.  &  G.  738.  Vidi 
tamen  Beckham  v.  Drake,  9  M.  &  W.  79,  11  M.  &  "W.  315,  which  does  not  shake  the 

*  S.  P.  Karthaus  v.  Ferrer,  1  Peters'  Rep.  228. 


78  MERCANTILE  PERSONS. 

Rights  of  third  Persons  against  Partners. 

loan  to,  one  of  a  partnership,  will  never  charge  the  rest,  though 
their  companion  maj''  have  applied  to  the  use  of  the  firm  the  money 
which  he  obtained  by  the  discount  or  advance,  (e)  A  good  exam- 
ple of  this  is  to  be  found  in  the  contract  under  which  books  are 
frequently  published,  known  to  the  trade  by  the  name  of  the  half- 
profits'  contract,  by  which  the  author  agrees  to  furnish  the  manu- 
script, and  the  publisher  to  print  and  publish  it  at  his  own  risk  and 
expense,  and  to  account  to  the  author  for  one-half  of  the  net  profits. 
In  such  a  case,  the  author  would  not,  unless  he  had  held  himself 
out  as  being  so,  be  liable  in  respect  of -the  printing  and  materials 
furnished  to  the  bookseller.  (/)  But  it  would  be  different,  if  the 
contracting  partner  were  really  empowered  to  treat,  and  did  treat 
on  account  of  the  firm,  while  he  described  himself  as  treating  in 
his  individual  capacity ;  in  such  a  case,  although  the  partnership 
could  not  be  sued  on  any  security  of  a  several  nature  given  by 
him,  still  if  the  transaction  had  been  such  as  a  loan  of  money  or  a 
purchase  of  goods,  the  creditor  would  have  a  right  to  charge  it,  on 
subsequently  discovering  the  transaction  to  have  been  on  its  ac 
count,  [g]  And  further,  it  is  apprehended,  that  the  very  nature  and 
consideration  of  the  debt  may  be  such  as  to  raise  a  presumption,  in 
the  absence  of  direct  evidence,  that  it  was  incun^ed  under  the  au- 
thority of  the  firm.  Thus,  if  a  member  purchase  goods,  such  as 
the  firm  deals  in,  and  apply  them  when  so  purchased  to  its  use,  a 
strong  presumption  seems  to  arise,  that  he  was  dealing  in  its  behalf; 
though  had  he  borrowed  money  and  contributed  that  to  the  firm, 
such  a  presumption  might  not  have  arisen.     For  when  the  firm 

proposition  in  the  text,  though  it  does  the  authority  in  the  decision  of  Beckham  v. 
Knight.     In  Latch  v.  Wedlake,  11  Ad.  &  E.  959,  A.  B.  and  C.  being  in  partnership, 

A.  and  B.  signed  a  contract  purporting  to  be  made  between  the  firm  and  D.,  the  Q. 

B.  held,  that  even  assuming  them  to  have  authority  to  bind  the  firm,  it  was  a  ques. 
tion  of  fact  for  the  jury  whether  they  intended  to  exercise  it  till  the  signature  of  D. 
had  been  added.     This  point  seems  susceptible  of  much  controversy. 

(e)  SifFkin  v.  Walker,  2  Camp.  308.  Emly  v.  Lye,  15  East,  7.  Lloyd  v.  Freshfield» 
2  C.  &  P.  325.  Smith  v.  Craven,  1  C.  &  J.  500,  1  Tyrwh.  389.  Bevan  v.  Lewis,  1 
Sim.  376.  And  so  is  the  general  rule  between  principal  and  agent.  See  Thacker  v 
Moates,  1  M.  &  Rob.  79. 

(/)  Wilson  V.  Wliitehead,  10  M.  &  W,  503. 

{g)  Robinson  v.  Gleadow,  2  Bingh.  N.  C.  156.     See  Brown  v.  Gibbons,  5  Bro.  P. 

C.  491.  Lloyd  V.  Freshfield,  2  C.  &  P.  325.  Denton  v.  Rodie,  3  Camp.  493.  Beck- 
nam  v.  Drake,  9  M.  &  W.  97. 


PARTNERS.  79 


Rights  of  third  Persons  against  Partners. 


desires  a  partner  to  procure  goods,  whicli  they  cannot  but  know  lie 
must  obtain  bj  purchase,  the  inference  is,  that  they  authorize  him 
to  purchase,  and  so  contract  through  him  with  the  vendor,  (h)  But 
when  they  call  on  him  for  a  contribution  of  money,  the  inference 
is,  that  they  intend  to  receive  it  from  himself,  not  to  empower  him 
to  borrow  for  them  from  a  third  person,  and  therefore  in  such  a 
case  where  A.  had  lent  money  to  B.,  who  had  advanced  it  to  the 
firm  of  which  he  was  a  member.  Lord  Hardwicke  said,  "Here  are 
plainly  two  contracts,  one  between  A.  and  B.,  the  other  between  B. 
and  his  partner."  (i) 

There  is  of  course  no  doubt,  that  a  third  party  may  contract 
with  the  whole  firm,  and  take  the  several  bill,  note,  bond,  or  other 
obligation  of  a  co-partner  as  his  collateral  security,  (j) 

Provided  the  contract  have  a  sufiicient  relation  to  the  business 
of  the  firm,  and  the  contractor  have  in  other  res^DCcts  acted  bond 
Jide,  it  matters  not  much  what  may  be  its  description,  or  how  griev- 
ous the  contracting  partner's  fraud  and  misconduct :  (k)  thus,  the 
firm  are  liable,  whether  it  be  a  loan  for  his  expenses  while  engaged 
in  the  partnership  business,  {I)  or  a  purchase  of  goods  such  as  might 
be  used  therein,  but  which  he  instantly  converts  to  his  own  bene 
fit ;  {m)  so  they  are  bound  by  his  sale  (n)  or  pledge  (o)  of  the  joint 
property.*     So,  though  a  partner  has  no  right  to  guarantee  a  sepa 

(/i)  See  Gouthwaite  v.  Duckworth,  12  East,  421. 

(i)  Ex  parte  Hunter,  1  Atk.  223.  See  ex  parte  Emlj,  1  Rose,  61.  See  CoUey  w 
Smith,  2  M.  <fe  Rob.  96. 

{j)  JEx  parte  Brown,  cited  1  Atk.  225.     Denton  v.  Rodie,  3  Camp.  493. 

{k)  See  Willett  v.  Chambers,  Cowp.  814.  Rapp  v.  Latham,  2  B.  &  A.  195.  "Wil- 
son V.  Bailey,  9  Dowl.  13,  where  the  advance  was  partly  before  and  partly  after 
notice. 

(1)  Rothwell  V.  Ilumj^hreys,  1  Esp.  406. 

(m)  Bond  v.  Gibson,  1  Camp.  185. 

(n)  Lambert's  Case,  Godbolt,  244. 

(o)  Raba  v  Ryland,  Gow,  N.  P.  C.  132.  Tupper  v.  Haythorn,  ibid.  135.  Reid 
V.  Hollinshead,  4  B.  ife  C.  86Y.  In  these  cases  the  defendants  were  ignorant  that  they 
were  dealing  with  a  partner,  but  the  decisions  in  all  proceeded  on  the  ground,  that 
the  pledgor's  right  as  partner  was  sufficient  to  sustain  the  pledge. 

*  Tliere  is  great  diversity  of  judicial  opinion  and  decision  as  to  the  power  of  one 
partner  to  make  a  valid  assignment  of  the  partnership  effects  to  the  benerit  of  the 
social  creditors  without  the  assent  of  the  other  partners.     The  right  of  the  acting; 


80  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


rate  transaction  in  the  name  of  the  rest,  yet  he  may  give  a  guaranty 
for  his  partnership  in  a  matter  relating  to  the  partnership ;  {p)  and, 
if  they  afterwards  adopt  and  recognize  his  act,  they  will  be  bound, 
whether  the  guaranty  related  to  the  business  of  the  firm  or  not,  (q) 
Again,  one  partner  can  bind  the  firm  hi/  circulating  negotiable 


(p)  Fx  parte  Nolte,   2  Glyn.   &  Jam.  306 ;  but  see  Hasleham  v.  Young,  5  Q.  B. 
833. 

(q)  Ibid.     Crawford  v.  Stirling,  4  Esp.  207.     Payne  v.  Ives,  3  Dowl.  &  R.  664. 


partner,  in  the  absence  of  his  co-partner  from  the  country,  to  make  a  general  assign 
ment  of  the  personal  assets  of  the  firm,  for  the  benefit  of  creditors,  is  sustained  by 
numerous  American  adjudications  of  the  highest  authority,  and  especially  by  tha 
cases  of  Harrison  v.  Sterry,  5  Cranch's  Reports,  300.  Anderson  v.  Tompkins,  1  Brock. 
C.  C.  Reports,  456.  Robinson  v.  Crowder,  4  McChord's  S.  C.  Rep.  419.  McCulloiigh 
V.  Somerville,  8  Leigh,  496.  Ilennessy  v.  The  Western  Bank,  6  "Watts  &  S.  301. 
Whitton  et  ah.  v.  Smith  et  ah.,  Freem.  Chr.  Rep.  231.  Egbert  v.  Wood,  3  Paige,  517. 
The  doctrine  of  these  cases  seems  to  rest  mainly  on  two  considerations;  the  implied 
authority  given  by  the  absent  partner  to  his  co-partner  to  exercise  his  discretion 
generally  in  all  matters  of  the  firm,  for  the  common  benefit,  and  the  difficulty  of 
discriminating  between  the  admitted  power  of  a  single  partner  to  pay  any  number 
of  the  social  creditors  out  of  the  assets,  and  the  power  to  make  a  general  assignment 
for  the  same  purpose.  The  weight  of  reason  as  well  as  authority  is  in  favor  of  the 
proposition,  that  where  such  an  assignment  is  made  without  the  concurrence  of  the 
other  partners,  and  imder  circumstances  in  which  they  could  have  been  consulted, 
or  still  more,  if  made  contrary  to  their  expressed  wishes,  it  amounts  to  a  fraud  upon 
their  rights,  and  will  not  be  suppoi'ted.  A  transfer  of  all  the  effects  of  a  firm  for 
the  payment  of  its  debts  is  a  virtual  dissolution  of  the  partnership,  and  cannot,  like 
the  payment  of  a  single  creditor,  be  supposed  to  fall  within  the  scope  of  the  part- 
nership business.  The  transaction  is  still  more  objectionable,  if  the  assignment  is 
made  to  a  trustee  in  whose  judgment,  integrity,  and  solvency  the  remaining  partners 
have  a  deep  interest,  and  in  whose  selection  they  should  therefore  have  a  voice. 
So,  if  the  assignment  gives  a  preference  to  particular  creditors,  and  thus  deprives 
the  remaining  partners  of  all  participation  in  the  distribution  of  their  common 
assets.  The  force  of  these  considerations  have  been  recognized  in  the  following 
cases : — ^Pierpont  v.  Graham,  4  Wash.  C.  C.  Rep.  232.  Havens  v.  Hussey,  5  Paige,  30. 
.Hitchcock  V.  St.  John,  1  Hoff.  Rep.  511.  Deming  v.  Colt,  3  Sand.  S.  C.  Rep.  284. 
Dana's  Adm'ors  v.  Lull,  2  Washburn's  (Verm.)  Rep.  390.  Kirby  v.  IngersoU,  1 
Douglas  (Michigan)  Rep.  477.  Hughes  v.  Ellison,  5  Missouri,  463.  Drake  v.  Rogers 
«fc  Shrewsbury,  6  Miss.  317. 

This  discussion  can,  of  course,  have  no  bearing  upon  the  power  of  one  partner 
over  th^  real  estate  of  the  firm.  It  belongs  to  the  partners  as  tenants  in  common, 
and  neither  of  the  partners  can  convey  more  than  his  individual  interest.  Story  OQ 
Partn.,  s.  101.     Lawrence  v.  Taylor,  5  Hill,  107. 


PARTNERS.  81 


Eights  of  third  Persons  against  Partners. 


instruments  on  its  hehalf.  This  is  quite  clear,  (r)  and  may  be  done, 
as  we  have  above  seen,  by  negotiating  them  in  the  name,  whatever 
that  may  be,  in  which  the  partnership  trade  is  usually  carried  on. 
We  may  further  remark,  that  if  a  bill  be  drawn  upon  the  partner- 
ship in  their  usual  style  and  firm,  and  accepted  by  one  of  the  part- 
ners in  his  own  name,  it  will  bind  them  all;  for  he  must  be  under- 
stood to  accept  the  bill  according  to  the  terms  in  which  it  is 
drawn,  (s)  It  has  however  been  decided  that  a  partner  cannot  bind 
the  rest  by  drawing  a  bill  in  any  name  except  that  of  the  firm,  {t) 
It  seems,  that  a  firm  may  use  one  distinct  name  for  all  other  pur- 
poses, and  another,  that  for  instance  of  the  managing  partner,  for 
the  purpose  of  indorsing  negotiable  instruments,  (w)  When  the 
trade  is  carried  on  in  the  name  of  one  partner,  a  question  will 
arise,  whether  in  negotiating  a  bill  or  note,  he  meant  to  pledge  the 

(r)  Pinkney  v.  Hall,  1  Salk.  126.  Harrison  v.  Jackson,  7  T.  R.  20Y.  Kenyon,  C. 
J.  dix.  Sutton  v.  Gregorj',  2  Peake,  150.  Wintle  v.  Crowther,  1  C.  &  J.  316.  Tliiek- 
nesse  v.  Bromilow,  2  C.  &  J.  425. 

(s)  Wells  V.  Masterman,  2  Esp.  TSl.  Mason  v.  Ruinsey,  1  Camp.  384.  Dolman  v. 
Orchard,  2  Carr.  &,  V&j.  104. 

{t)  Kirk  V.  Blurton,  9  M.  &  W.  284;  the  marginal  note  of  which  is  wrong,  and 
in  which  none  of  the  cases  mentioned  in  the  last  note  were  cited.  There  is  obviously 
a  great  difference  between  holding  that  the  acceptance  of  a  bill  drawn  on  a  firm  by 
its  right  name,  and  accepted  by  a  partner,  does  not  bind  the  firm,  because  that  part- 
ner signs  his  name  to  the  acceptance  which  requires  no  signature  at  all  (Dufaur  v. 
Oxenden,  1  M.  &  R.  90),  and  holding  that  a  bill  in  which  the  firm  is  not  mentioned, 
shall  bind  its  members.  In  Faith  v.  Richmond,  11  Ad.  &  E.  339,  where  a  partner  in 
the  Newcastle  and  Sunderland  Walls  End  Coal  Company  had  made  a  note  in  the 
name  of  the  Newcastle  Coal  Company,  the  Lord  Chief  Justice  directed  the  jury  that 
it  would  be  binding  on  the  companj',  if  the  plaintiff  had  been  used  to  deal  with 
them  as  the  Newcastle  Coal  Company,  and  the  Court  of  Queen's  Bench  approved  of 
the  direction.  There  is  a  mistake  in  the  marginal  note  of  this  case  also.  It  states 
the  question  left  to  the  jury  to  have  been,  "whether  the  name  used,  though  inaccu- 
rate, substantially  describes  the  firm,  or  so  varies  it  that  the  indorser  must  be  taken 
to  have  issued  the  note  on  his  own  account."  It  might  be  argued  that  to  leave  such 
a  question  to  the  jury  would  be  to  leave  to  them  the  construction  of  a  writing.  The 
question  really  left  to  them  by  the  Lord  Chief  Justice  was  obviously  a  fit  one  for 
their  consideration,  since,  if  the  firm  had  dealt  by  the  name  of  the  Newcastle  Coal 
Company  with  the  plaintiff,  he  would  have  a  right  to  treat  that  as  the  real  name. 
It  would  also  appear  that  the  rule  laid  down  in  Kirk  v.  Blurton  only  applies  to  the 
case  of  a  deviation  from  the  fictitious  name  of  the  firm,  and  that  if  the  true  namea 
of  the  partners  were  used,  they  would  be  bound.  Norton  v.  Seymour,  16  L.  J,  0.  P* 
100;  see  also  ex  parte  Buckley,  15  M.  &  "W.  469. 

(w)  Williamson  v.  Johnson,  1  B.  <fe  C.  146. 

6 


g2  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


J 


firm  or  himself  only ;  this  must  be  solved  by  extrinsic  evidence, 
tor  prima  facie  lie  alone  is  liable,  (v) 

Further,  these  negotiable  instruments  must  have  been  circulated 
on  helialf  of  the  firm.  Now,  it  is  clear  that  when  the  purposes  of 
the  firm  do  not  require  that  its  members  should  pass  negotiable  in- 
struments, it  is  not  very  likely  that  such  should  be  circulated  in  its 
hehaf:  in  such  cases,  therefore,  the  implied  authority  of  a  partner 
fails,  and  the  firm  will  not  be  bound  by  his  negotiation.  Hence 
an  attorney  cannot  bind  his  partner  by  a  note,  though  given  for 
the  debt  of  the  firm ;  {w)  and  it  has  been  decided,  that  partners  in  a 
farming  or  mining  concern  have  no  such  authority,  (x)  From  the 
observations  of  the  judges  in  the  case  last  cited,  I  think  it  may  be 
collected :  First^  that  partners  in  a  trade,  strictly  mercantile,  have 
^  an  authority  implied  by  law  to  bind  each  other  by  bills  or  notes. 
Secondly^  that  partners  in  some  particular  businesses,  such  as  farm- 
ino"  and  mining,  h^vQ  prima  facie  no  such  authority.  Thirdly^  that 
this  presumption  against  their  authority  may  be  rebutted,  by  show 
ing,  1st,  that  the  constitution  and  particular  purposes  of  the  firm 
are  such  as  to  render  it  in  their  individual  cases  necessary ;  or 
2dly,  that  though  not  necessary,  it  is  in  other  similar  cases  usual, 
"for  if  it  be  necessary  or  usual,  the  law  will  imply  it."  (?/) 

Lastly.  It  is  an  essential  portion  of  the  rule  that  the  person  to 
whom  the  firm  is  to  be  bound  should  have  dealt  bond  fide.  If  he 
who  seeks  to  charge  the  firm  was  himself  privy  to  a  fraud,  if  he 
knew,  or  even  if  there  were  circumstances  sufficient  to  induce  a 
man  of  moderate  discernment  to  believe,  that  the  partner  with 
whom  he  contracted  had  no  authority  to  bind  the  rest,  innocent 
members  will  not  be  allowed  to  suffer  by  his  wickedness  or  stu- 
pidity. "  There  is  no  doubt,"  said  Lord  Mansfield,  "  but  that  the 
act  of  every  single  partner  in  a  transaction  relating  to  the  partner- 


{v)  Ex  parte  Bolitho,  Buck.  100.  South  Carolina  Bank  v.  Case,  8  B.  &  C.  427  ; 
Bee,  however.  Furze  v.  Sharwood,  2  Q.  B.  388,  where,  under  the  circumstances,  the 
onus  was  held  to  be  shifted  to  the  firm.  In  that  case  the  bills  were  discounted  with 
customers  of  the  firm,  and  not  till  the  separate  business  had  been  discontinued. 

(?c)  Ileadley  v.  Bainbridge,  3  Q.  B.  316. 

(x)  Gr°.enslade  v.  Dower,  T  B.  &  C.  635.  Brown  v.  Byers,  16  L.  J.,  Ex.  Hi 
Dickenson  v.  Valpy,  10  B.  &  C.  139. 

(y)  Per  Littledale,  J.,  ibid. 


PARTNERS.  83 


Rights  of  third  Persons  against  Partners. 


ship  binds  all  the  others.  But  there  is  no  general  rule  which  may 
not  be  infected  by  covin,  or  such  gross  negligence  as  may  amount 
or  be  equivalent  to  covin ;  for  covin  is  defined  to  be  a  contrivance 
between  two  lo  defraud  or  cheat  a  third."  (2)  With  respect  to  ne- 
gotiable instruments  given  in  the  name  of  the  firm,  the  rule  is,  that 
they  cannot  be  enforced  by  any  party  who  was  guilty  of  fraud  in 
receiving  them,  (a)  or  who  took  them  from  him,  knowing  that  they 
had  been  so  fraudulently  received,  or  even  without  knowing  it,  un- 
less he  gave  a  valuable  consideration  for  them,  (h)  But  that  they 
may  be  enforced  by  any  one  who  obtained  them  for  value,  and 
without  fraud,  (c)  or  gave  a  valuable  consideration  for  them  with- 
out knowing  that  they  had  been  fraudulently  obtained,  (d)^  How- 
ever, though  the  fraud  of  one  partner  may  be  a  good  defence  to  an 

(z)  Hope  V.  Oust,  1  East,  53,  ex  relatione  Lawrence,  J.  Lloyd,  v.  Freshfield,  2  C.  & 
P.  325.  Snaith  w.Burridge,  4  Taunt.  684.  Lord  Galway  v.  Matthews,  1  Campb.  403. 
Willis  V.  Dyson,  1  Stark,  164.  In  Lord  Galway  v.  Matthews,  a  circular,  in  Willis  v. 
Dyson,  an  advertisement  had  given  notice  of  the  want  of  authority.  See  Minnet  v. 
Whinery,  5  Bro.  P.  G.  489.     Vice  v.  Fleming,  1  Y.  <&  J.  227, 

(a)  Arden  v.  Sharpe,  2  Esp.  624. 

(6)  See  Heath  v.  Sansom,  2  B.  &  Ad.  291. 

(c)  Wintle  v.  Growther,  1  Gr.  &  Jew.  316.  Ex  parte  Bushell,  3  Mont  D.  &  De  G. 
615. 

{d)  Swan  v.  Steele,  1  East,  210.     Lacy  v.  Woolcot,  2  Dow.  &  Ry.  458. 


*  It  is  not  within  the  purpose  and  business  of  a  mercantile  firm  to  indorse  ne- 
gotiable paper  for  the  accommodation  of  its  neighbors,  and  therefore  no  authority 
to  make  such  indorsements  is  implied  or  attached  to  any  one  of  its  members.  Such 
indorsements  are  in  fraud  of  the  firm,  and  void,  unless  in  the  hands  of  a  bond  fide 
holder.  Wherever  therefore  the  holder  is  apprised  of  the  nature  of  the  indorsement, 
he  is  chargeable  with  notice  of  want  of  authority,  and  guilty  of  concurring  in  an  at- 
tempted fraud  upon  the  other  partners,  unless  he  can  prove  their  assent,  express  or  im- 
plied, either  before  or  after  the  signature.  But  in  England,  the  assent  of  all  the  part- 
tiers  is  presumed,  and  the  burthen  of  avoiding  the  security  is  thrown  upon  the  firm, 

Lavertyv.  Burr,  1  Wend.  529,  Gansevoort  t».  Williams,  14  Wend.  133.  Wilson 
V.  Williams,  14  Wend.  146.  Austin  v.  Vandermark,  4  Hill's  K  Y,  R,  259.  Stall  y 
Catskill  Bank,  18  Wend.  466.  Bank  of  Tennessee  v.  Saffarans,  3  Hump.  Rep.  597 
New  York  Fire  Insurance  Corap.  v.  Bennett,  5  Conn.  574.  Eastman  v.  Gooper,  15 
Pick.  267.     Beach  v.  The  State  Bank,  2  Ind.  Rep.  488. 

Tlie  same  general  rule  applies  to  a  guaranty,  or  letter  of  credit,  given  by  one 
partner  in  the  name  of  the  firm.  Sutton  v.  Irwine,  12  Serj.  <fe  Rawle,  13.  Kent's 
Comm.,  vol.  iii.  page  46.  Con.  Coursey  v.  Baker,  7  Harr.  &  I,  18,  Sweetser  v.  French 
2  Gush.  309.     Hamill  v.  Purvis,  2  Pein.  177. 


g4  MERCANTILE  PERSONS. 


Riglits  of  third  Persons  against  Partners. 


action  against  all,  yet  they  cannot,  it  seems,  institute  an  action  m 
order  to  avoid  it.  Thus,  where  a  partner  has  fraudulently  given 
the  bills  and  money  of  the  firm  for  his  own  debt,  they  cannot  bring 
trover  for  the  one  and  assumpsit  for  the  other,  for,  in  doing  so,  they 
would  be  obliged  to  join  the  fraudulent  partner  as  co-plaintiff. 
Their  remedy,  therefore,  in  such  case,  lies  in  equity,  (e) 

It  would  seem,  that  the  unexplained  fact,  that  a  partnership 
security  has  been  received  from  one  of  the  partners  in  discharge  of  a 
separate  claim  against  himself,  is  a  badge  of  fraud,  or  of  such  pal- 
pable negligence  as  amounts  to  fraud,  (/)  which  it  is  incumbent  on 
the  party  \Vho  so  took  the  security  to  remove,  by  showing  either 
that  the  partner  from  whom  he  received  it  acted  under  the  authority 
of  the  rest,  or  at  least  that  he  himself  had  reason  to  believe  so.  (g) 
Yet  Lord  Ellenborough  appears  to  have  thought  that,  even  in  such 
a  case,  thg  onus  of  showing  want  of  authority  in  the  single  partner 
would  lie  upon  the  firm,  if  it  were,  from  the  nature  of  the  transaction, 
possible  for  them  to  procure  direct  testimony  to  that  effect,  [h)  And 
unless  the  security  was  transferred  for  a  sejmrate  demand,  no  such 
presumption  will  arise ;  for,  if  it  be  in  the  ordinary  course  of  com- 
mercial transactions,  as  upon  discount,  without  any  knowledge  on 
the  part  of  the  transferee  that  it  was  a  separate  transaction,  the 
firm  will  be  bound,  though  the  transferring  partner  may  have  con 
verted  the  whole  produce  of  the  security  to  his  own  use :  (i)  to  hold 
the  contrary  would  tend  to  shake  all  paper  credit. 

The  transfer  of  a  partnership  security  may  be  fraudulent  in 
part,  yet  good  for  the  residue  ;  thus,  where  the  defendant's  partner 
was  separately  indebted  to  the  plaintiff  in  the  sum  of  80Z.,  and  gave 
him  the  acceptance  of  the  firm  for  130?.  10s,  Qd.,  the  Court  of  Ex- 
chequer held,  that  though  the  plaintiff  had  no  right  to  retain 
thereout  his  debt  of  80Z.,  yet  he  might  keep  a  verdict  which  he  had 

(e)  Jones  v.  Yates,  9  B.  &  C.  532.  And  see  Wallace  v.  Kelsall,  1  M.  &  W.  264, 
and  Gordon  v.  Ellis,  1  M.  &  G.  607. 

(/)  See  Hope  v.  Cust,  1  East,  53,  cited  by  Mr.  J.  Lawrence  from  a  note  of  Buller 
J.  Sheriff  v.  Wilks,  1  East,  48.     Green  v.  Deakin,  2  Stark.  347. 

(g)  See  Sir  J.  Leach's  observations  in  Frankland  v.  M'Gusty,  Knapp,  Priv.  C.  C 
274,  and  Lord  Eldon's  in  ex  parte  Bonbonus,  8  Ves.  540. 

(h)  Ridley  v.  Taylor,  13  East,  175.  See  ex  parte  Kirby,  Buck.  SIL  Winae  h 
Growther,  1  C.  <fe  J.  316,  1  Tyrwh.  210. 

U)  Ex  varte  Bonbonus,  8  Ves.  540. 


PARTNERS.  85 


Rights  of  third  Persons  against  Partners. 


recovered  from  the  residue,  and  for  the  amount  of  another 
partnership  acceptance,  with  respect  to  which  no  fraud  was 
proved,  (j) 

It  remains  to  observe  that  though  a  transaction  may  be  primd 
facie  fraudulent  against  the  firm,  yet  it  will  bind  them  if  they 
subsequently  approve  of  it,  for  subsequent  approbation  raises  an 
inference  of  previous  positive  authority.  (Jc) 

Besides  the  cases  mentioned  in  the  rule  above  laid  down,  the 
firm  may,  in  various  other  ways,  be  bound  by  the  conduct  of  a 
partner.  Thus,  his  admission,  acknowledgment,  or  representation, 
is  evidence  against  them ;  (Z)  and  part  payment  of  principal  or  in- 
terest by  one  of  several  partners  is,  even  since  stat.  9  Geo.  4,  c.  14, 
an  answer  to  the  statute  of  limitations  as  to  all ;  {in)  but  since  that 
act  no  other  species  of  acknowledgment  by  a  co-partner  is  so. 
Notice  by  (n)  or  to  (o)  one  partner  is  equivalent  to  notice  by  or  to 
all.  Moreover,  as  he  is  the  accredited  agent  of  the  rest,  it  follows 
upon  grounds  which  we  will  examine  more  deliberately  in  Chapter 
v.,  that  they  are  liable  for  breaches  of  contract  (p)  and  negligent 
wrongs  (q)  committed  in  such  his  capacity ;  nay,  they  have  been 
held  responsible  for  frauds  (r)  and  breaches  of  the  revenue  laws 
riommitted  by  him  in  his  management  of  the  partnership  busi 

(j)  Wintle  V.  Crowther,  1  C.  <k  J.  316.     Wilson  v.  Bailey,  9  Dowl.  18. 

(^•)  ^x/)ar<eBonbonus,  8  Ves.  540.  See  fXjodrteNolte,  2  Glj'n.  tfe  Jam.  306.  Cra'W- 
ford  ti.  Sterling,  4  Esp.  207.     Payne  v.  Ives,  3  D.  &  R.  664. 

(l)  Rapp  V.  Latham,  2  B.  <fe  A,  795:  Wood  v.  Braddick,  1  Taunt.  104.  Pritchard 
V.  Draper,  1  Russ.  4  Myl.  199.  Cheap  v.  Cramond,  4  B.  <fe  A.  663.  Lacy  v.  M'Xeill,  4 
D.  &  R.  7. 

(»i)  W^-att  V.  Hodson,  8  Bingh.  309.  But  the  payment  of  a  surviving  jsartner 
will  not  keep  alive  a  debt  against  the  estate  of  a  deceased  partner  in  equity.  Way 
V.  Bassett,  5  Hare,  55. 

(n)  Mayhew  v.  Eames,  1  C.  &  Q.  550.     Hunt  v.  R.  E.  A.  Co.  5  M.  &  6.  47. 

(o)  Alderson  v.  Pope,  1  Camp.  404.  Poithouse  v.  Parker,  1  Camp.  82.  Perry  v. 
Jackson,  4  T.  R.  516.  Heath  v.  Sansom,  2  B.  &  Ad.  291.  This  observation  would 
appear  not  to  be  applicable  to  Joint  Stock  Companies,  as  to  which,  see  Thomson  v 
Speirs,  13  Sim.  469.    Powles  v.  Page,  15  L.  J.,  C.  P.  217. 

(p)  Stone  V.  Marsh,  6  B.  <fe  C.  551,  Ry.  &  Moo.  364.  Marsh  v.  Keating,  1  Bingh. 
K  C.  199.     Sadler  v.  Lee,  6  Beav.  324. 

(q)  Moreton  v.  Harderne,  4  B.  &  C.  223. 

(r)  Marsh  «.  Keating,  1  Bingh.  N  C.  199.  Wollettf.  Chambers,  Cowp.  814.  Rapp 
V.  Latham,  2  B.  <fe  A.  795.  Sadler  v.  Leigh,  6  Beav.  324.  Blair  v.  Bromley,  16  L.  J, 
C.  C.  105. 


e(5  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


ness ;  (s)  and  may  even,  in  certain  cases,  be  made  criminally  answer 
able  for  liim.  (t) 

The  liability  of  each  partner  to  third  persons,  in  respect  of  the 
engagements  of  the  others,  commences  with  the  commencement  of 
liis  partnership,  and  is  not  postponed  by  postponing  the  execution 
of  the  deed,  provided  that  the  partnership  have,  in  fact,  com- 
menced, {u)  He  is  not  liable  for  contracts  previously  made,  {v)  If, 
indeed,  after  his  accession  to  the  partnership  he  receive  benefit 
from  them  and  recognize  their  existence,  he  may  become  respon- 
sible by  virtue  of  a  new  contract  to  the  same  effect  as  the  old  one, 
which  his  conduct  will  be  evidence  of  his  having  entered  into  along 
with  his  partners,  {iv) 

His  liability  ceases  upon  his  dissolving  the  partnership,  remov- 
ing his  name  from  the  firm,  and  giving  proper  notice  of  the  disso- 
lution ;  {x)  for,  until  the  world  is  duly  advertised  thereof,  he  con- 


•  (s)  Att.  Gen.  v.  Stanniforth,  Bunb.  97.  Att.  Gen.  v.  Weeks,  ibid.  223.  Att.  Gen. 
V.  Burges,  ibid.  See  King  v.  Manning,  Comyn,  616.  Att.  Gen.  v.  Siddon,  1  C.  <fe  J* 
220  ;  1  Tyrwh,  41.     Att.  Gen.  v.  Riddell,  2  C.  &  J.  493 ;  Tyrwh.  523. 

{£)  R.  V.  Almon,  5  Burr.  2686.     R.  v.  Pearce,  Peake,  75.     R.  v.  Topham,  4T.  R.  126. 
R.  V.  Gutch,  1  M.  <fe  M.  437.     See  further  on  this  subject,  post,  cap.  5,  sect.  4. 

(m)  Battley  v.  Lewis,  1  M.  &  G.  155.     1  Scott,  N.  R.  143. 

(v)  Catt  V.  Howard,  3  Stark.  5.  Vere  v.  Ashby,  10  B.  &  C.  288.  (A  strong  case, 
since  tliere  the  partnersliip  was  by  agreement  to  have  a  retrospective  operation.) 
See  the  judgment  in  Battley  v.  Lewis,  1  M.  &  G.  155.  Young  v.  Hunter,  4  Taunt. 
582.  Fox  V.  Frith,  10  M.  &  W.  135.  Saville  v.  Robertson,  4  T.  R.  720,  and  Fox  v. 
Clifton,  6  Bingh.  776,  and  Dickenson  v.  Valpy,  10  B.  &  C.  142,  ubi  per  Parke,  J.  "  If 
a  person  agree  to  become  a  partner  at  a  future  time  with  others,  provided  other  per- 
sons agree  to  do  the  same,  and  advance  stipulated  portions  of  capital,  or  provided 
any  other  previous  conditions  are  performed,  he  gives  no  authority  at  all  to  any 
other  individual  until  all  those  conditions  are  performed.  If  any  of  the  intended' 
partners  in  the  mean  time  enter  into  contracts,  he  is  not  bound  by  them,  on  the  sim- 
ple ground  that  he  never  authorized  them,  always  supposing  that  he  has  not  held 
himself  out  directly  or  indirectlj'  as  having  given  such  authoritj'."  See  also  Howell 
V.  Brodie,  6  Bingh.  N.  C.  44.  Barnett  v.  Lambert,  15  M.  &  W.  482.  Gabriell  v. 
Erill,  9  M.  &  W.  297.  Hawken  v.  Bourne,  8  M.  &  W.  703.  He  is  not  liable  by  re- 
lation; Battley  v.  Lewis,  1  M.  <fe  G.  155.  Vere  v.  Ashby,  10  B.  <fe  C.  288 ;  nor  for 
goods  furnished  while  he  is  a  member  under  a  contract  made  before  he  became  one. 
Whitehead  v.  Barron,  2  M.  &  Rob.  243. 

(w)  Ex  parte  Jackson,  1  Ves.  131.     Ex  parte  Peele,  6  Ves.  602.     Helsby  v.  Meara, 
5  B.  &  C.  504.     Barker  v.  Birt,  10  M.  &  W.  61. 

(x)  On  the  question  what  amounts  to  dissolution,  see  a7ite  sect.  3,  and  Heath  u 
Samson,  4  B.  <fe  Ad.  177. 


PARTNERS.  87 


Rights  of  third  Persons  against  Partners. 


tinues,  as  we  have  before  remarked,  to  hold  himself  out  as  still  in 
business  with  his  late  companions,  and  will  be  still  responsible  for 
their  engagement;  {y)  and,  if  he  do  not  remove  his  name  from  the 
firm,  he  gives  strangers  cause  to  disbelieve  his  notice,  though  he 
may  have  promulgated  one,  and  will,  therefore,  notwithstanding 
it,  continue  liable.  (2)  But  then  this  non-removal  must,  to  produce 
this  effect,  be  the  result  of  his  own  negligence ;  for  if  his  late  part- 
ners wrongfully  persevere  in  using  his  name,  that  will  not  bind 
him.  (a) 

As  to  the  mode  of  giving  notice  of  the  dissolution.*  To  per- 
sons who  have  not  dealt  with  the  firm,  notice  in  the  Gazette  will  be 
sufficient,  ih)  To  persons  who  have  so  dealt  express  notice  ought 
to  be  given ;  (c)  this  is  usually  done  by  circular  letters,  {d)  But  if 
a  fair  presumption  can  be  raised  from  other  circumstances,  that  the 
party  had  actual  notice,  that  will  be  enough,  (e)  Thus,  a  change  in 
the  wording  of  checks  has  been  held  notice  to  a  creditor  who  uses 
them.  (/) 

As  to  a  dormant  partner,  as  his  name  never  appeared  in  the 
firm,  of  course  it  cannot  be  removed  ;  and  as  the  correspondents  of 


{y)  Parkin  v.  Carruthers,  3  Esp.  248.  Graham  v.  Hope,  1  Peake,  154.  In  Jones 
*>.  Shears,  4  Ad.  &  E.  832,  held  that  a  retired  partner,  though  he  had  not  notified  his 
retirement,  was  not  bound  by  the  admission  of  a  subsequently  appointed  agent  of 
the  firm. 

{z)  Williams  v.  Keats,  2  Stark.  290.     Dolman  v.  Oi-chard,  2  Car.  &  P.  106. 

(a)  Newsome  v.  Coles,  2  Camp,  616. 

(6)  Godfrey  v.  TurnbuU,  1  Esp.  371.     Wrightson  v.  Pullan,  1  Stark.  3*75. 

(c)  See  Kirwan  v.  Kirwan,  2  C.  &  M.  61*7 ;  4  Tyrwh.  491.  Graham  v.  Hope,  Peake, 
208,  et  notas. 

(d)  Newsome  v.  Coles,  2  Camp.  61Y.     Jenkins  v.  Blizzard,  1  Stark.  418. 

(e)  M'lver  v.  Humble,  16  East,  169. 

(/)  Barfoot  v.  Goodall,  3  Camp.  147.     See  Hart  v.  Alexander,  2  M.  &  W.  484. 

*  There  are  no  American  cases  of  any  authority  questioning  the  accuracy  of  the 
law,  as  it  is  stated  in  the  text.  The  same  principles  are  settled  inKetchum^;.  Clarke, 
6  J.  R.  144.  Mowatt  v.  Howland,  8  Day's  Rep.  353.  Nott.  v.  Downing,  6  Louis.  Rep. 
680.  Shurlds  v.  Tilson  &  Pitkin,  2  McClean's  C.  C.  R.  458.  Mitchum  v.  The  Bank 
of  Kentucky,  9  Dana,  166.  Kelly  v.  Hurlburt,  5  Cow.  Rep.  534.  Martin  v.  Walton, 
1  McChord's  Rep.  16.  Irby  v.  Vining,  2  McChord's  R.  379.  Coddington  v.  Hunt,  6 
Hill's  N.  Y.  R.  595.  Davis  v.  Allen,  3  Comst.  168.  Magill  v.  Mesrie,  5  B.  Monr.  168. 
White  V.  Murphy,  3  Rich.  369. 


88  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


the  house  never  knew  him  to  be  a  partner,  they  need  not  be  in- 
formed of  his  ceasing  to  be  such ;  {g)  nay,  though  many  may  have 
been  aware  that  he  was  a  partner,  yet  will  he  not  be  chargeable, 
except  by  individuals  who  knew  it  at  the  time  of  entering  into 
their  engagements  with  the  firm ;  (A)  to  such  persons  he  will  be 
liable,  if  he  have  not  given  a  proper  notice  of  retirement,  {i) 

On  his  dissolving  the  partnership,  removing  his  name  from  the 
firm,  and  duly  promulgating  notice  of  his  withdrawal,  all  danger 
of  his  liability  for  the  future  acts  of  his  companions  is  at  an  end ;  {j) 
unless  created  by  his  own  authority,  as  if  he  allow  them  to  go  on 
using  his  name,  notwithstanding  the  dissolution ;  (/c)  and  Lord 
Kenyon  has  even  doubted  whether  a  bill,  indorsed  by  one  partner 
in  the  name  of  the  firm  before  dissolation,  could  be  negotiated  after- 
wards. (?)*     The  Court  of  Queen's  Bench,  however,  has  since  held 

(g)  Evans  v.  Drummond,  4  Esp.  89.  Brooke  v.  Enderby,  2  B.  &  B.  11.  See 
Heath  v.  Sansom,  4  B.  &  Ad.  177. 

(A)  Carter  v.  Whalley,  1  B.  &  Ad.  11. 

(i)  Evans  v.  Drummond,  4  Esp.  89.     Farrer  v.  Defiinne,  1  Car.  &  K.  580. 

Ij)  Pinder  v.  Wilks,  5  Taunt.  612.  Abel  v.  Sutton,  3  Esp.  108.  "Wrightson  v  Pul- 
lan,  1  Stark.  375.     Heath  v.  Sansom,  4  B.  <fc  Ad.  177. 

(Jt)  Smith  V.  Winter,  4  M.  &  "W.  454.  It  seems  that  the  authority  maj'  be  express 
or  implied  from  the  terms  of  the  separation.  But  authority  to  wind  up  the  partner- 
ship would  not  warrant  the  indorsement  of  a  bill     lb. 

(l)  Abel  V.  Sutton,  3  Esp.  108. 


*  The  effect  of  a  dissolution  is  to  put  an  end  to  the  mutual  agency,  which  exists 
during  the  continuance  of  the  partnership,  except  for  the  purpose  of  winding  up  its 
affairs.  Each  partner  may,  after  the  dissolution,  perform  any  act  relating  to  debts 
and  conti-acts  previously  existing,  which  would  have  been  valid  if  performed  by  him 
before  the  dissolution,  such  as  releasing  or  giving  a  receipt  for  a  partnership  debt; 
but  he  has  no  authority  to  impose  any  new  obligation  upon  his  co-partner.  Whether 
his  acknowledgment  of  debt  will  be  sufficient  to  take  it  out  of  the  operation  of  the 
statute  of  limitations,  has  been  a  much  controverted  question.  In  the  case  of  Bisp- 
ham  V.  Patterson  &  Walter,  2  McLean's  Rep.  87,  Judge  McLean  declared  that  no  rule 
of  evidence  seemed  to  be  better  settled  in  the  English  courts,  than  that  the  admissions 
of  a  partner,  though  not  a  party  to  the  suit,  are  evidence  against  another  partner, 
■who  is  sued  as  to  a  joint  contract,  made  during  the  existence  of  the  partnership, 
■whether  the  admission  be  made  before  or  after  the  dissolution  thereof,  and,  as  the 
learned  judge  conceives,  on  sound  principles.  Mr.  Justice  Story,  in  his  work  on  Part- 
nership, ex']:>resses  a  different  opinion. 

The  acknowledgment  of  a  debt  by  one  partner  after  the  dissolution  of  the  firm, 
and  after  it  has  been  barred  by  the  lapse  of  time,  is  insufficient  to  take  it  out  of  the 


PARTNERS.  89 


Rights  of  third  Persons  against  Partners. 


that  a  bill  drawn  by  a  partnership  before  the  dissolution,  might  be 
indorsed  after  the  dissolution,  to  a  person  having  notice  of  it.  (pi) 
Abel  V.  Sutton  and  Smith  v.  Winter  were  not  cited  upon  the  argu- 
ment of  this  case,  which  possibly  may  be  heareafter  thought  open 
to  review,  since  it  may  be  argued  that  all  express  authority  to  in- 
dorse was  put  an  end  to  by  the  dissolution,  and  all  implied  authority 
by  the  notice. 

He,  however,  of  course,  remains  liable  for  contracts  made  by 
the  firm  while  he  continued  to  belong  to  it ;  yet  if  the  partnership 
be  dissolved  in  consequence  of  his  death,  his  personal  representa- 
tive stands  in  a  very  different  situation,  for  he  is  completely  exon- 
erated from  responsibility  at  laiu ;  the  rule  there  being,  that  per-^ 
sonal  claims  and  liabilities  survive.  Equity,  however,  unwilling 
that  this  maxim  should  work  injustice,  considers  the  estate  of  the 
deceased  partner  as  liable  to  the  demands  of  the  partnership  cred- 
itors, until  the  debts  which  affected  him  at  the  time  of  his  decease 
have  been  fully  discharged,  {n)     Whether,  indeed,  the  claim  of  the 

{m)  Lewis  v.  Reillj^  1  Q.  B.  349. 

{n)  VuUiamy  v.  Noble,  3  Meriv.  593.     See  the  judgment  in  Winter  v.  Innes,  4  M. 

operation  of  the  statute  of  limitations.  Clementson  v.  Williams,  8  Cranch,  72. 
Bell  V.  Morrison,  1  Peters'  S.  C.  R.  373.  Bispham  v.  Patterson  &  Walter,  2  McLean's 
C.  C.  R.  87.  Beutley  v.  White,  4  B.  Mon.  263.  Yandes  v.  Lefavour,  2  Black,  37 L 
Mure  V.  Donelson,  2  Hump.  166.  Seariglit  v.  Craighead,  1  Pen.  &  Walls.  135.  This 
is  law  in  Virginia  by  force  of  statutory  provision.  According  to  the  reasoning  of  the 
Supreme  Court,  in  the  leading  case  of  Bell  v.  Morrison,  the  new.  promise  is  not  to  be 
regarded  as  a  mere  continuation  of  the  original  promise,  but  as  a  new  contract 
springing  out  of,  and  supported  by,  the  original  consideration.  If  an  acknowledg- 
ment of  a  cause  of  action  barred  by  statute  of  limitations,  is  operative  at  all,  it  creates 
a  right,  because  it  revives  a  debt  extinct  in  the  eye  of  the  law.  Inasmuch  as  the 
dissolution  of  a  partnership  is  a  revocation  of  the  implied  authority  of  each  partner 
to  act  as  the  authorized  agent  of  the  firm  within  the  scope  of  the  partnership  busi- 
ness, except  so  far  as  its  continued  existence  is  indispensable  to  the  winding  i:p  of  its 
affairs,  a  new  authority  must  be  communicated  to  a  partner,  to  enable  him  to  revive 
against  the  firm  an  extinct  cause  of  action.  After  the  dissolution  the  relation  of  the 
partners  is  that  of  joint  debtors.  The  same  principles  affirmed  in  New  York,  in 
National  Bank  v.  Norton,  1  Hill's  N.  Y.  R.  572.  Van  Iveusen  v.  Parmelee,  2  Comst.  525. 
But  in  some  of  the  courts,  the  declarations  of  one  partner  after  the  dissolution 
concerning  facts  which  transpired  before  that  e\  ent,  have  been  received  as  evidence 
for  the  plaintiff,  in  an  action  commenced  against  all  the  partners  previous  to  the  dis- 
Bolution,  Parker  v.  Merrill  et  al.,  6  Green,  41.  Mann  v.  Locke,  11  N.  H.  246.  Cady  v 
Shepherd,  11  Pick.  400.  Mclntire  v.  Oliver,  2  Hawks,  209.  Ivisk  v.  Hiatt,  2  Ind.Rep.  322 


90  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


partnership  creditors  on  the  separate  estate  of  the  deceased  shall  be 
postponed  to  that  of  his  own  separate  creditors,  or  whether  they  shall 
come  in  with  iheva pari passu^  or  whether,  lastly,  they  have  any  claim 
against  it  at  all,  until  the  insolvency  of  the  partnership  estate  has 
been  ascertained,  are  questions  which  were  long  unsettled,  (o)  The 
last  of  them,  however,  is  resolved  by  the  case  of  Wilkinson  v.  Hen- 
derson^ (p)  which  decides  that  the  joint  creditor  is  not  compelled  to 
pursue  the  surviving  partner  in  the  first  instance,  but  may  resort  at 
once  to  the  assets  of  the  deceased,  without  showing  that  full  satis- 
faction cannot  be  obtained  from  the  survivor,  and  may  leave  the 
representatives  of  the  deceased  to  recover  what,  if  any  thing,  shall 
appear  upon  the  partnership  account  to  be  due  from  the  survivor 
to  the  estate  of  the  deceased  partner.  It  was  not,  however,  decided 
in  that  case,  that  the  creditors  of  the  firm  could  come  in  pari p)assu 
with  the  separate  creditors,  and  the  better  opinion  seems  to  be  that 
they  cannot,  (j)*     But  of  this  general  rule  there  is  no  doubt,  viz.^ 


&  Cr.  Ill,  and  qucere,  as  to  the  effect  of  the  Statute  of  Limitations  on  the  creditor'^ 
equity  against  the  estate  of  the  deceased  partner.  If  the  firm  be  indebted  to  his 
estate  beyond  the  proportion  it  ouglit  to  bear  of  the  claim,  it  seems  the  statute 
"would  bar  the  equity,  and  it  is  clear  that  a  payment  of  part,  or  of  interest,  by  the 
surviving  members  will  not  deprive  the  executors  of  the  deceased  partner  of  this  de- 
fence.    Way  V.  Bassett,  5  Hare,  55,  68. 

(o)  See  Gray  v.  Chiswell,  9  Ves.  118.  Ex  parte  Kendall,  17  Yes.  519.  Campbell 
V.  Mallet,  2  Swanst.  576.  Devaynes  v.  Noble,  1  Meriv.  529.  Cowell  v.  Sykes,  2  Russ. 
191.  The  better  opinion  seems  to  be  that  the  joint  creditors  must  be  postponed  to 
the  separate. 

(p)  1  Mylne  &  K.  589. 

{q)  This  seems  to  have  been  admitted  by  Mr.  Pemberton,  in  Wilkinson  v.  Hender- 
Bon ;  see  also  Fisher  v.  Farrington,  Seton  on  Decrees,  239,  cited  1  Mylne  &  K.  583. 

*  This  question  arose  in  Allen  v.  Wells,  22  Pick.  450,  and  the  whole  doctrine  as  to 
the  respective  rights  of  joint  and  several  creditors  is  discussed  in  the  following  learned 
and  interesting  opinion  of  Judge  Dewey: — 

"The  question  arises  whether  by  the  law  of  this  Commonwealth  an  attachment  of 
the  private  estate  of  one  of  several  co-partners  for  a  debt  due  from  the  co-partnership 
is  valid  as  against  an  after  attachment  of  the  same  estate  by  a  separate  creditor  of  tha 
same  co-partner. 

"  This  point  was  supposed  to  have  been  settled  by  the  decision  of  this  Court  in  the 
case  of  Newman  v.  Bayley  &  Tr.,  16  Pick.  570;  but  the  counsel  for  the  defendants 
being  desirous  of  a  re-examination  of  this  question,  we  have  been  disposed,  consider- 
'ng  the  practical  importance  of  the  question  under  consideration,  to  revise  that 


PARTNERS.  9] 


Rights  of  third  Persona  against  Partners. 


that  the  separate  estate  of  the  deceased  can  never  be  discharged  while 
any  partnership  debt  remains  outstanding.  Nay,  courts  of  equity  will 
even  reform  joint  securities,  when  executed  by  partners  for  a  part- 
opinion,  -with  the  aid  of  the  very  full  and  elaboi-ate  arguments  of  the  counsel  in  the 
present  case, 

"The  conflicting  claims  of  co-partnership  and  separate  creditors  have  been  a  fruitful 
source  of  litigation  in  England.  The  questions  more  usually  have  arisen  under  the 
bankrupt  law,  and  the  decisions  are  mostly  to  be  found  in  the  Chancery  Reports,  but 
not  exclusively  so.  The  great  number  of  cases  in  which  this  question  has  arisen, 
shows  very  clearly  that  there  could  have  been  at  the  time  no  very  well  defined  gene- 
ral principles,  known  and  acknowledged  as  such,  applicable  to  the  adjustment  of 
these  conflicting  rights.  Even  as  regards  the  joint  property  of  partners,  the  rule  was 
varied.  By  the  rules  of  law  as  formerly  held  in  England,  the  sherifl^,  under  an  exe- 
cution against  one  of  two  co-partners,  took  the  partnership  eflPects  and  sold  the  moiety 
of  the  debtor,  treating  the  property  as  if  owned  by  tenants  in  common.  Heydon  v. 
He3'don,  1  Salk.  392.  Jacky  v.  Butler,  2  Ld.  Raj^m.  871.  But  the  principle  is  now 
well  settled  in  England,  both  at  law  and  in  equity,  that  a  separate  creditor  can  only 
take  and  sell  the  interest  of  the  debtor  in  the  partnership  property,  being  his  share 
upon  a  division  of  the  surplus,  after  discharging  all  demands  upon  the  co-partner- 
ship. Fox.  V.  Hanbury,  Cowp.  445.  Taylor  v.  Fields,  4  Ves.  396.  The  same  fluc- 
tuation in  the  rule  as  to  partnership  property  has  existed  in  the  United  States.  The 
rule  of  selling  the  moiety  of  the  separate  debtor  in  the  partnership  property,  on  an 
execution,  for  his  private  debts,  formerly  prevailed  in  several  of  the  States  of  the 
Union,  but  the  later  decisions  have  changed  the  rule,  and  that  now  more  generally 
adopted  is  in  accordance  with  the  one  prevailing  in  England,  and  which  has  already 
been  mentioned.  The  State  of  Vermont  still  adheres  to  the  doctrine,  that  partner- 
ship creditors  have  no  priority  over  the  creditor  of  one  of  the  partners,  as  to  the 
partnership  effects.  Reed  v.  Shephardson,  2  Vermont  R.  120.  The  rule  in  Massa- 
chusetts, giving  a  priority  to  the  partnership  creditor  in  sucli.cases,  was  settled  in 
the  case  of  Pierce  v.  Jackson,  6  Mass.  R.  242,  and  has  been  uniformly  followed  since. 
The  efi^ect  of  the  rule,  that  the  only  attachable  interest  of  one  of  the  co-partners,  by 
a  separate  creditor,  was  the  surplus  of  the  joint  estate  which  miglit  remain  after  dis- 
charging all  joint  demands  upon  it,  necessarily  was  to  create  a  preference  in  favor  of 
the  partnership  creditors  in  the  application  of  the  partnership  property,  and  this 
efi'ect  would  be  produced,  although  the  original  purpose  of  the  rule  might  have  been 
the  securing  the  rights  of  the  several  co-partners,  as  well  as  those  of  their  joint  cred- 
itors. Whatever  may  have  been  the  objects  of  the  rule,  the  rule  itself  is  now  to  be 
considered  as  well  settled  as  to  the  appropriation  of  partnership  eff"ects. 

"  Tlie  defendants  allege,  that  by  law  a  similar  priority  exists  in  favor  of  a  creditor 
of  one  memVjer  of  a  co-partnership,  as  to  the  separate  property  of  his  debtor.  Upon 
this  point  there  has  been  not  only  a  direct  contrariety  in  the  decisions  as  to  the  prin- 
ciple itself,  but  even  where  ■'.he  principle  has  been  admitted,  various  exceptions  have 
been  ingrafted  upon  this  rule. 

"The  more  ancient  doctrine,as  established  by  Lord  Hardwick,  was,  that  separat« 
sreditors  had  a  prior  claim  upon  the  separate  estate.      This  princi^^le  was  contro- 


92  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


nership  debt,  by  construing  them  joint  and  several,  so  as  to  bind 
the  executor  of  a  deceased  co-partner.  (?•)  But  such  an  instrument 
must  have  arisen  out  of  some  antecedent  partnership  liability,  for 

(r)  Burn  v.  Burn,  3  Ves.  573.     Orr  v.  Chase,  1  Meriv.  729. 

Terted  by  Lord  Thurlow,  who  allo-wed  joint  creditors  to  take  their  dividends  upon 
the  separate  estate  of  the  partners.  In  the  time  of  Lord  Loughborough,  the  doctrine 
"was  again  asserted,  that  the  separate  estate  was  first  tc  v,e  applied  to  the  separate 
debts.  Such  has  been  the  state  of  this  question  in  the  English  courts,  as  declared  by- 
Lord  Eldon  in  ex  parte  Clay,  6  Ves.  813.  The  want  of  uniformity  in  the  application 
of  the  rule,  as  well  as  serious  doubts  in  his  own  mind  as  to  its  atility,  are  plainly 
suggested  by  Lord  Eldon  in  Button  v.  Morrison,  17  Ves.  205.  In  the  case  ex 
parte  Elton,  3  Ves.  238,  which  is  usually  relied  upon  as  having  re-established 
the  rule  in  England,  making  the  separate  property  first  applicable  to  the  pay- 
ment of  the  separate  debts,  it  seems  to  be  admitted  that  a  joint  creditor  who  sues 
out  the  commission  of  bankruptcy  against  a  separate  debtor,  is  entitled  to  share 
rateably  with  the  separate  creditors  in  the  distribution  of  the  separate  property. 
Subsequent  English  cases  more  explicitly  state  the  rule  of  distribution  to  be,  that  of 
priority  in  favor  of  the  separate  creditors  in  the  application  of  the  separate  estates. 
Such  was  the  doctrine  there,  as  was  declared  by  Chancellor  Kent,  in  the  opinion  pro- 
nounced by  him  in  Murray  v.  Murray,  5  Johns.  Ch.  R.  60,  where  the  leading  English 
cases  up  to  that  period  (1821)  were  fullj-  considered  by  him. 

"But  it  will  be  found  somewhat  difficult  to  reconcile  all  the  English  cases,  and  to 
maintain  that  since  the  time  of  Lord  Loughborough  to  the  present  day,  there  has 
been  no  departure  in  principle  from  tlie  rule  adopted  by  him.  The  learned  American 
commentator  on  equity  jurisprudence,  in  noticing  some  of  the  later  decisions,  re- 
marks, 'that  if  the  true  doctrine  be  that  avowed  by  Sir  William  Grant,  in  the  case 
of  Deraynes  v.  Noble,  1  Meriv.  529,  and  afterwards  affirmed  by  Lord  Brougham,  2  Rus- 
sell and  Mylne,  494,  that  a  partnership  contract  is  several  as  well  as  joints  then  there 
seems  no  ground  to  make  any  difference  whatsoever  in  any  case  between  joint  and 
several  creditors,  as  to  payment  out  of  joint  or  separate  assests.'  1  Story  on  Equity, 
626  in  notis.  I  am  not  to  be  understood  as  suggesting  that  Mr.  Justice  Storj^  doubts 
the  existence  of  the  rule  in  equitj',  that  separate  creditors  are  entitled  to  be  first  paid 
out  of  the  separate  estate.  On  the  contrary,  he  distinctly  affirms  it.  This  principle 
has  been  directly  recognized  also  in  the  cases  of  Wilder  v.  Keeler,  3  Paige,  267. 
Egberts  v.  Wood,  3  Paige,  518.  Hall  v.  Hall,  2  M'Cord's  Ch.  R.  302.  Woddrop  v. 
Ward,  3  Desaus.  203.     Tunno  v.  Trezevant,  2  Desaus.  270. 

"As  authorities  prescribing  a  rule  to  govern  a  court  of  equity  in  the  distribution 
of  the  assets  of  an  insolvent  estate,  these  decisions  would  be  entitled  to  much  con 
eideration.  But  it  is  to  be  remarked,  that  no  cases  from  any  of  the  States  cf  the 
Union  have  been  cited,  when  the  question  has  arisen  in  a  court  of  law,  between  dif- 
ferent attaching  creditors,  and  when  an  attachment  or  lien  of  a  joint  creditor  upon 
the  separate  property  of  one  of  the  partners  has  been  postponed  or  superseded  by 
one  subsequently  made  by  a  separate  creditor  of  the  same  partner.  '  The  better 
opinion  would  seem  to  be,  that  it  is  in  a  court  of  equity  only,  that  the  joint  creditor 


PARTNERS.  93 


Rights  of  third  Persons  against  Partners. 


a  presumption  then  arises  that,  as  the  demands  for  which  the  secu 
ritj  was  given  might  have  been  enforced  against  the  estate  of  a  de- 
ceased partner,  the  parties  must  have  intended  that  the  security 

can  be  restrained  from  proceeding  against  the  separate  estate.  Such  was  the  opin- 
on  of  the  late  Chief  Justice  Marshall,  as  stated  in  the  case  of  Tucker  v.  Oxley,  5 
Cranch,  35.  So  also  in  M'Culloch  v.  Dashiel,  1  Har.  &  Gill,  96,  it  was  said,  that  a* 
law  the  joint  creditors  may  pursue  both  the  joint  and  separate  estates,  unless  re 
strained  by  a  CQurt  of  equity.  The  same  doctrine  seems  to  be  asserted  by  Mr.  Jus- 
tice Story,  in  his  Commentaries  on  Equity,  Vol.  I.  p.  625,  where  he  says,  '  The  sep- 
arate creditors  of  each  partner  are  entitled  to  be  first  paid  out  of  the  separate  effects 
«f  their  debtor,  before  the  partnership  creditors  can  claim  any  thing ;  which  can 
only  be  accomplished  by  the  aid  of  a  court  of  equity;  for  at  law,  a  joint  creditor 
may  proceed  directly  against  the  separate  estate.' 

"  It  is  urged,  however,  on  the  part  of  the  defendants,  that  as  this  court,  as  a  court 
of  law,  have  long  since  recognized  the  principle,  that  an  attachment  of  the  goods  of 
a  partnership  by  a  creditor  of  one  of  the  partners  is  not  valid  as  against  an  after 
attachment  by  a  partnership  creditor,  it  should  also  adopt  the  converse  of  the  pro- 
position, giving  a  like  preference  to  separate  creditors  in  respect  to  the  separate  pro- 
perty. But  we  think  that  there  is  a  manifest  distinction  in  the  two  cases.  The 
restriction  upon  separate  creditors  as  to  the  partnership  property,  arises  not  merely 
from  the  nature  of  the  debt  attempted  to  be  secured,  but  also  from  the  situation  of 
the  property  proposed  to  be  attached.  In  such  a  case,  a  distinct  moiety  or  other 
proportion,  in  certain  specific  articles  of  the  partnership  property,  cannot  be  taken 
and  sold,  as  one  partner  has  no  distinct  separate  property  in  the  partnership  effects. 
His  interest  embraces  only  what  remains  upon  the  final  adjustment  of  the  partner- 
ship concerns.  But  on  the  other  hand,  a  debt  due  from  the  co-partnership  is  the 
debt  of  each  member  of  the  firm,  and  every  individual  member  is  liable  to  pay  the 
whole  amount  of  the  same  to  the  creditor  of  the  firm.  In  the  case  of  the  co-partner- 
ship, the  intei'est  of  the  debtor  is  not  the  right  to  any  specific  property,  but  to  a  re- 
siduum which  is  uncertain  and  contingent,  while  the  interest  of  one  partner  in  his 
individual  propei'ty  is  that  of  a  present  absolute  interest  in  the  specific  property. 
Each  separate  member  of  the  co-partnership  being  thus  liable  for  all  debts  due  from 
the  co-partnership,  and  no  objection  arising  from  any  interference  with  the  rights  of 
others  as  joint  owners,  it  seems  necessarily  to  follow,  that  his  separate  property  may 
be  well  adjudged  to  be  liable  to  be  attached  and  held  to  secure  a  debt  due  from  the 
co-partnership." 

There  is  no  difficulty  in  ascertaining  the  respective  rights  of  the  joint  and 
several  creditors,  as  recognized  by  courts  of  law,  in  the  separate  and  social  estate ; 
but  the  question  has  arisen  in  equity  under  such  a  variety  of  circumstances,  that 
it  is  impossible  to  deduce  from  the  authorities  any  general  and  uniform  rule. 
As  the  only  interest  which  the  separate  creditor  can  sell  at  law,  is  the  right  of  the 
debtor  partner  in  the  pai'tnership  effects  upon  a  settlement  of  the  partnership  ac- 
counts, the  priority  of  the  joint  creditor  in  the  distribution  of  the  social  assets  is  of 
necessity  secured.  In  a  struggle,  however,  between  the  joint  and  several  creditors 
of  a  partner  for  his  separate  estate,  there  is  no  rule  of  law  by  which  the  several  cre- 
ditor can  appropriate  such  assets  in  the  first  instance,  to  the  exclusion  of  the  joint 


y4  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


should  be  similarly  available.  But  where  the  instrument  is  pure 
matter  of  arbitrary  convention  growing  oat  of  no  such  antecedent 
liability,  that  presumption  does  not  arise,  and  then  even  a  court  oi 
equity  will  not,  if  it  be  jointly  worded,  construe  it  joint  and  sev- 
eral, but  will,  like  a  court  of  law,  measure  its  extent  by  the  terms 
in  which  it  is  conceived,  (s) 

However,  the  liability  of  a  retired  partner  and  that  of  a  de- 
ceased partner's  estate,  will  be  reduced  by  the  amount  of  all  pay- 
ments {t)  made  by  his  late  companions  since  the  dissolution  of  the 
partnership,  and  appropriated,  either  specifically  or  impliedly,  to 
the  reduction  of  the  demands  upon  the  firm.  Thus,  Devaynes  and 
others  were  in  partnership  as  bankers,  Clayton  had  a  running  ac- 
count with  the  firm,  and  was  in  the  habit  of  paying  in  and  drawing 
out  money.  At  the  time  of  Devaynes's  death,  there  was  a  balance 
in  favor  of  Clayton  and  against  the  firm  of  £1713.  After  the 
death  of  Devaynes,  his  late  partners  became  bankrupt :  but,  before 
their  bankruptcy,  Clayton  had  drawn  out  sums  to  more  than  the 
amount  of  £1713,  and  had  paid  in  other  sums  yet  more  consider- 

(«)  Summer  v.  Powell,  2  Meriv.  30. 

(t)  Brooke  v.  Enderby,  2  B.  <fe  B.  70.  Newmarch  v.  Clay,  14  East,  2^0.  Clayton's 
case,  1  Meriv.  572. 

creditor.  So  long  as  any  portion  of  the  joint  estate  remains,  a  court  of  equity,  in  a 
proper  case,  upon  the  principle  of  marshalling  securities,  may  stop  the  hands  of  the 
social  creditor,  until  the  fund  thus  available  for  the  satisfaction  of  his  debt  has  been 
exhausted. 

"Where  the  controversy  arises  in  equity,  the  considerations  which  secure  to  the 
joint  creditor  a  priority  at  law  in  the  application  of  the  joint  estate,  produce  a  cor- 
responding result.  But  in  reference  to  the  separate  estate,  a  great  diversity  of  judi- 
cial opinion  has  been  expressed,  as  to  the  proper  mode  of  its  administration  in  equity 
in  a  contest  between  the  social  and  several  creditors  of  a  partnership.  In  Murrel  v 
Neil,  8  How  S.  C.  R.  414,  the  rule  which  prevails  in  England,  in  cases  of  bankruptcy, 
of  appropriating  the  separate  estate  in  the  first  instance  to  the  several  creditors,  was 
received  as  a  general  doctrine  of  equity.  In  Virginia,  in  Morris's  Administr.  v.  Mor- 
ris's Administr.  et  ah.,  4  Gratt.  294,  the  subject  was  elaborately  discussed,  and  the 
Coiirt  were  equally  divided  in  opinion  as  to  the  true  rule.  In  the  note  to  Silk  v. 
Prime,  2  "White  and  Tudor's  Leading  Cases  in  Equity,  p.  259,  and  1  American  Lead- 
ing Cases,  488,  the  American  cases  are  collected,  and  the  distinctions  which  they  es- 
tablish very  clearly  elucidated.  The  subject  is  considered  and  the  rule  laid  down 
by  the  Supreme  Court  of  the  United  States,  denied  in  the  recent  case  of  Cleg- 
Lorn  V.  The  Insurance  Bank  of  Columbus,  9  Georg.  Rep.  319. 


PARTNERS  95 


Rights  of  third  Persons  against  Pai'tners. 


able.  Upon  the  bankruptcy  of  the  surviving  partners,  Clayton 
was  desirous  of  having  recourse  to  the  estate  of  Devaynes ;  but  it 
was  held  that  the  sums  drawn  out  by  Clayton  since  the  death  must 
be  appropriated  to  the  payment  of  the  balance  of  £1713  then  due, 
and  that,  as  the  total  amount  of  those  sums  was  greater  than  the 
balance,  the  debt  due  from  the  firm  at  the  death  of  Devaynes  had 
been  discharged  and  his  estate  exonerated ;  the  sums  paid  in  by 
Clayton  since  the  death,  constituting  a  new  debt,  for  which  the 
survivors  only  could  be  held  liable,  (w)* 

Although  among  themselves,  partners  may,  and  often  do,  agree, 
that  after  the  dissolution,  the  credits  of  the  firm  shall  be  received, 
and  its  debts  paid,  by  one  of  the  late  partners  only,  yet  this  ar- 
rangement does  not  afifect  their  joint  responsibility  to  third  per- 
sons, unless  such  persons  agree  to  exchange  the  liability  of  the  firm 
for  that  of  the  single  'partner,  {v)  And  though  it  has  been  held, 
that  neither  acceptance  of  the  single  partner's  note,  as  a  collateral 
security,  {iv)  nor  receipt  of  interest  from  him  on  the  joint  debt,  {x) 
nor  changing  the  heading  of  the  account  from  the  name  of  the 
firm  to  that  of  the  single  partner  and  drawing  on  him  for  part 
of  the  balance,  amounted  to  conclusive  evidence  of  such  an  agree- 
ment ;  iy)  yet  it  seems  clear  on  principle,  that  if  the  creditor  be 

(w)  Clayton's  case,  1  Meriv.  572.  See  also  Toulmin  v.  Copeland,  3  Y.  <fe  Coll.  625 
(AfF.  in  D.  P.  1  "West  App.  C.  164)  Jones  v.  Maund,  ibid.  347.  Pemberton  v.  Oakea, 
4  Rus3.  154:;  in  -which  latter  cases  Lord  Lyndhurst  and  Lord  Abinger  seem  to  disa 
gree  as  to  the  effect  of  such  pa3'ments,  where  a  new  partner  has  been  taken  into  the 
old  firm  to  which  the  retired  partner  belonged.  See  the  subject  of  Appropriation  of 
Payments  discussed,  post,  B.  IIL  in  the  Chapter  on  Contracts  of  Debt. 

iy)  Kirwia  v.  Kirwin,  2  C.  <fe  M.  617,  4  Tyrwh.  491. 

(w)  Bedford  v.  Deakin,  2  B.  <fe  A.  210. 

(a:)  Gough  v.  Davies,  4  Price,  200. 

(y)  David  v.  EUice,  5  B.  <k  C.  196.  See  Lodge  v.  Dicas,  3  B.  &  A.  611.  Qiicert 
tamen,  for  these  cases  have  been  much  reflected  on,  particularly  in  Hart  v.  Alexan- 

*  The  courts  of  New  York  and  Virginia  have  not  followed  the  recent  English 
decisions,  but  have  adhered  to  the  old  rule,  requiring  the  creditor  to  pursue  his  rem- 
edy at  law  against  the  surviving  partner,  unless  he  can  claim  the  interposition  of 
equity  upon  some  ground  of  necessity.  See  Slatter  v.  Carrol,  2  Sandf  C.  R.  573, 
where  the  authorities  are  cited  and  reviewed  ;  also  Sale  v.  Dishman's  Ex'rs,  3  Leigh. 
548.  In  Virginia,  the  rule  is  now  altered  by  statute.  The  modern  Englisli  doctrine 
is  recognized  by  the  Supreme  Court  of  the  United  States,  in  Nelson  et  alt.  v.  Hill,  5 
How,  127. 


96  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Partners. 


actually  a  party  to  the  arrangement  of  tlie  late  partners  among 
themselves,  their  acquiescence  in  that  arrangement  would  be  a 
consideration  for  his  promise  to  accept  the  single,  instead  cf  the 
double  liability  which  contributed  to  induce  them  so  to  acquiesce.(2) 
Besides  which,  the  liability  of  a  single  partner  may  possibly  be 
more  beneficial  to  the  creditor  than  the  joint  liability  of  two, 
either  in  respect  to  the  solvency  of  the  parties,  or  the  convenience 
of  the  remedy ;  and  therefore,  in  a  recent  case  in  the  King's  Bench, 
it  was  decided,  that  if  the  creditors  of  a  firm  consisting  of  two 
persons,  expressly  agreed  with  them  to  take,  and  did  take,  the  se- 
parate bill  of  one  partner  in  satisfaction  of  the  joint  debt,  their  so 
doing  amounted  to  a  discharge  of  th?  other  partner  by  way  of  ac- 
cord and  satisfaction,  (a)  Whether  such  an  agreement  have  been 
made  is,  in  each  case,  a  question  proper  to  be  submitted  to  a  jury.(i) 
This  sort  of  arrangement  was  usual  under  the  civil  law,  and  went 
by  the  name  of  Novatio.  {cy'^ 

der  2  M.  &  "W.  484,  ubi  per  Parke,  B.,  "  I  apprehend  the  law  now  to  be  settled,  that 
if  one  partner  goes  out  of  the  firm  and  another  comes  in,  the  debts  of  the  old  firm 
may,  by  the  consent  of  all  the  three  parties,  the  creditors,  the  old  firm,  and  the  new 
firm,  be  transferred  to  the  new  firm.  In  David  v.  Ellice,  the  retired  partner  was 
held  liable,  but  the  court  was  substituted  for  a  jury  in  that  case ;  and  I  much  doubt 
whether  twelve  merchants  would  have  determined  it  as  the  court  did.  [The  autho- 
rity, however,  of  that  case,  as  well  as  of  Lodge  v.  Dicas,  has  been  much  shaken  by 
Thompson  v.  Pereival,  and,  it  may  be  added,  by  the  Chancellor's  judgment  in  "Win- 
ter V.  Innes,  4  Myl.  <&  Cr.  108-9.  Lodge  v.  Dicas  is  virtually  overruled  in  Lj-th  v. 
Ault,  11  Eng.  L.  &  E.  R.  580,  The  true  principle  is,  that  the  law  does  not  measure 
the  value  of  a  consideration.  If  thei'e  is  a  difference  between  the  separate  liability 
of  one  debtor,  and  the  joint  liability  of  two  or  more,  a  bargain  to  take  one  for  the 
other  will  be  good.  SeealsotheAmericancaseofWildesi'.Fessenden,4Met.l2. — A.E.] 
(?)  Ibid.,  and  see  Goode  v.  Cheesman,  2  B.  &  Ad.  328.  Cartwright  v.  Cook,  3 
B.  &  Ad.  703.     Per  Shadwell,  V.  C.  Benson  v.  Hadfield,  4  Hare,  37. 

(a)  Thompson  v.  Pereival,  3  Nev.  <fe  Man.  167,  5  B.  <k  Add.  925.  See  in  equity, 
Winter  v.  Innes,  4  M.  &  Cr.  109,  and  Reed  v.  "White,  5  Esp.  122.  Evans  v.  Drum 
mond,  4  Esp.  89.     Kirwan  v.  Ivirwan,  2  C.  <fe  M.  617,  4  Tyrwh.  491. 

(b)  Thompson  v.  Pereival.  Kirwan  v.  Kirwan,  and  see  Hart  v.  Alexander,  2  M. 
&  W.  485,  which  is  a  very  strong  case. 

(c)  "Novatione  toUitur  obligatio,  veluti  si  id,  quod  tibi  Sextus  debebat,  a  Titio 
dari  stipulatus  sis."    Inst.  lib.  8,  tit.  30. 


*  The  student  will  find  a  learned  discussion  of  this  doctrine  in  Vol.  I.  p.  110 
Am.  Law  Mag.,  and  Hossack's  Ex.  v.  Rogers,  25  "Wend.  R.  313. 


PARTNERS.  97 


Riglits  of  Partners  against  third  Persons. 


As  an  entire  firm  may  be  bound,  so  it  may  also  be  discharged  \j 
by  transactions  with  a  single  partner ;  thus  payment  or  satisfaction 
of  a  debt  by  one  partner  is  payment  or  satisfaction  by  them  all,  ((?) 
so  a  release  or  discharge  even  without  deed  to  one  or  several  part- 
ners or  joint  debtors,  though  the  debt  be  joint  and  several,  is  a 
discharge  to  them  all.  {e)  But  though  a  covenant  not  to  sue  an 
individual  may,  to  avoid  circuity  of  action,  be  pleaded  by  him  as  a 
release,  yet  a  covenant  not  to  sue  one  partner,  does  not  release  the 
rest ;  for  it  is  as  easy  to  give  a  release  as  such  a  covenant,  and 
therefore  the  only  reason  for  preferring  the  latter  course  must  be 
to  prevent  the  benefit  from  extending  to  a  co-partner.  (/) 

Section  VI. — Riglds  of  Partners  against  third  Persons.^ 

As  to  the  rights  of  partners  against  third  persons,  they  involve 
very  few  peculiar  considerations ;   those  few  relate  either  to  the 

(J)  Innes  v.  Stephenson,  1  M.  &  Rob.  1-45.  Cheap  v.  Cramond,  4  B.  &  A,  663. 
Ballam  v.  Price,  2  Moore,  235.  Clark  v.  Clement,  6  T.  R.  525.  Newton  v.  Blunt,  16 
L.  J.,  C.  P.  121. 

{e)  Co.  Litt.  232,  a.  See  Collins  v.  Prosser,  1  B.  A  C.  682.  Nicholson  v.  Revill, 
4  A.  &  E.  675.  Cheetham  v.  Ward,  1  B.  &  P.  630.  By  special  words,  this  opera 
tion  may,  however,  be  prevented.  Solly  v.  Forbes,  2  B.  <fe  B.  38,  4  Moore,  448. 
Thompson  v.  Lack,  16  L.  J.,  C.  P.  75. 

(/)  Hutton  V.  Eyi-e,  1  Marsh,  608,  6  Taunt.  289.  Thomas  v.  Courtnay,  1  B.  <fe  A.  8 
Lacy  V.  Kj-naston,  12  Mod.  551.  Dean  v.  Newhall,  8  T.  R.  168.  ■  Comjiounding  an 
action  against  one  of  two  joint  contractors  was  held  no  discharge  of  the  others.  Field 
V.  Robins,  2  K  &  P.  226,  6  A.  &  E.  90 

*  The  case  of  Rogers  v.  Batchelor,  12  Peters'  Rep.  221,  raised  the  question, 
whether  the  application  of  partnership  j^roperty  to  the  payment  of  his  separate 
creditor  b}'  one  partner,  without  the  assent,  express  or  implied,  of  his  co-partners, 
would  be  valid  against  them,  provided  the  creditor  was  wholly  ignorant  of  the  fact. 
And  after  a  review  of  the  English  and  American  authorities,  which  were  all  sup 
posed  to  lead  to  the  same  conclusion,  the  court  held,  that  the  rights  of  the  remain- 
ing co-fiartners  could  not  be  affected  by  the  innocence  and  ignorance  of  the  separate 
creditor.  One  man  cannot  be  permitted  to  dispose  of  the  property  of  another,  un- 
less the  latter  has  authorized  the  act.  The  question  of  knowledge  does  not  arise 
in  such  a  case.  The  true  question  is,  Has  the  title  to  the  property  passed  from  the 
partnership  to  the  separate  creditor?  If  it  has  not,  and  it  is  difficult  to  see  how  it 
could  by  an  illegal  conversion,  then  the  partnership  may  re-assert  their  claim  tft 
it  in  the  hands  of  such  creditor.  S.  P.  Kelley  v.  Greenleaf,  3  Story's  C.  C.  Rep.  98. 
7 


98  MERCANTILE  PERSONS. 


Rights  of  Partners  against  third  Persons. 


mode  in  whicli  tliey  may  be  acquired,  or  that  in  which  they  may 
be  determined. 

As  to  the  mode  in  ivhich  they  may  he  acquired.  It  has  been  held, 
that  where  one  party  applies  to  another  for  a  loan,  without  in- 
quiring whether  the  money  is  to  be  advanced  by  the  lender  as  an 
individual,  or  as  the  member  of  a  firm,  he  is  liable  either  to  the  in- 
dividual, or  to  the  firm,  as  the  advance  may  chance  to  be  made,  {g) 
It  has  also  been  held,  that  when  one  partner  sells  the  goods  of  the 
firm  in  his  own  name,  the  whole  partnership  is,  nevertheless,  en- 
titled to  sue  the  buyer  for  the  price.  (A)  But  this  right  of  theirs 
does  not  preclude  the  buyer  from  setting  off  any  debt  due  to  him 
from  the  single  partner,  for  the  existence  of  that  debt  may  have 
been  his  inducement  to  deal  with  him.  {i)  The  above  are  cases  of 
direct  liability,  and  in  which  the  defendant  received  a  valuable  con- 
sideration, viz.,  the  goods  or  money  of  the  firm.  But  even  in  cases 
y  of  collateral  liability,  where  a  written  agreement  is  required  by  the 
Statute  of  Frauds,  it  has  been  held  that  the  firm  may  sue  upon  a 
guaranty  given  to  a  single  partner,  if  there  be  evidence  that  it  was 
given  for  the  benefit  of  all.  [j)  And  in  a  case  at  N.  P.,  Mr.  J, 
Gazelee  held,  that  a  guaranty  addressed  to  one  partner  would 
enure  to  the  benefit  of  all,  the  guaranty  having  been  given  to  secure 
payment  for  goods  such  as  the  firm  were  in  the  habit  of  dealing  in, 
and  the  j^artuer  to  whom  it  was  given  carrying  on  no  separate 
trade ;  and  further,  that  a  guaranty,  without  an  address,  would 
enure  to  the  benefit  of  those  to  whom,  or  for  whose  use,  it  was  de- 
livered, {k)  All  this  results  from  a  universal  rule  of  law,  viz.,  that 
where  a  contract,  not  under  seal,  is  made  with  an  agent  in  his  own 
name  for  an  undisclosed  principal,  either  the  agent  or  the  principal 
may  sue  upon  it,  the  defendant  in  the  latter  case  being  entitled  to 
be  placed  in  the  same  situation  at  the  time  of  the  disclosure  of 


{g)  Alexander  v.  Barker,  2  C.  &  J.  13.".,  2  Tyrwh.  149.  See  Boswell  v.  Smith,  6 
C.  &  P.  62.     Sims  v.  Bond,  5  B.  &  Ad.  393.     Sims  v.  Britain,  4  B.  <k  Ad.  375. 

(A)  Cothay  v.  Fennell,  10  B.  &  C.  671.  Skinner  v.  Stocks,  4  B.  «fe  A.  437.  See 
Rodwcll  V.  Redge,  1  C.  &  P.  220. 

(i)  Stacy  v.  Decy,  2  Esp.  469,  7  T.  R.  361.  George  v.  CLaggett,  7  T.  R.  359.  As 
to  the  requisites  of  such  a  plea  of  set-off,  see  Gordon  v.  Ellis,  2  C.  B.  821. 

(j)  Garrett  v.  Handley,  4  B.  <fe  C.  664. 

ijc)  Walton  V.  Dodson,  3  C.  &  P.  162,  and  see  MoUer  v.  Lambert,  2  Camp.  548. 


PARTNERS.  99 


Rights  of  Partners  against  third  Persons. 


the  real    principal,    as   if  tlie   agent  had   been   the    contracting 
party.  (Z) 

Where  a  security  is  given  to  the  firm,  which  is  intended  to  con- 
tinue in  force,  notwithstanding  any  change  that  may  take  place  in  :■' 
its  constitution,  such  intent  must  appear,  either  expressly  or  by 
implication,  upon  the  security :  (m)  since  otherwise  it  will,  if  by  deed, 
become  inoperative  as  to  future  events  on  the  incoming  or  outgoing 
of  a  partner ;  (n)  and  the  same  rule  is  applied  to  simple  contracts,  (o) 
However,  a  promissory  note,  given  to  secure  advances  made  by  the 
firm,  will  be  available  for  the  benefit  of  future  as  well  as  present 
members,  if  such  clearly  appear  to  have  been  the  intention  of  the 
makers,  (p) 

As  to  the  mode  in  which  the  rights  of  the  firm  against  third  persons  ^ 
may  he  determined^  the  better  opinion,  as  has  been  already  stated, 
appears  to  be,  that  they  may  be  released  by  any  one  of  the  part- 
ners :  {q)  accord  and  satisfaction,  without  fraud,  to  one  partner  pre- 
vents the  rest  from  suing  ;  (?•)  and  there  is  no  doubt  that  payment 
of  a  partnership  debt  to  one  member  is  payment  to  all :  and  that  . 
even  after  the  firm  has  been  dissolved,  (s)  and  notwithstanding  a 
clause  in  the  deed  of  dissolution,  that  another  partner  shall  receive 

{I)  Sims  V.  Bond,  5  B.  <fe  Ad.  393,  post. 

{m)  See  Barclay  v.  Lucas,  1  T.  R.  291,  which  is,  however,  doubted  in  Strange  v. 
Lee ;  and  see  Leadley  v.  Evans,  2  Bing.  32.  Saunders  v.  Taj-lor,  9  B.  &  C.  35.  Sim- 
8on  V.  Ingham,  2  B.  &  C.  65.  Simson  v.  Cooke,  1  Bingh.  452 ;  a  guaranty  will  be 
binding,  though  it  be  given  for  goods,  and  contain  no  binding  contract  on  the  part 
of  the  future  firm  to  supply  them.  Chapman  v.  Sutton,  2  C.  B.  634.  See  also  Met- 
calfe V.  Bruin,  12  East,  4aO,  2  Camp.  422,  where  it  was  held  that  the  trustees  of  a  joint 
stock  company  might  sue  on  a  bond  made  to  them,  as  such,  notwithstanding  a  change 
in  the  company ;  for  the  obligor,  knowing  the  fluctuating  nature  of  the  company, 
must  have  so  intended.  But  the  Court  will  be  slow  in  extending,  by  implication,  the 
meaning  of  words  beyond  what  they  ordinarily  bear,  in  legal  construction,  in  order 
to  extend  the  liability  of  a  security.     Chapman  v.  Beckinton,  3  Q.  B.  703. 

(n)  See  Lord  Arlington  v.  Merrick,  2  Wms.  Saund.  412,  et  notas.  Strange  v.  Lee, 
3  East,  484.  Pemberton  v.  Oakes,  4  Russ.  154.  Dance  v.  Girdler,  1  K  R.  34.  Wes- 
ton V.  Barton,  4  Taunt,  673.     Wright  v.  Russell,  2  Bl.  934. 

(o)  Myers  v.  Edge,  7  T.  R.  254.  Ex  parte  Kensington,  2  V.  <fe  Bea.  79.  Dry  v, 
Davy,  10  A.  &  E.  30. 

{p)  Pease  v.  Hirst,  10  B.  &  C.  122. 

Iq)  Philips  V.  Clagett,  11  M.  &  W.  84.     Rawstone  v.  Gandell,  15  M.  &  W.  S04. 

(r)  Wallace  v.  Kelsall,  8  Dowl.  845,  7  M.  &  W.  264. 

(s)  Porter  v.  Taylor,  6  M.  &  S.  156. 


100  MERCANTILE  PERSOXS. : 

Rights  of  Partners  against  third  Persons. 

all  the  joint  debts,  {t)  So  one  partner  may  give  time  to  the  debtor 
of  the  firm,  as  by  taking  his  acceptance,  (w)  or  may  preclude  the 
partnership  from  suing,  by  some  act  which  would  render  it  uncon- 
scientious in  himself  to  do  so.  {v)  Thus,  where  Jacaud  and  Blair 
indorsed  a  bill  to  Jacaud  and  Gordon,  and  afterwards  received 
effects  from  the  drawer  to  discharge  it,  which  they  converted  to 
their  own  purposes,  it  was  held,  that  Jacaud  and  Gordon  could  not 
sue  the  acceptor  on  this  bill.  "  Jacaud,"  said  Lord  Ellenborough, 
"  being  a  partner  with  Blair,  must  be  considered  as  having,  together 
with  Blair,  received  money  to  take  up  this  very  bill.  How  then 
can  he,  because  he  is  also  a  partner  with  Gordon,  be  permitted  to 
contravene  his  own  act,  and  sue  upon  this  bill,  which  has  been  al- 
ready satisfied  as  to  him  ?" 

'(t)  King  V.  Smith,  4  C.  &  P.  108. 

(m)  Tomlins  v.  Lawrence,  8  M.  &  P.  655,  6  Bing.  316. 

(v)  Richmond  v.  Heapy,  1  Star.  202.  Sparrow  v.  Chisman,  9  B.  »fe  C.  241.  Jaeaua 
V.  French,  12  East,  317.  AVallace  v.  Kelsall,  7  M.  &  "W.  264.  Jones  v.  Young,  9  B.  & 
C,  532.     Gordon  v.  Ellis,  2  C.  B.  821 


CHAPTER  III. 

JOIKT      STOCK      COMPANIES. 

Sect.  1.  What 

2.  Sow  formed — and  dissolved. 

3.  Bights  and  Liabilities  of  Members^  inter  se. 

4.  Rights  against^  and  Liabilities  to,  third  Parties. 


Section  I. —  What. 

A  JOINT  STOCK  company  is  a  partnership,  consisting  of  a  very 
large  number  of  members,  wliose  riglits  and  liabilities  would  be 
precisely  the  same  as  those  of  any  other  sort  of  partners,  did  not 
their  multitude  oblige  them  to  adopt  certain  peculiar  regulations 
for  the  government  of  the  concern,  which  are  ordinarily  contained 
in  an  instrument,  called  a  Deed  of  Settlement,  to  which  is  fre- 
quently added  an  act  of  parliament  passed  ex|)ressly  for  that  pur- 
pose, (a)* 

(a)  See  on  the  construction  of  such  Acts,  Blakemore  v.  Glamorganshire  Canal  Co., 
1  Mylne  &  K.  154.  Where  such  Acts  of  Parliament  in  any  way  affect  the  piiblic,  as 
in  the  case  of  Canal  Acts,  ■wherein  tolls  are  imposed,  the  statute  is  considered  as  ex- 
pressing the  terms  of  a  bargain  between  the  public  and  the  company  ;  any  ambiguity 
therein  must  operate  most  strongly  against  the  adventurers,  and  in  favor  of  the  pub- 
lic, and  the  adventurers  can  take  nothing  under  it  that  is  not  clearly  given  them. 
Stourbridge  Canal  Company  v.  Wheeley,  2  B.  &  Ad.  '792.  Hull  Dock  Co.  v.  La  Marcho, 
8  B.  <fe  C.  52.  Priestley  v.  Foulds,  2  M.  &  G.  196.  Leeds  and  Liverpool  Canal  Co.  v. 
Hustler,  1  B.  &  C.  424.  R.  v.  Hungerford  Market  Co.,  4  B.  &  Ad.  602.  Parker  v.  The 
Great  Western  Railway  Company,  7  M.  &  G.  253.  Where  no  time  for  carrying  the 
object  of  such  an  act  into  effect  is  expressly  limited,  the  Court  will  not  imply  one. 
Thicknesse  v.  Lancaster  Canal  Co.,  4.  M.  <fe  W.  472. 

*  Previous  to  the  enactment  of  the  statutes  cited  in  the  text,  the  English  law 


102  IMERCANTILE  PERSONS. 


Joint  Stock  Companies — what. 


With  respect  to  companies  established  bj  act  of  parliament 
after  the  8th  of  May,  1845,  for  the  execution  of  undertakings  of  a 
public  nature,  in  order  to  produce  uniformity,  a  general  act,  termed 
"The  Companies  Clauses  Consolidation  Act"  (8  &  9  Vict.  c.  16), 
embodying  all  the  clauses  usually  contained  in  acts  of  parliament 
establishing  such  companies  for  the  regulation  of  their  proceedings, 
and  the  transfer  of  shares,  and  their  general  government ;  and  an- 
other act,  termed  "  The  Lands  Clauses  Consolidation  Act,  1815" 
(8  9  Vic.  cap.  18),  containing  provisions  as  to  their  taking  lands 
for  such  purposes,  were  passed.  These  acts  constitute  a  code 
by  which  companies  of  this  description  are  governed,  and  among 
them  are  included  railway  companies.  On  account,  however,  of 
the  peculiar  nature  and  importance  of  the  latter  undertakings,  a 
third  statute,  termed  "  The  Eailway  Clauses  Consolidation  Act, 
1845"  (8  &  9  Vict.  c.  20),  has  enacted  regulations  as  to  the  mode 
of  constructing  their  works,  the  amount  and  mode  of  enforcing  tolls 
and  fares,  the  making  of  by-laws  for  the  conduct  of  their  business, 
the  recoveries  of  penalties  and  damages,  and  other  objects  of  a  like 
nature.  This  enactment  extends  to  railway  companies  subsequently 
created ;  but  several  general  acts,  affecting  likewise  railway  com- 
panies previously  existing,  have  been  passed,  which  control  the 
amount  of  their  fares,  and  impose  various  regulations  upon  their 
proceedings,  as  well  as  the  conduct  of  their  business,  and  empower 
the  government,  through  the  medium  of  a  Board  of  Trade,  to  a  cer- 
tain extent,  to  interfere  in  their  management,  {h)  By  a  later  act 
(9  &  10  Vict.  c.  105),  her  Majesty  was  enabled  to  appoint  commis- 
missioners  of  railways,  to  whom  the  powers  vested  in  the  Board  of 
Trade  were  to  be  transferred,  and  commissioners,  pursuant  to  this 
statute,  have  since  been  appointed. 

(6)  3  &  4  Vict.  c.  9T ;  5  <fe  6  Viet.  c.  55 ;  1  &  8  Vict.  e.  85. 

recognized  no  distinction  in  unincorporated  partnerships,  growing  out  of  the  num- 
ber of  partners  and  extent  of  objects  undertaken.  Owing,  probably,  to  the  greater 
liberality  of  our  law  in  reference  to  corporations,  and  the  greater  facility  with  which 
charters  are  obtained  by  associations  for  public  or  private  purposes,  those  considera- 
tions of  public  convenience  which  induced  legislation  in  England,  have  obtained  but 
to  a  small  extent  in  the  United  States,  and  similar  provisions  are  to  be  found  in  few 
if  any,  of  our  states. 


JOINT  STOCK  COMPANIES.  iQg 


Joint  Stock  Companies — how  formed  and  dissolved. 

For  the  regulation  of  sucli  public  companies  in  their  preliminary 
stages,  but  more  especially  for  the  general  regulation  of  joint  stock 
companies,  the  object  of  which  can  be  attained  without  special 
powers  derived  from  the  legislature,  the  statute  7  &  8  Vict.  c.  110, 
was  passed,  which  will  for  the  future,  it  is  presumed,  cause  acts  of 
parliament  for  such  undertakings  to  be  less  often  sought  or  granted. 
Inasmuch  as  this  act  only  applies  to  companies  the  formation  of 
which  may  be  commenced  after  the  1st  of  ISTovember,  1844,  it  will 
be  necessary,  in  the  first  place,  to  advert  to  the  state  of  the  law  and 
the  course  usually  adopted  in  the  formation  of  companies  pre- 
viously to  that  period.  "Wherever  a  company  exists  under  that  or 
any  other  act  of  parliament  or  letters  patent,  it  certainly  differs 
very  materially  from  an  ordinary  firm,  but  still,  so  far  as  the  act  or 
patent  has  not  provided,  it  is  governed  by  the  ordinary  law  of  part- 
nership. 


Section  II. — How  formed — and  dissolved. 

A  joint  stock  company  is  usually  formed  by  Deed  of  Settlement^ 
as  it  is  called^sometimes  accompanied  by  a  private  act  of  parliament 
or  a  royal  ixitent. 

The  Deed  of  /Settlement  constitutes  trustees  of  the  partnership 
property,  directors  of  the  partnership  affairs,  auditors  of  its  accounts, 
and  such  othe.  •  officers  as  the  objects  of  the  society  require,  and  con- 
tains covenants  for  the  performance  of  their  respective  duties,  which 
are  specifically  set  out,  as  are  those  of  the  other  partners  or  share- 
holders; it  also  defines  the  number  of  shares,  the  power  and 
method  of  transferring  them,  and  of  calling  for  the  instalments  re- 
quired to  be  made  thereon ;  the  mode  of  convening  general  meet- 
ings of  proprietors,  their  rights  when  convened ;  and  a  variety  of 
other  rules,  suited  to  the  exigencies  of  that  particular  undertaking. 
As  far  as  the  provisions  of  this  instrument  extend,  it  is  the  law  by 
which  the  partnership  affairs  are  to  be  governed ;  when  it  is  silent, 
the  general  law  respecting  partnership  is  to  be  followed,  (c) 

(c)  The  powers  conferred  by  such  an  instrument  on  the  directors  must  be  strictly 
pursued.     See  Moore  v.  Hammond,  6  B.  &  C.  456.     Daviea  v.  i^wkins,  3  M.  &  S.  488 


104  MERCAJvTILE  PERSON'S. 


Joint  Stock  Companies — how  formed  and  dissolved. 


It  seems  proper  to  make  a  few  remarks  on  the  clause  almost  al- 
ways inserted  in  an  instrument  of  this  description,  and  by  which 
the  shares  of  each  partner  are  rendered  transferable  without  the 
consent  of  all  the  other  shareholders,  but  subject,  in  general,  to  the 
approbation  of  the  directors.  By  stat.  6  Geo.  1,  c.  18,  usually 
called  the  Bubble  Act,  companies  of  a  certain  tendency  very  loosely 
described  therein  were  declared  illegal,  as  was  "  the  acting  or  pre- 
suming to  act  as  a  corporate  body,  the  raising  or  pretending  to  raise 
transferable  stock,  transferring  or  pretending  to  transfer  any  share 
in  such  stock  without  legal  authority."  That  act,  which  passed 
during  the  excitement  occasioned  by  the  speculations  of  the  famous 
South  Sea  Company,  has  since  been  repealed,  (c/)  But  there  is  no 
doubt,  that  "  acting  or  presuming  to  act  as  a  corporate  body"  is  an 
offence  at  common  law,  viz.,  the  usurpation  of  a  royal  franchise, 
and  punishable  as  such  by  information ;  and  it  has  been  supposed 
that  a  company  which  attempts  to  make  its  shares  transferable 
without  any  restriction,  at  the  mere  will  of  the  holders,  is  guilty  of 
usurping  the  privileges  of  a  corporation,  and  consequently  illegal. 
"  There  can,"  said  Best,  C.  J.,  "  be  no  transferable  share  of  any  stock, 
except  the  stock  of  corporations,  or  of  joint  stock  companies,  created 
hy  acts  of  parliament — the  pretending  to  be  possessed  of  transferable 
stock,  is  pretending  to  act  as  a  corporation,  and  pretending  to  pos- 
sess a  privilege  which  does  not  belong  to  many  corporations."  (e) 

It  is,  however,  difficult  to  say  what  end  of  public  policy  would 
be  answered,  by  prohibiting  partners  from  dispensing  with  the 
necessity  of  obtaining  their  own  consent  to  the  introduction  of  a 
new  member  into  the  firm,  which  is  all  that  need  be  done,  in  order 


Bucarry  v.  Gill,  4  C.  <fe  P.  121.  A  company  of  a  public  nature  may  in  this  respect 
differ  in  some  degree  from  one  of  a  more  private  description,  as  a  power  of  a  pilblic 
nature  given  to  several  may  be  executed  by  the  majority.  See  Grindley  v-  Barber,  1 
B.  &  P  229.  Cortis  v.  Kent  W.  W.  Co.,  7  B.  &  C.  332.  Wilkinson  v.  Malin,  2  Tyrwh. 
544,  2  C.  &  J.  636. 

{<!)  By  stat.  6  Geo.  4,  c.  91. 

((?)  In  Duvergier  v.  Fellowes,  5  Bing.  267,  and  see  Josephs  v.  Pebrer,  3  B.  «fe  C.  639, 
The  Vice  C.  has  in  a  late  case  approved  of  the  above  doctrine.  Blundell  v.  "Winsor, 
8  Sim.  601.  But  see  London  Grand  Junction  Railway  Co.  v.  Freeman,  2  M.  &  G. 
606,  Garrard  v.  Hardey,  5  M.  &  G.  471,  in  which  it  was  much  qualified  after  time 
•taicen  to  consider  by  the  Court  of  Common  Pleas ;  also  Harrison  v.  Heathorn,  6  M.  <fe 
G.  81. 


JOINT  STOCK  COMPANIES.  105 

Joint  Stock  Companies — how  formed  and  dissolved. 

to  make  shares  in  the  concern  transferable  without  restriction  at  the 
will  of  the  holder;  and  in  a  late  case, (/)  Tindal,  C.  J.,  speaks  of 
such  a  proceeding  without  any  marks  of  disapprobation.  "  The 
present  case,". says  his  lordship,  "appears  not  to  be  governed  by 
reference  to  the  rules  which  restrain  partners  from  parting  with 
their  shares  in  ordinary  cases  without  each  other's  consent ;  for  in 
this  case,  the  power  of  transferring  the  scrip  to  any  one,  cannot  but 
have  formed  a  part  of  the  known  original  design."  Even  before 
the  repeal  of  stat.  6  Greo.  1,  c.  18,  Lord  Ellenborough  intimated, 
that  "  it  may  admit  of  doubt,  whether  the  raising  of  transferable  v- 
stock  is  in  any  case^er  se  an  offence  against  the  act,  unless  it  has 
relation  to  some  undertaking  or  project  which  has  a  tendency  to 
the  common  grievance,  prejudice,  or  inconvenience  of  his  Majesty's 
subjects,  or  of  great  numbers  of  them."  (g)  And  it  is  quite  clear, 
that  a  very  slight  restriction  on  the  transferability  of  the  shares, 
such,  for  instance,  as  the  common  one,  by  which  the  approbation  of 
the  directors  is  required,  was,  even  before  the  repeal  of  the  act,  suf- 
ficient to  render  the  company  legal ;  (A)  and  would  a  fortiori  be  so 
now,  if  indeed  the  necessity  of  any  restriction  at  all  continued  to 
exist.  At  all  events  it  is  now  settled,  that  on  a  plea,  framed  on  the 
words  of  6  Geo.  1,  c.  18,  sect.  19,  and  stating  that  a  company  raised 
transferable  stock  without  any  authority  from  the  crown  or  from 
parliament,  does  not  describe  any  thing  amounting  to  a  nuisance 
indictable  at  common  law.  (^) 

As  to  companies  created  by  ro3'al  charter,  they  must,  by  the 
express  enactment  of  1  Vict.  c.  73,  be  divided  into  shares,  and  there 
is  no  doubt  that  those  shares  may,  by  the  deed  of  association,  be 
legally  rendered  transferable  ad  libitum.  And  in  companies  com- 
pletely registered  under  the  Joint  Stock  Companies  Act,  it  is  de- 
clared, (y)  that  every  shareholder  shall  be  entitled  to  sell  and  trans- 
fer his  shares. 

It  has  been  decided^  that  when  the  shares  are,  by  the  provisions    '/ 

(/)  Fox  V.  Clifton,  9  Bingh.  120,  and  see  London  Grand  Junction  R.  Co.  v.  Free- 
aian,  2  M.  &  G.  606. 

(g)  R.  V.  Webb,  14  East,  406.     See  Josephs  v.  Pebrer,  3  B.  <fe  C.  639. 

(/()  R.  V.  Webb,  supra.     Pratt  V.Hutchinson,  15  East,  511. 

(i)  Garrard  v.  Hardey,  5  M.  &  G,  471.     Harrison  v.  Heathorn,  6  M.  &  G.  81. 

(j)  1  &8  Vict.  c.  110,  s.  54. 


106  MERCANTILE  PERSONS. 

Joint  Stock  Companies — how  formed  and  dissolved. 

of  an  act  of  parliament,  transferable  bj  deed  only,  tlie  purcliasei 
must  tender  a  conveyance  to  tlie  seller  for  execution,  before  lie  can 
sue  for  not  transferring  tbem,  even  though  tiie  act  makes  the  shares 
personal  property,  (h)  and  a  sealed  instrument  of  transfer  having 
the  name  of  the  vendee  in  blank  at  the  time  when  it  is  sealed  and 
delivered  is  invalid.  "It  is  an  attempt,"  said  Parke,  B.,  "to  make 
a  deed  negotiable  and  transferable  like  a  bill  of  exchange  or  ex- 
chequer bill,  which  the  law  will  not  permit."  (A  The  transferee 
may,  however,  under  certain  circumstances,  estop  himself  from 
taking  advantage  of  a  defect  in  the  transfer,  even  as  against  the 
company,  (m)  Generally  speaking,  shares  in  a  joint  stock  com- 
pany, not  falling  within  the  Statute  of  Frauds,  are  transferable  by 
parol, (n)  and  an  action  for  not  accepting  them  may  be  maintained 
by  the  vendor  upon  an  agreement  to  purchase  them,  (o)  If  the  ap- 
probation of  the  directors  be  required  as  a  preliminary  to  the  trans 
fer,  the  vendor  of  the  shares  must  procure  it;  and  if  they  refuse  it, 
although  improperly,  the  purchaser  may  rescind  the  contract,  (p)  ■ 

The  Act  of  Parliament  (q)  usually  euable^the  company  to 
sue  and  be  sued  in  the  name  of  its  secretary,  or  some  one  member 
to  be  appointed  for  that  purpose,  thereby  obviating  the  technical 
objections  that  might  arise  in  consequence  of  the  non-joinder  of 
some  among  a  great  number  of  partners,  providing  at  the  same 
time  that  the  suit  shall  not  be  abated  by  the  death  of  such  nominal 
plaintiff  or  defendant,  that  he  shall  be  indemnified  against  the  con- 
sequences of  the  action,  (?-)  and  not  disqualified  for  a  witness  by 

{k)  Stephens  v.  Medina,  4  Q.  B.  422.     Bowlby  v.  Bell,  16  L  J.,  C.  P.  18. 

{1)  Hibblewhite  v.  M'Morine,  6  M.  &.  W.  200 ;  see  Humble  v.  Langton,  7  M.  &  W. 
517.  And  Baron  Parke's  judgment  in  Daly  v.  Thompson,  10  M.  &  W.  319  ;  aad  sea 
London  and  Brighton  Railway  Co.  v.  Fairclough,  2  M.  &  G.  674. 

(m)  Sheffield  and  Manchester  Railway  Co.  v.  "Woodcock,  7  M.  &  W.  574. 

{n)  See  judgment  of  Parke,  B.,  ibid.,  and  Humble  v.  Mitchell,  11  A.  «feE.  205:  see 
also  Knight  v.  Barber,  16  M.  &  "W.  66. 
'(o)  Tempest  v.  Kilner,  2  C.  B.  300. 

(p)  Wilkinson  v.  Lloyd,  7  Q.  B.  27. 

(q)  Upon,  the  question  what  provisions  in  such  an  act  are  directory,  and  what 
imperative,  see  Thames  Haven  Dock  Co.  v.  Rose,  4  M.  <fe  Gr.  552. 

(rVjDifficulties  sometimes  arise  in  obtaining  execution  against  a  company  sued  in 
this  manner,  the  act  often  providing,  either  expressly  or  impliedly,  that  the  nominal 
defendant  shall  not  be  liable  to  execution,  or  to  attachment  in  case  of  a  reference  to 
arbitration.     See  Harrison  v.  Timmins,  4  M.  &  W.  510.     "Wormwell  v.  Hailstone, 


JOINT  STOCK  COMPANIES.  lOT 

Joiut  Stock  Companies — how  formed  and  dissolved. 

his  appearance  as  a  party  on  the  record.  It  sometimes  prohibits 
the  company  from  increasing  their  capital  beyond  a  certain  sum, 
and  always  conclades  with  a  cautionary  proviso,  that  nothing 
therein  shall  extend  to  incorporate  the  partnership,  and  a  direction 
that  the  act  shall  be  deemed  public.  Acts  of  this  sort  sometimes 
contain  a  clause,  directing  that  the  books  and  minutes  of  the  com- 
pany shall  be  evidence  for  certain  purposes,  especially  in  actions 
for  calls.  (5) 

In  Eailway,  Canal,  and  Market  Companies'  acts,  there  is  usu- 
ally a  proviso  that  the  shares  shall  be  personal  property ;  where 
this  is  the  case,  they  may  be  sold  by  parol.  And  it  has  been  hinted 
that  they  might  be  so  leven  without  such  a  proviso,  {i) 


6  Bingh.  668.  Corpe  v.  Glynn,  3  B.  <&  Ad.  801.  In  such  cases,  the  act  sometimes 
goes  on  to  provide,  that  execution  may  be  issued  against  the  members  of  the  com- 
pany, and  then  a  suggestion  of  the  facts  must  be  previously  entered  on  the  record, 
since  otherwise  the  execution  would  appear  not  to  be  warranted  by  the  judgment, 
and  the  court  would  set  it  aside  on  motion.  Bartlett  v.  Pentland,  1  B.  &  Ad.  704. 
If  the  act  contam  no  'such  provision,  the  plaintiff's  remedy  is  by  »iaw(^a!??iMS.  R.  v. 
St.  Katharine's  Dock  Co.  4  B.  <fe  Ad.  360.  Corpe  v.  Glynn,  3  B.  <fe  Ad.  801.  How- 
ever, when  the  judgment  is  entered  against  the  company,  it  is  by  execution. 
Whether  in  case  of_tlieir  having  no  assets,  the  court  would  issue  a  mandamus  to 
make  calls  is  uncertain.  R.  v.  Victoria  Park  Co.,  1.  Q.  B.  288.  In  the  case  of  joint 
stock  banks  and  companies  incorporated  under  the  statute  1  Vic.  c.  73,  it  is  by  scire 
facias.  Cross  v.  Law,  8  Dowl.  791:.  "VVhittenbury  v.  Law,  6.  Bingh.  N.  C.  345. 
Bosanquet  v:  Ransford,  and  Paulett  v.  Nuttall,  11  A.  ifeE.  520.  Eardley  v.  Law,  12 
A.  &  E.  802.  Ransford  v.  Bosanquet  in  error,  12  A.  &  E.  813.  Phillipson  v.  the 
Earl  of  Egremont,  *6  Q.  B.  587.  To  this  writ  the  defendant  may  set  up  as  an  answer, 
that  the  original  judgment  was  obtained  by  fraud  and  collusion,  but  he  cannot  rely  on 
any  defence  which  would  have  been  a  good  answer  to  the  original  action.  Phillip- 
son  V.  the  Earl  of  Egr^ont.  Bradley  v.  Eyre,  11  M.  &  W.  432.  Same  v.  Urquhart, 
ibid.  456.  In  a  late  case  it  was  held,  that  a  private  act,  which  directed  that  the 
chairman  might  sue  in  behalf  of  the  company,  "  for  recovering  any  debts  or  enforcing 
any  claims  or  demands,"  entitled  him  to  sue  for  a  libel  on  the  company.  "Williams  v. 
Beaumont,  10  Bingh.  260.     See  on  the  other  hand  Guthrie  v.  Fiske,  3  B.  <fe  C.  178. 

(s)  See  Southampton  Dock  Company  v.  Richard,  1  M.  &  G.  448.  Miles  v.  Bough, 
3  Q.  B.  845,  and  West  London  Railway  Co.  v.  Bernard,  ibid.  873,  as  to  the  construe, 
tion  of  such  a  clause  ;  and  see  London  Grand  Junction  Railway  Co.  v.  Preeman,  2  M. 
&  G.  G06.  Birmingham,  Bristol,  and  Thames  Railway  Co.  v.  Locke,  1  Q.  B.  256. 
Sanie  v.  Graham,  ibid.  271.  Sheffield  and  Manchester  Railway  Co.  v.  Woodcock, 
7M.  «k  W.  574.  Also  London  and  Brighton  Railway  Co.  v.  Fairclough,  3  Scott'a 
N.  R.  68 ;  2  M.  &  G.  674. 

{t)  Bradley  v.  Holdsworth,  3  M.  &W.  422.     Judgment  of  Parke,  B.,  in  Hibble- 


108  MERCANTILE  PERSONS. 


Joint  Stock  Companies — how  formed  and  dissolved. 


Sometimes  the  act  requires  that  the  proprietors  should  be 
registered  ;  such  a  clause  does  not,  however,  prevent  a  valid  trans- 
fer of  shares  from  being  made,  prior  to  the  formation  of  the  regis- 
ter, {u)  And  where  the  act  directed  that  the  subscribers  should 
constitute  the  company,  and  it  appeared  that  the  subscription  was 
by  signing  the  parliamentary  contract,  on  which  a  scrip  receipt  was 
handed  to  the  person  signing,  the  transferee  of  such  a  person  having 
been  registered,  was  held  to  have  become  a  proprietor,  the  enact- 
ment being,  that  the  proprietors  of  shares  might  sell  them,  {v) 

With  regard  to  the  pjatent — it  has  been  long  since  found  by 
experience  that  the  number  of  members  of  a  joint  stock  company, 
and  the  extent  of  the  transactions  in  which  it  engages,  render  it 
difficult  to  carry  it  on  under  the  general  rules  provided  by  law  for 
the  government  of  partnership.  Hence,  as  above  stated,  it  became 
usual  to  call  the  legislature  in  to  assist  in  supplying  the  powers, 
without  which  it  was  impossible  to  conduct  the  enterprise  advan- 
tageously ;  and  a  private  act  of  parliament  was  commonly  obtained 
for  that  purpose,  the  ordinary  provisions  of  which  have  been  just 
enumerated.  However,  when  joint  stock  companies  began  to  mul- 
tij)ly,  their  conductors  sometimes  endeavored  to  dispense  with  the 
private  act,  on  account  of  the  large  sums  of  money  it  cost,  and  the 
trouble  it  occasioned  to  obtain  it;  and  the  ingenuity  of  convey- 
ancers was  taxed  to  supply,  as  far  as,  by  ingrafting  special  terms 
upon  the  deed  of  settlement,  they  could  suppl}^,  the  want  of  legis- 
lative assistance.  It  was,  however,  impossible  for  them,  though 
they  certainly  exerted  great  skill,  to  accomplish  this  completely. 
With  respect  to  joint  stock  banks  of  issue  at  a  distance  of  more 
than  sixty-five  miles  from  London,  they  were,  indeed,  in  a  different 
situation  from  other  large  partnerships,  being  governed  by  a  law 
of  their  own  (stat.  7  Geo.  4,  c.  46),  which  not  only  aUoived,  but 
compelled  them  to  appoint  public  officers,  in  whose  names  they  were 
to  sue  and  be  sued.  With  respect  to  other  companies,  however, 
the  state  of  the  law  was  extremely  inconvenient.     The  attention 

white  V.  ]M'Morine,  6  M.  &W.  200.  Humble  v.  Mitchell,  11  A.  &  E.  205.  Duncroft 
V.  Albrecht,  12  Sim.  189 ;  see  also  Thompson  v.  Thompson,  1  Coll.  386 

(u)  Sheffield  and  Manchester  Railway  Co.  v.  AVoodcock,  1  M.  &.  W  674. 

(?')  Biniiinghara,  Bristol,  and  Thames  Railway  Co.  ■«.  Locke,  1  Q.  B.  256.  Same 
«.  Graham,  ih.  271.     As  to  the  stamp  on  transfers,  see  "Wolsey  v.  Cox,  2  Q.  B.  32l. 


JOINT  STOCK  COMPANIES.  109 

Joint  Stock  Companies — how  formed  and  dissolved. 

of  parliament  was  at  last  directed  towards  the  subject,  and  it  was 
thought  expedient  to  empower  the  crown  to  grant  to  joint  stock 
companies  such  powers  as  were  likely  to  be  most  useful  to  them, 
without  either  putting  them  to  the  expense  of  obtaining  a  private 
act  of  parliament  or  conferring  upon  them  all  the  incidents  of  cor- 
porate existence. 

The  first  attempt  made  by  the  legislature  to  effect  this  object 
was  by  6  Geo.  4,  c.  91,  which  enacted,  "  that  in  any  charter  of  in- 
corporation thereafter  to  be  granted,  it  should  be  lawful  for  his  Ma- 
jesty to  declare  and  provide  that  the  members  of  such  corporation 
should  be  individually  liable  in  their  persons  and  property  for  the 
debts,  contracts,  and  engagements  of  the  corporation,  to  such  ex- 
tent and  subject  to  such  regulations  and  restrictions  as  his  IMajesty, 
his  heirs  and  successors,  might  deem  fit  and  proper."  This  act, 
however,  proved  insufi&cient  to  meet  the  exigency  of  the  case,  on 
account  of  the  difiiculty  and  expense  of  obtaining  charters  of  in- 
corporation for  every  new  joint  stock  company.  The  next  legis- 
lative experiment  is  contained  in  stat.  4  &  5  Wm.  4,  c.  94 ;  an  act 
by  which  a  mode  of  remedying  the  difiiculty  was  adopted  precisely 
the  converse  of  that  tried  in  stat.  6  Geo.  4,  c.  91 ;  for  by  6  Geo. 
4,  c.  91,  the  crown,  as  we  have  seen,  was  empowered  to  cut  down 
the  immunities  of  corporations  by  rendering  their  members,  to 
some  extent,  individually  liable,  so  as  to  reduce  them  nearer  to  the 
level  of  ordinary  companies ;  but  by  stat.  4  &  5  Wm.  4,  c.  94,  the 
crown  was  empowered  to  increase  the  privileges  of  companies  so 
as  to  lift  them  up  nearer  to  the  level  of  corporations.  And  for  this 
purpose,  the  crown  was  enabled  to  grant  to  joint  stock  'companies, 
by  letters  patent,  the  privilege  of  bringing  or  defending  actions  in 
the  name  of  any  of  their  ofl&cers,  upon  certain  conditions.  The 
provisions  of  this  statute,  however,  not  being  found  sufficiently  ex- 
tensive, and  the  subject  having  been  much  investigated  and  dis 
cussed,  in  consequence  of  the  prodigious  growth  of  railroad,  bank- 
ing, gas,  steam,  mining,  and  other  joint  stock  companies,  an  at- 
tempt was  made  by  stat.  1  Vic.  c.  73,  entitled,  "  An  act  to  en- 
able her  Majesty  to  confer  certain  powers  and  immunities  on 
trading  and  'other  companies,"  by  which  the  powers  of  the  crown 
to  confer  peculiar  privileges  upon  joint  stock  companies  were  re- 
gulated. 


110  MERCANTILE  PERSON'S. 

Joint  Stock  Companies — how  formed  and  dissolved. 

This  statute,  after  reciting (z^;)  "that  divers  associations  may 
be  formed  for  trading  and  other  purposes,  some  of  which  it  would 
be  inexpedient  to  incorporate,  though  it  would  be  expedient  to  con- 
fer upon  them  some  of  the  privileges  of  corporations,  and  also  to 
confer  upon  them  other  powers  and  privileges,"  and  referring  to  the 
above  enactments,  6  Geo.  4,  c.  9,  and  4  &  5  Wm.  4,  c.  94,  empow- 
ered {x)  her  Majesty  to  grant,  by  letters  patent,  to  any  company  any 
privilege  which  she  could  grant  by  charter  of  incorporation.  It 
also  enacted  (y)  that  in  such  patent  it  may  be  provided  that  all 
suits  and  proceedings  ly  or  on  helicdf  of  the  company  shall  be  car- 
ried on  in  the  name  of  one  or  two  of&cers  appointed  to  sue  and 
be  sued  in  the  name  of  the  company,  and  that  all  suits  and  pro- 
ceedings against  the  company  shall  be  carried  on  against  such 
officer,  or  if  there  be  none  such,  against  any  member  of  the  com- 
pany, provided  that  any  member  may  be  joined  with  such  officer 
for  the  purpose  of  discovery,  or  in  case  of  fraud.  That  (z)  in  such 
patents  the  liability  of  members  for  debts  and  engagements  may 
be  limited  to  such  extent  per  share  as  shall  be  therein  declared. 
That  (a)  the  company  shall  be  formed  by  a  deed  or  agreement,  {h) 
and  the  undertaking  divided  into  shares,  each  of  which  is  to  have 
a  distinguishing  number.  This  deed  or  agreement  must  set  forth 
the  name  or  style  of  the  companj^,  and  the  names  or  styles  of  its 
members,  the  date  of  its  commencement,  the  business  or  purpose 
for  which  it  is  formed,  the  principal  or  only  place  for  carrying  it 
on,  and  must  appoint  two  or  more  officers  to  sue  and  be  sued  in 
its  behalf.  The  company  is  also  (c)  to  make  a  return  to  one  of 
the  officers  for  enrolment  mentioned  in  the  act,  of  the  date  of  the 
grant,  the  name  or  style  of  the  company,  its  business  or  purpose, 
its  principal  or  only  p*ace  of  business,  the  total  number  of  shares, 
the  amount  to  which  each  share  is  to  render  its  holder  liable,  the 
names,  and  (except  as  to  bodies  politic)  the  places  of  abode  of  its 
members,  and  the  distinctive  numbers  of  their  respective  shares, 
and  also  of  the  names  and  descriptions  of  the  officers  appointed  to 
sue  and  be  sued.     Any  change  in  the  style  of  the  company  is  for- 

(m)  Sect.  1.  {x)  Sect.  2.  {y)  Sect  3. 

\z)   Sect.  4.  (a)  Sect.  5. 

\b)  See  as  to  this,  Phillipson  v.  Earl  of  Egremont,  6  Q.  B.  587. 

(c)  Sect.  6. 


JOINT  STOCK  COMPANIES.  Ill 

Joint  Stock  Companies — how  formed  and  dissolved. 

bidden,  and  returns  are  to  be  made  of  any  change  in  its  place  of 
business,  (c/)  of  persons  ceasing  to  be  or  becoming  members,  ex- 
cept by  transfer,  or  of  any  change  in  the  names  of  members,  within 
three  months,  (e)  In  the  case  of  any  transfer,  (/)  the  transfer,  or 
a  memorandum  stating  its  date  and  the  name  and  abode  of  the 
transferee,  and  the  numbers  of  the  shares  to  which  it  relates, 
signed  by  the  parties,  is  to  be  left  at  the  company's  principal  or 
only  ofiice,  and  {g)  the  company  are,  within  three  calendar  months, 
or  sooner  on  the  request  of  either  of  the  parties,  to  make  a  return 
of  it,  containing  the  last-mentioned  particulars,  together  with  the 
name  and  place  of  abode  of  the  transferor.  Where  {h)  the  extent 
of  the  liability  of  the  members  is  limited,  any  member  who  has 
been  compelled  by  execution  to  pay  money  for  the  company,  is  to 
make  a  return,  accompanied  by  a  voucher,  in  a  given  form,  and  (^') 
if  any  such  sum  be  repaid,  a  return  of  that  must  also  be  made. 
Upon(y)  the  death,  the  resignation,  or  removal  of  one  of  the  oflGi- 
cers  appointed  to  sue  and  be  sued,  the  company  are,  within  three 
calendar  months,  to  appoint  another,  and  return  the  names  and 
descriptions  of  both.  These  various  ijc)  returns  are  to  be  signed 
by  one  of  such  officers,  or  if  there  be  none  such,  by  a  member,  and 
verified  by  a  declaration,  but  no  return  (J)  of  the  name  and  abode 
of  a  member  or  transferee  shall  be  invalid  by  reason  of  any  error 
or  omission,  provided  it  is  rectified  within  one  calendar  month  after 
discovery,  and  it  was  not  fraudulent.  Where  (m)  the  principal  or 
only  place  of  business  is  in  England,  the  returns  are  to  be  made  to 
the  Enrolment  Office  of  the  Court  of  Chancery ;  where  in  Scotland, 
to  the  General  Kegistry  Office ;  where  in  Ireland,  to  the  Enrolment 
Office  of  the  Court  of  Chancery  ;  and  they  may  be  inspected  by  any 
person  on  payment  of  one  shilling,  and  certified  copies  (which  are 
made  evidence)  procured  (?2)  on  payment  of  one  shilling  and  six- 
pence per  folio.  Until  registered,  (o)  no  new  member  can  sue  for 
his  share  of  profits,  and  the(^)  liability  of  old  members  continues 
until  their  ceasing  to  be  such  is  registered.     Proceedings  {q)  by  or 

{d)  Sect.  T.  (c)  Sect  8.  (/)  Sect.  9. 

{g)  Sect.  10.  [h)  Sect.  11.  {i)  Sect.  12. 

(j)  Sect.  13.  {k)  Sect.  14.  (Z)  Sect.  15. 

(rn)  Sect.  16.  (m)  Sects.  1*7  and  18.  (o)  Sect.  20. 

(p)  Sect.  21,  \q)  Sect.  22. 


112  MERCANTILE  PERSONS. 


Joint  Stock  Companies — how  formed  and  dissolved. 


against  the  company  are  not  to  be  abated  by  the  death,  resigna- 
tion, or  removal  of  the  officer,  or  any  change  in  the  members,  and 
both  (r)  officers  and  members  are  rendered  competent  witnesses  in  all 
cases.  Judgments,  (-s)  decrees,  interlocutors,  and  orders  against  the 
officer,  are  to  have  the  same  effi^ct  as  if  obtained  against  all  persons 
liable,  and  execution  may  issue  accordingly  0  to  the  amount  to 
which  each  appears  by  the  register  to  be  still  liable.  The  (w)  bank- 
ruptcy, insolvency,  or  stoppage,  also,  of  individual  members,  is  not 
to  be  construed  that  of  the  c'ompany.  Service  {v)  of  legal  proceed- 
ings on  the  company  may  be  on  its  clerk,  or  at  its  head  office,  or, 
if  the  clerk  cannot  be  found,  on  any  officer  or  agent  at  his  place 
of  abode,  and(zy)  summonses,  demands,  and  notices  by  the  com- 
pany may  be  by  its  clerk,  attorney,  or  solicitor.  In  case  (a;)  of  the 
determination  of  the  company,  it  shall  be  considered  to  continue 
to  subsist  till  its  affairs  are  wound  up,  in  order  to  such  winding 
up,  and  it  may  sue  and  be  sued  till  such  winding  up  is  completely 
effected. 

Thus,  it  will  be  seen,  a  comjoletely  new  system  was  created,  to 
which  bodies  receiving  charters  (y)  under  this  act  were  subjected, 
such  companies  partaking  in  some  degree  of  the  nature  of  a  cor- 
poration, though  in  other  respects  being  governed  by  the  general 
law  of  partnership.  Under  this  statute,  however,  very  few  appli- 
cations for  charters  were  made,  and  the  rapid  increase  in  the  num- 
ber of  these  associations  rendered  some  general  enactment,  the 
operation  of  which  should  not  be  dependent  upon  their  option, 
necessary.     The  statute  7  &  8  Vict.,  c.  110,  was  therefore  passed, 

(r)  Sect.  23.  (s)  Sect.  34. 

{t)  Tliis  is  to  obviate  the  difficulty  which  occurred  in  "Wormwell  v.  Ilailstone,  6 
Bingh.  668.  Corpe  v.  Glynn,  3  B.  &  Ad.  801,  and  Bartlett  v.  Pentland,  1  B.  &  Ad.  704. 
The  proper  course  of  proceeding  against  a  member  is  by  scire  facias,  to  which  he  may 
plead  that  the  judgment  was  obtained  by  fraud  or  collusion  between  the  plaintiff 
and  the  public  officer,  but  he  cannot  plead  any  matter  which  would  have  been  an 
answer  to  original  action.  As  to  this  and  the  requisites  of  a  declaration  in  sci.fa., 
see  Phillipson  v.  The  Earl  of  Egremont,  6  Q.  B.  587. 

{u)  Sect.  25.  (v)  Sect.  26. 

(to)  Sect.  27.  (.r)  Sect.  28. 

(y)  Before  any  charter  could  be  granted,  notice  of  the  application  for  it  must 
have  been  inserted  three  times  in  the  Gazette,  and  in  one  newspaper  at  least  in  the 
county  where  the  principal  place  of  business  was  intended  to  be,  at  intervals  of  not 
less  than  one  week.     Sect.  32. 


JOI]S'T  STOCK  COMPANIES.  113 

Joint  Stock  Companies — how  formed  and  dissolved. 

which  created  a  uniform  system  with  reference  to  companies  es- 
tablished after  the  first  day  of  ISTovembei',  18-i-i.  The  provisions 
of  this  act  are  so  minute  and  numerous,  that  it  is  impossible  to 
furnish  an  abridgment  which  can  convey  accurate  information  as 
to  its  provisions,  and  the  following  epitome  can,  therefore,  only  be 
considered  as  affording  a  general  view  of  them,  and  of  the  sj^stem 
they  create.  AYhere  j)recise  acquaintance  with  the  details  is  re- 
quired, recourse  must  be  had  to  the  statute  itself.  This  statute, 
after  reciting  that  it  is  expedient  to  make  provision  for  the  due 
registration  of  joint  stock  companies  during  the  formation  and  sub- 
sistence thereof,  and,  after  such  complete  registration  as  therein 
is  mentioned,  to  invest  such  companies  with  the  qualities  and  inci- 
dents of  corporations  with  some  modifications,  and  subject  to  cer- 
tain conditions  and  regulations  ;  and  also  to  prevent  the  establish- 
ment of  any  companies  which  shall  not  be  duly  authorized  and 
regulated  according  to  the  provisions  of  that  act,  declares  (2)  that 
its  provisions  shall  apply  to  every  joint  stock  company,  the  -^Drma- 
tion  of  which  shall  be  commenced  after  the  first  of  November, 
1844,  for  any  commercial  purpose,  or  purpose  of  profit,  or  insur- 
ance (except  banking  companies,  schools,  and  scientific  and  literary 
institutions,  friendly,  loan,  and  benefit  building  societies  duly  cer- 
tified and  enrolled,  other  than  friendly  societies  granting  assurances 
on  lives  as  afterwards  mentioned,  companies  incorporated  by  sta- 
tute or  charter,  or  authorized  by  statute  or  letters  to  sue  or  be 
sued  in  the  name  of  some  ofl&cer  or  person,  partnerships  (a)  for 
making  mines  and  quarries  on  the  cost  book  principle,  as  (6)  well 
as  Irish  anonymous  partnerships) ;  and  that  the  term,  joint  stock 
company,  shall  comprehend  every  partnership  whereof  the  capital 
is  divided  into  shares,  so  as  to  be  transferrable  without  the  express 
consent  of  allthe  co-partners ;  every  life,  fire,  storm,  other  casualty, 
or  marine  insurance  and  annuity  company,  and  every  friendly  so- 
ciety, insuring  upon  one  life,  or  for  any  one  person  more  than 
£200,  as  well  as  every  partnership  which,  at  its  formation,  or  by 
subsequent  admission,  (except  any  admission  subsequent  on  devo- 
lution or  other  act  of  law,)  shall  consist  of  more  than  25  members. 
But  that,  except  where  specially  provided,  it  shall  not  extend  to 

(r)  Sect.  2.  (a)  Sect.  73.  X^)  Sect.  74. 

S 


114  MERCANTILE  PERSONS. 

Joint  Stock  Companies — how  formed  and  dissolved. 

companies  for  executing  any  bridge,  road,  cut,  canal,  reservoir, 
aqueduct,  waterwork,  navigation,  tunnel,  archway,  raihvay,  j^ier, 
port,  harbor,  ferr}^,  or  dock,  which  cannot  be  carried  into  execu- 
tion without  obtaining  the  authority  of  parliament.  Before  {c)  pro- 
ceeding to  make  public  any  proposal  to  form  a  company,  either  for 
executing  any  such  last-mentioned  work  or  for  any  other  purpose, 
the  promoters  or  their  solicitor  must  make  a  return  to  the  registrar 
of  joint  stock  companies,  whom  the  Board  of  Trade  are  authorized 
to  appoint,  {d)  of  the  proposed  name,  business,  or  purpose  of  the 
company,  and  the  names,  occupations,  places  of  business  and  re- 
sidence of  its  promoters,  whereupon  they  are  entitled  to  a  certifi- 
cate of  provisional  registration.  But  they  are  also  bound,  from 
time  to  time,  to  make  returns  of  the  name  of  the  street  and  of  the 
number  or  other  designation  of  the  provisional  place  of  business, 
of  the  names,  occupations,  places  of  business,  and  residence  of  the 
committee,  or  body  acting  in  its  formation,  together  with  a  written 
consent  of  every  such  member  or  promoter  to  become  such,  and 
an  agreement,  signed  by  him,  to  take  one  or  more  shares,  and  of 
the  names,  occupations,  places  of  business  and  residence  of  the  of- 
ficers, and  of  the  subscribers  to  the  company.  Likewise  a  return 
must  be  made,  before  it  is  circulated,  of  a  copy  of  every  prospec- 
tus, circular,  handbill,  advertisement,  or  other  such  document  ad- 
dressed to  the  public,  or  the  subscribers,  or  others,  and  afterwards, 
until  complete  registration,  of  ever}'-  addition  to,  or  change  in,  any 
of  those  particulars.  A  failure  (e)  for  the  period  of  a  calendar 
month  after  these  particulars  have  been  ascertained  or  determined 
on,  to  register  them,  subjects  the  promoters  to  a  penalty,  or  (/)  if 
they  have  appointed  an  attorney  or  solicitor  to  make  the  returns, 
then  he  is  liable  to  a  penalty  ;  and  if  the  omission  were  fraudulent, 
he  may  be  suspended  from  practice,  or  struck  off  the  rolls.  No  (g) 
company,  whether  for  executing  any  such  work  under  the  au- 
thority of  parliament,  or  any  other  purpose  can  act  otherwise  than 
provisionally  until  it  has  obtained  a  certificate  of  complete  regis- 
tration, and  it  cannot  obtain  this,  unless  it  be  formed  by  a  deed  of 
settlement  appointing  not  less  than  three  directors,  and  one  or  mora 


(c)  Sect.  4.  (d)  Sect.  19.  (e)  Sect  5. 

(/)  Sect.  6.  (.9)  Sect.  7. 


JOINT  STOCK  COMPANIES.  115 

Joint  Stock  Companies — how  formed  and  dissolved. 

auditors,  and  setting  forth  in  a  schedule  the  name  and  business  or 
purpose  of  the  company ;  the  principal  or  only  place  for  carrying  it 
,  and  every  branch  office ;  the  amount  of  the  proposed  capital 
and  additional  capital,  the  means  by  which  it  is  to  be  raised,  and  if 
it  be  not  money,  or  entirely  money,  its  nature  and  value ;  the 
amount  of  money  to  be  raised  by  loan ;  and  the  total  amount  of 
capital  subscribed,  or  proposed  to  be  subscribed,  at  the  date  of  the 
deed.  Also  the  division  of  the  capital  into  equal  shares,  and  the 
number  of  them  each  being  distinguished  by  a  separate  number  in 
regular  series ;  the  names,  occupations,  and  places  of  residence  of 
the  subscribers ;  the  number  of  shares  each  subscriber  holds,  and 
their  respective  numbers,  distinguishing  the  number  of  the  shares 
on  which  the  deposit  has  been  paid  from  those  on  which  it  has  not 
been  paid  ;  the  names,  occupations,  places  of  business,  and  residence 
of  the  then  directors,  trustees  and  auditors;  and  the  duration  of  the 
company,  and  the  mode  or  condition  of  its  dissolution.  The  deed 
must  also  contain  a  covenant,  by  every  shareholder  with  a  trustee, 
to  pay  the  instalments  on  his  shares,  and  to  perform  the  several  en- 
gagements contained  in  it  on  the  part  of  the  shareholders.  Pro- 
visions must  likewise  be  inserted  for  such  of  the  purposes  sc^  forth 
in  the  schedule  A  to  the  act,  as  the  nature  and  business  of  the  com- 
pany may  require,  regulating  the  holding  of  meetings,  and  the  pro- 
ceedings thereat ;  the  execution  of  the  affairs  of  the  company  and 
the  registration  of  its  proceedings ;  the  distribution  of  its  capital 
into  shares  or  the  apportionment  of  the  interest  in  its  property ;  and 
the  borrowing  of  money  where  that  is  contemplated.  The  deed, 
before  it  can  be  registered,  must  be  signed  by  one-fourth  in  number 
of  the  persons  who  at  its  date  have  become  subscribers,  and  who 
shall  hold  one-fourth  of  the  maximum  number  of  shares,  and  be 
certified  by  two  directors.  Upon  the  production  of  such  deed,  and 
a  complete  abstract  of  it,  and  not  till  then,  the  registrar  may  grant 
a  certificate  of  complete  registration,  which  is  made  evidence  of  the 
proper  provisions  being  contained  in  the  deed,  and  of  the  perform- 
ance of  the  conditions  required.  Any  defect  or  omission  may  be 
supplied  by  a  supplementary  deed,  which,  in  order  to  be  operative, 
must  be  registered.     If  any  original  or  supplementary  deed  (A)  at 

(A)  Sect  8. 


116  MERCANTILE  PERSOXS. 


Joint  Stock  Companies — how  formed  and  dissolved. 


any  time  appear  to  the  registrar  to  be  defective  or  inconsistent  with 
the  act,  he  is  to  notify  the  particulars  to  the  persons  or  the  company 
by  whom  it  shall  have  been  presented.     This  deed  of  settlement,  (i) 
however,  may  be  dispensed  with,  and  a  certificate  of  complete  regis- 
tration shall  be  granted  in  the  case  of  any  of  the  companies  above 
mentioned  for  works  which  cannot  be  carried  into  execution  with- 
out the  authority  of  parlianient,  if  they  deposit  in  the  ofiices  of  the 
two  Houses,  in  compliance  with  the  standing  orders,  such  deeds  of 
partnership  or^  subscription  contracts  as  shall  be  required  to  be  de- 
posited by  the  standing  orders,  and  also  return  to  the  Kegistry  of- 
fice a  copy  of  them,  together  with  a  certificate  of  the  receipt  of  such 
plans,  sections,  and  books  of  reference  as  the  Board  of  Trade  ap- 
points. -  Throughout  the  continuance  of  the  company  a  copy  of 
every  new  or  supplementary  deed  of  settlement,  (j')  with  an  abstract 
of  it,  must  be  transmitted  within  one  month  from  its  date  to  the 
registrar ;  and  within  six  months  after  any  change  shall  have  taken 
place  in  any  of  the  particulars  required  to  be  set  forth  in  the 
schedule  to  the  deed  of  settlement,  except  so  far  as  respects  the 
shareholders  and  their  shares,  returns  of  the  particulars  so  changed 
must  be  made,  under  a  penalty  upon  each  director  not  exceeding 
£20.'    In  the  months  of  January  and  July,  annually,  the  directors 
of  every  completely  registered  company  (/c)  must  make  returns  to 
the  registrar,  in  a  given  form,  of  every  transfer  of  any  share  made 
since  the  last  return  ;  of  the  names  and  abodes  of  all  persons  who 
have  ceased  to  be,  or  have  become  shareholders,  otherwise  than  by 
transfer ;  and  of  all  changes  in  the  names  of  the  shareholders,  b;^ 
marriage  or  otherwise,  in  that  interval,  under  a  similar  penalty.     If 
any  {I)  party,  however,  to  a  transfer  of  a  share  shall  at  any  tijae  in 
writing  request  the  directors  to .  make  a  return  thereof,  they  forth- 
with shall  make  the  same  ;   and  on  proof  of  such  transfer  and  re- 
quest to  the  satisfaction  of  the  registrar,  the  party  may  make  a  re- 
.  turn  of  the  transfer.     Until  (m)  the  return  of  the  transfer,  or  other 
fact  or  event,  whereby  a  person  becomes  the  holder  of  any  share, 
is  made,  it  shall  not  be  lawful  to  pay  such  person,  nor  for  him  to 
sue  for  or  recover  any  profits,  or  to  act  as  a  shareholder ;  and  the 

(i)  Sect.  9.  (J)  Sect.  10.  '  {k)  Sect.  11. 

{I)  Sect.  12.  (m)  Sect.  13. 


JOINT  STOCK  COMPANIES.  117 

Joint  Stock  Companies — how  formed  and  dissolved. 

person  whose  share  has  been  transferred,  so  far  as  respects  his  lia- 
bility to  the  debts  and  engagements,  and  the  reimbursement  of  any 
loss,  damages,  costs  and  charges  he  may  incur  thereby,  is  deemed 
to  continue  a  member.  In  January,  {-n)  or  at  such  other  period  as 
the  Board  of  Trade,  on  the  application  of  any  company,  shall  ap- 
point, every  completely  registered  company  shall  annually  return 
to  the  registry  the  name  and  business  "of  the,  company,  on  the  re- 
ceipt of  which  the  registrar  shall  give  a  certificate  thereof ;  and  if 
this  return  be  not  made  within  one  month,  the  company  becomes 
liable  to  a  penalty.  Upon  (o)  the  return  of  the.  required,  documents . 
and  particulars,  it  is  declared  to  be  the  duty  of  the  registrar  to  cause 
to  be  written  on  every  of  them  the  day  of  the  receipt  thereof,  and 
a  number  denoting  the  order  in  which  they  were  received,  and  to 
give  an  acknowledgment  of  the ,  receipt ;  and  if  such  returns  •  or 
documents  be  conformable  to  the  act,  to  register  the  same,  and  to 
grant  to  the  company  a  certificate  of  provisional  or  complete  regis- 
tration, as  the  case  may  require,  signed  by  him,  and  sealed  with  the 
seal  of  his  office ;  and  in  the  absence  of  evidence  to  the  contrary, 
any  such  certificate  shall  be  received  in  evidence  without  proof  of 
the  signature  or  seal.  Until  (p)  complete  registration,  the  pro- 
moters or  their  solicitor  must  make  the  required  returns,  signed  by 
one  of  them  at  least,  or  their  solicitor,  and  after  complete  registra. 
tion  the  directors  must  make  these  returns,  signed  by  one  director 
at  least,  and  sealed  with  the  seal  of  the  company.  The  form  of,  (q) 
and  manner  and  time  of  making  these  returns  may  be  varied,  or 
any  of  them  may  be  dispensed  with  by  the  Board  of  Trade  ac- 
cording to  regulations  published  in  the  Gazette,  and  {r)  every  per- 
son shall  be  at  liberty  to  inspect  the  returns,  deeds,  registers,  and 
indexes  kept  by  the  registrar,  upon  payment  of  one  shilling,  and 
may  require  a  copy  or  extract,  certified  by  the  registrar,  upon  pay- 
ment of  such  fee,  not  exceeding  6d.  per  folio,  as  the  Board  of  Trade 
may  appoint;  which  copy  or  extract  so  certified  shall  be  evidence 
without  proof  of  the  signature  or  seal.  The  certificate  of  (s)  pro- 
visional registration  continues  in  force  for  twelve  months,  and  no 
longer,  unless  it  be  renewed,  but  no  renewed  certificate  shall  be 


(n)  Sect.  14.  (o)  Sect.  15.  (p)  Sect.  16. 

(q)  Sect.  11.  (r)  Sect.  18.  (s)  Sect.  23. 


118  MERCANTILE  PERSONS. 


Joint  Stock  Companies — how  formed  and  dissolved- 


in  force  for  a  longer  period  than  twelve  months.  "  During  such 
period  the  promoters  may  assume  the  name  of  the  intended  com- 
pany ;  but,  coupled  with  the  word  "registered  provisionally,"  open 
subscription  lists,  allot  shares,  and  receive  deposits  at  a  rate  not 
exceeding  IO5.  for  every  £100  on  the  amount  of  every  share  in  the 
capital,  and  in  the  case  of  the  companies  for  the  works  above  men 
tioned  which  cannot  be  carried  into  execution  without  the  author- 
ity of  parliament,  such  further  sum  on  each  share  as  may  be  re- 
quired by  the  standing  orders  to  be  deposited ;  and  also  perform 
such  other  acts  as  are  necessary  for  constituting  the  company,  or 
for  obtaining  letters  patent,  or  a  charter,  or  :m.  act  of  parliament. 
But  they  may  not  make  calls,  nor  purchase,  contract  for,  nor  hold 
lands,  nor  enter  into  contracts  for  any  services  or  the  execution  of 
any  works,  or  the  supply  of  any  stores,  except  such  services,  stores, 
or  other  things  as  are  necessarily  required  for  establishing  the  com- 
pany, and  any  purchase  or  other  contract  to  be  made  conditional  on 
the  completion  of  the  company,  and  to  take  eflect  after  the  certifi- 
cate of  complete  registration,  or  act  of  parliament,  or  charter,  or 
letters  patent  shall  have  been  obtained ;  and  exce]3t,  in  the  case  of 
companies  for  executing  such  works  as  aforesaid,  contracts  for  ser- 
vices in  making  surveys  and  performing  all  other  acts  necessary  for 
obtaining  an  act  of  incorporation,  or  other  act  for  enabling  the  com- 
pany to  execute  such  works.  If,  {t)  before  obtaining  a  certificate 
of  provisional  registration,  any  of  the  promoters  or  any  person  em- 
ployed by  or  under  them,  take  any  moneys  in  consideration  of  the 
allotment,  either  of  shares,  or  of  any  interest  in  the  concern,  or  by 
way  of  deposit  for  shares  to  be  granted  or  allotted ;  or  issue  in  the 
name  or  on  behalf  of  the  company,  any  note,  or  scrip,  or  letter  of 
allotment,  or  other  instrument,  or  writing  to  denote  a  right,  or 
claim,  or  preference,  or  promise  absolute  or  conditional  to  any 
shares ;  or  advertise  the  existence  or  jDroposed  formation  of  the 
company ;  or  make  any  contract  whatsoever  for,  or  in  the  name,  or 
on  behalf  of  the  intended  company,  such  person  (11)  is  liable  to  for- 
feit a  sum  not  exceeding  £20. 

The  act  then  proceeds  to  make  provisions  respecting  companies 
after  they  have  obtained  a  certificate  of  complete  registration.     Ini' 

(t)  Sect.  24.  («)  Sect.  25. 


JOINT  STOCK  COMPANIES.  119 

Joint  Stock  Companies — how  formed  and  dissolved. 

mediately  upon  the  company  obtaining  this  certificate,  the  then 
shareholders  and  all  succeeding  shareholders,  whilst  shareholders, 
are  incorporated  as  from  the  date  of  the  certificate,  hj  its  name, 
and  for  the  purpose  of  carrying  on  the  business  for  which  it  was 
formed,  but  only  according  to  the  provisions  of  the  act  and  the 
deed  of  settlement,  and  for  the  purpose  of  suing  and  being  sued, 
and  of  taking  and  enjoying  the  property  and  effects  of  the  com- 
pany ;  and  any  covenants  or  engagements  entered  into  with  any 
trustee  on  behalf  of  the  company  before  complete  registration,^  may 
then  be  proceeded  on  and  enforced  by  the  company,  as  if  made  or 
entered  into  with  the  company  after  incorporation.  The  company 
is  to  continue  so  incorporated,  until  it  shall  be  dissolved  and  all  its 
affairs  wound  up,  yet  so  as  not  in  any  wise  to  restrict  the  liability 
of  any  of  the  shareholders  under  any  judgment,  decree,  or  order 
for  the  payment  of  money,  which  shall  be  obtained  against  the 
compan}^  or  any  of  its  members  in  au}^  action  or  suit  prosecuted 
by  or  against  the  company,  but  every  shareholder  shall  in  respect 
of  such  moneys,  subject  as  afterwards  provided,  (v)  be,  and  con- 
tinue liable,  as  he  would  have  been  if  the  company  had  not  been 
incorporated.  The  company  is  then  empowered  to  use  the  regis- 
tered name,  adding  thereto  "registered;"  to  have  a  common  seal, 
with  power  to  change  it,  but  on  which  must  be  inscribed  the  name 
of  the  company ;  to  sue  and  be  sued  by  their  registered  name  in 
respect  of  any  claim  by  or  upon  the  company  upon  or  by  any  per- 
son, whether  a  member  of  th'e  company  or  not ;  to  enter  into  con- 
tracts for  the  execution  of  the  works  and  for  the  supply  of  the 
stores,  or  for  any  other  necessary  purpose  of  the  company ;  to  pur- 
chase as  places  of  business,  and  also  (but  with  tlie  license  first  ob- 
tained of  the  Board  of  Trade)  such  other  real  property  as  the  nature 
of  the  business  of  the  comjoany  may  require ;  to  issue  certificates 
of  shares  and  receive  instalments  from  subscribers;  to  borrow 
money  within  the  limits  prescribed  by  the  deed;  to  declare  divi- 
dends out  of  the  profits ;  to  hold  general  meetings ;  to  make,  at 
general  meetings  specially  summoned  for  the  purpose,  by-laws  not 
inconsistent  with  the  act  or  deed  of  settlement,  for  the  regulation 
of  the  shareholders,  members,  directors,  and  of&cers;  and  to  per- 

(«)  Sect.  56. 


I«i0  MERCANTILE  PERSONS. 


Joint  Stock  Companies — how  formed  and  dissolved. 


form  all  other  acts  for  carryiog  into  effect  the  purposes  of  the  com- 
pany, in  all  respects  as  other  partnerships  are  entitled  to  do.  The 
company  is  also  required  from  time  to  time  to  appoint  for  a  period 
not  longer  than  five  years,  not  less  than  three  directors,  who  may 
be  re-eligible,  as  provided  by  any  deed  of  settlement  or  by-law ; 
and  to  appoint  and  remove  one  or  more  auditors,  and  such  other 
officers  as  the  deed  of  settlement  may  authorize.  There  is,  how- 
ever, a  provision,  with  regard  to  any  company  for  carrying  on  the 
works  above-mentioned  which  cannot  be  cariied  into  execution 
without  obtaining  the  authority  of  parliament,  that  before  the 
granting  of  the  act  it  shall  not  be  lawful  for  its  officers  to  exercise 
this  power  to  enter  into  contracts,  otherwise  than  conditionally 
upon  obtaining  the  act;  or  to  receive  instalments  beyond  the  de- 
posits required  by  the  standing  orders,  or  such  other  sum  as  may 
be  requisite  for  obtaining  the  act ;  or  to  exercise  the  power  to  bor- 
row money,  or  to  declare  dividends.  Subject,  however,  to  these 
last-mentioned  exceptions,  all  the  powers  given  to  any  company 
completely  registered,  except  the  general  power  to  perform  all  acts 
necessary  for  carrying  on  the  business 'of  the  company,  may  be 
exercised  as  fully  by  any  such  company  so  completely  registered, 
as  by  any  other  company  completely  registered,  but  it  may  perform 
all  acts  necessary  for  obtaining  an  act,  and  when  that  comes  into 
operation  the  powers  conferred  by  this,  act  and  its  regulations  cease. 
No  {iv)  shareholder  is  entitled  to  receive  any,  dividends  or  profits,  or 
to  the  remedies  or  powers  given  to  shareholders,  until  he  has  exe- 
cuted the  deed  of  settlement  or  some  deed  referring  to  it,  and  paid 
up  all  instalments  due  from  him,  and  been  registered  in  the  Regis- 
try Office ;  but  after  these  preliminaries  he  is  entitled  to  be  present 
at  all  general  meetings,  to  take  part  in  discussions,  to  vote  in  de- 
termination of  any  question  thereat,  and  that  either  in  person  or 
by  proxy,  unless  the  deed  of  settlement  preclude  voting  by  prox}^, 
and  to  vote  in  the  choice  of  directors  and  auditors;  subject  never- 
theless to  the  provisions  of  that  act  and  of  the  deed  of  settlement, 
or  other  special  authority,  so  far  as  they  shall  either  regulate  or 
restrict  the  exercise  of  such  powers,  but  not  so  as  to  deprive  such 
shareholders  thereof     Also  with  regard  to  subscribers  and  every 

(m)  Sect.  26. 


JOINT  STOCK  COMPANIES.  121 

Joint  Stock  Companies — how  formed  and  dissolved. 

person  entitled,  or  claiming  to  be  entitled  to  any  share  in  any  com- 
pany {x)  until  it  "  shall  have  obtained  a  certificate  of  complete  regis- 
tration, and  until-  any  such  subscriber  or  person  shall  have  been 
duly  registered  as  a  shareholder  in  the  Eegistry  Office,  it  shall  not 
be  lawful  for  such  person  to  dispose  by  sale  or  mortgage  of  such 
share  or  of  any  interest  therein,  and  every  contract  for,  or  sale,  or 
disposal  of  such  share  or  interest  shall  be  void,  and  every  person 
entering  into  such  contract  shall  forfeit  a  sum  not  exceeding  £10." 
For  the  protection  of  purchasers  it  is  declared  to  be  the  duty  of  the 
directors  to  state  on  every  certificate  of  shares  the  date  of  the  first 
complete  registration,  and  a  false  statement  subjects  the  director  or 
officer  to  the  penalty  of  a  misdemeanor.  The  powers  and  duties  (y) 
of  the  directors  are  declared  to  be  to  conduct  and  manage  the  affairs 
of  the  company  according  to  the  act  and  the  deed  of  settlement,  or 
any  by-law,  and  for  that  purpose  to  .enter  into  all  such  contracts, 
and  to 'execute  all  such  acts  and  deeds  as  the  circumstances  may 
require ;  to  appoint  the  secretary,  if  any,  and  the  clerks,  and  ser- 
vants, and  to  remove  them  and  appoint  others;  to  appoint  other 
persons  for  special  services  as  the  concerns  of  the  company  may 
require ;  to  hold  meetings  periodically,  and  from  time  to  time,  as 
requisite ;  and  to  appoint  a  chairman  of  such  meetings,  and  in  his 
absence  a  chairman  at  each  such  meeting,  but  subject  to  the  act  and 
the  deed  of  settlement  or  other  special  authority ;  but  not  so  as  to 
enable'  the  shareholders  to  act  on  their  own  behalf  in  the  ordinary 
management  of  the  concerns,  otherwise  than  by  means  of  the  direc- 
tors. It  is,  however,  provided  that  the  directors  may  not  purchase 
or  sell  any  shares,  except  shares  forfeited  for  non-payment  of  instal- 
ments,'or  lend  any,  one  of  their  number,  or  any  officer  of  the  com- 
pany, any  money  belonging  to  the  company  without  the  sanction  of 
a  general  meeting.     The  {z)  appointment  of  any  person  to  be  or  act 


(x)  As  this  portion  of  the  clause  only  mentions  the  word  companies,  it  has  been 
held,  pursuant  to  the  restrictions  of  that  word  imposed  by  sect.  2,  that  the  sale  of 
scrip  in  companies  provisionally  registered,  projected  for  the  execution  of  the  pub- 
lic works  alluded  to  in  that  clause  which  cannot  be  carried  into  execution  without 
the  authority  of  parliament,  is  legal.  Young  ij.  Smith,  15  M.  <fe  W.  131.  And  this 
decision  has  been  confirmed  by  the  Court  of  Queen's  Bench  in  Lawton  v.  Hickman. 
16  L.  J.  Q.  B,  20. 

(j/)  Sect.  27.  (2)  Sect.  28. 


122  MERCANTILE  PEESONS. 


Joint  Stock  Companies— how  formed  and  dissolved. 


as  a  director,  whether  honorary  or  otherwise,  or  to  hold  the  office 
of  patron  or  president,  or  any  other  office  of  the  like  description,  is 
forbidden,  and  he  is  prohibited  from  acting  in  any  such  capacity, 
unless  at  the  time  of  his  appointment,  or  his  acting,  he  hold  in  his 
own  right  at  least  one  share.  The  person  thus  filling,  or  acting  in, 
any  of  these  capacities  forfeits  a  sum  not  exceeding  £20  for  every 
offence ;  and  if  any  person  be  announced  or  held  out  by  or  on  be- 
half of  the  company  in  any  of  them  without  having  consented  in 
writing,  or  acted,  each  director  knowingly  concurring  in  the  repre- 
sentation shall  forfeit  a  like  sum.  If  (a)  any  director  be  directly  or 
indirectly  concerned  or  interested  in  any  contract  proposed  to  be 
made  by  or  on  behalf  of  the  company,  he  shall,  on  the  subject  of 
such  contract,  be  precluded  from  voting  or  acting  as  a  director,  and 
if  any  contract  or  dealing  (except  a  policy  of  assurance,  grant  of 
annuity,  or  contract  for  the  purchase  of  an  article,  or  of  service, 
which  is  the  subject  of  the  proper  business  of  the  company,  such 
contract  being  made  upon  the  same  or  the  like  terms  as  any  like 
contract  with  other  customers  or  purchasers)  be  entered  into,  in 
which  any  director  shall  be  interested,  the  terms  of  such  contract 
or  dealing  shall  be  submitted  to  the  next  general  or  special  meeting 
of  the  shareholders,  and  shall  have  no  force  until  approved  and 
confirmed  by  them.  If,  too,  a  director  cease  to  be  a  holder  of  the 
prescribed  number  of  shares,  or  become  a  bankrupt  or  insolvent, 
or  shall  have  suspended  payment,  or  compromised  with  his  credit- 
ors, or  be  declared  a  lunatic,  it  shall  be  unlawful  for  him  to  con- 
tinue as  a  director  or  act  as  such,  and  his  office  is  declared  by  the 
act  to  be  vacant.  Notwithstanding  (b)  any  defect  or  error  in  the 
appointment  of  a  director,  or  his  disqualification,  all  acts  done  by 
him,  before  its  discovery,  shall  be  as  binding  on  him  and  the  com- 
pany and  its  directors  and  officers,  and,  if  done  bond  fide,  shall  be 
as  binding  on  all  persons  whomsoever,  as  if  he  were  duly  appointed 
or  qualified.  Acts(c)  of  fraudulent  commission  ar  omission,  or 
falsification,  mutilation,  or  erasing  of  books  or  documents  by  any 
director  or  officer,  are  declared  to  be  a  misdemeanor.  If  the  entry  {d) 
of  the  proceedings  of  any  meeting  of  the  shareholders  or  directora 
purport  to  be  signed  by  the  chairman  duly  presiding  at  such  men- 

(a)  Sect.  29.  (6)  Sect  30.  (c)  Sect.  31.  (c?)  Sect.  32. 


I 


I 


JOINT  STOCK  COMPANIES.  123 

Joint  Stock  Companies — how  formed  and  dissolved. 

ing,  and  sealed  with  the  company's  seal,  all  courts,  justices  and 
others  shall  receive  the  book  in  which  such  entry  shall  be  made 
2iS  prima  facie  evidence,  not  only  of  the  proceedings  of  the  meeting,. 
but  of  its  having  been  duly  convened,  and  of  the  persons  making 
or  entering  such  orders  or  proceedings,  being  shareholders,  or  di- 
rectors, and  of  the  signature  of  the  chairman.  The  books  (e)  re- 
cording the  proceedings  are  to  be  kept  at  the  principal  place  of 
business,  and  to  be  open  to  the  inspection  of  any  shareholder ;  sub- 
ject to  the  provisions  of  the  deed  of  settlement  or  any  by-law. 
The  accounts  (/)  are  to  be  kept  in  books  by  the  directors,  who,  {g) 
at  least  fourteen  days  before  the  period  at  which  the  accounts  are 
afterwards  required  to  be  delivered  to  the  auditors,  shall  cause  them 
to  be  balanced,  and  a  balance-sheet  to  be  made  out,  examined  by 
three  of  them,  signed  by  the  chairman,  recorded  in  the  books,  and 
produced  {h)  to  the  shareholders  at  each  ordinary  meeting.  During 
fourteen  days(i)  before  each  ordinary  miveting,  and  one  month 
afterwards,  each  shareholder  may  inspect  these  books  and  the  bal- 
ance-sheet, and  take  copies  and  extracts,  and  three  directors  may 
authorize  such  an  insjDection  at  any  other  time.  Every  company  {j) 
must  annually  appoint  at  a  general  meeting  one  or  more  auditors 
(one  of  whom  shall  be  appointed  by  the  shareholders),  and  return 
their  names  to  the  registrar;  and  if  an  auditor  be  not  appointed  on 
behalf  of  the  shareholders,  or  if  he  die,  or  become  incapable,  or  de- 
cline to  act,  or  if  such  return  be  not  made,  the  Board  of  Trade,  on 
the  application  of  a  shareholder,  may  appoint  such  an  auditor  and 
direct  his  salary  to  be  paid  by  the  company.  Twenty-eiglit  days  (IS) 
before  the  ordinary  meetings  the  directors  are  to  deliver  the  ac- 
counts and  balance-sheet  to  the  auditors,  who  shall  examine  them ; 
but  throughout  the  year  (J)  the  auditors  may  inspect  the  books  of 
account  and  registry,  and  documents  relating  to  the  accounts. 
Within  {m)  fourteen  days  after  their  receipt,  the  auditors  shall  con- 
firm the  accounts  and  report  generally,  or,  if  they  do  not  confirm 
them,  report  specially,  and  deliver  the  accounts  and  balance-sheet 
to  the  directors,  who  {ii)  ten  days  before  the  ordinary  meeting,  sub- 

(c)  Sect  33.  (/)  Sect.  34.  {g)  Sect.  35. 

(A)  Sect  36.  (t)  Sect.  37.  U)  Sect.  38. 

(yfc)  Sect.  39.  {I)  Sect.  40.  vi)  Sect.  41. 
(n)  Sect.  42. 


124  MERCANTILE  PERSONS. 


Joint  Stock  Companies — how  formed  and  dissolved. 


ject  to  the  deed  or  any  by-law,  are  to  send  a  printed  copy  of  the 
balance-sheet  and  auditors'  report  to  every  shareholder,  and  to 
cause  such  report  and  the  directors'  report  to  be  read  at  each  meet- 
ing. Within  fourteen  days  (o)  after  the  meeting,  the  directors  must 
return  to  the  Registry  Office  a  copy  of  the  balance-sheet  and  the 
auditors'  report. 

For  the  purpose  of  regulating  (^j)  contracts  entered  into  on  be- 
half of  the  company,  "  except  contracts  for  the  purchase  of  any 
article  the  payment  or  consideration  for  which  doth  not  exceed 
the  sum  of  £50,  or  for  any  service  the  period  of  which  doth  not 
exceed  six  months,  and  the  consideration  for  which  doth  not  exceed 
£50,  and  except  bills  of  exchange  or  promissory  notes,"  it  is  enacted 
'*  that  every  such  contract  shall  be  in  writing,  and  signed  by  two 
at  least  of  the  directors  of  the  company  on  whose  behalf  the  same 
shall  be  entered  into,  and  shall  be  sealed  with  the  common  seal 
thereof,  or  signed  by  some  officer  of  the  company  on  its  behalf, 
to  be  thereunto  expressly  authorized  by  some  minute  or  resolution 
of  the  board  of  directors  applying  to  the  particular  case ;  and 
that  in  the  absence  of  such  requisites,  or  any  of  them,  any  such 
contract  shall  be  void  and  ineffectual  (except  as  against  the  com- 
pany on  whose  behalf  the  same  shall  have  been  made)."  '."That 
everv  such  contract  for  the  purchase  of  any  article  the  considera- 
tion for  which  doth  not  exceed  the  sum  of  £50,  or  for  any  ser- 
vice the  period  of  which  doth  not  exceed  six  months,  and  the 
consideration  for  which  doth  not  exceed  £50,  may  be  entered  into 
by  any  officer  authorized  by  a  general  by-law  in  that  behalf,"  and 
that  every  such  contract,  whether  under  seal  or  not,  shall  be  im- 
mediately reported  to  the  secretary  or  other  appointed  officer,  who 
shall  enter  the  same  in  the  books ;  and  if  it  be  not  so  reported  and 
entered,  the  officer  omitting  to  enter  or  report  it  shall  be  liable  to 
repay  the  amount  of  the  consideration  agreed  to  be  paid  by  the 
company.  AVith  regard  ('/)  to  bills  and  notes  "  made,  accepted,  or 
indorsed  on  the  behalf  or  account  of  the  company,  so  far  as  relates 
to  the  mode  of  making,  accepting,  or  endorsing  the  same,  and  to  the 
liability  of  the  company'-  thereon,"  if  the  directors  "  be  authorized  by 
deed  of  settlement  or  by-law  to  issue  or  accept  bills  of  exchange  or 

(o)  Sect.  43.  (p)  Sect.  4-i.  {q)  Sect.  -Ic 


JOINT  STOCK  COMPANIES.  I05 

Joint  Stock  Companies- — how  formed  and  dissolved. 

promissory  notes,  then  every  sucli  bill  of  exchange  or  promissory 
note  shall  be  made  or  accepted  (as  the  case  may  be)  by  and  in  the 
names  of  two  of  the  directors  of  the  company  on  whose  behalf  01 
account  the  same  may  be  so  made  or  accepted,  and  shall  be  by 
such  directors  expressed  to  be  made  or  accepted  by  them  on  behalf 
of  such  company ;  and  that  every  such  bill  of  exchange  and  pro- 
missory note  so  made  or  accepted  as  aforesaid,  shall  ,be  counter- 
signed by  the  secretary  or  other  appointed  officer  of  the  company 
in  whose  behalf  the  same  is  expressed  to  be  made  or  accepted,  and 
that  every  bill  of  exchange  so  made  as  aforesaid,  or  received  b^ 
or  on  behalf  of  the  company,  may  be  indorsed  in  the  name  of  the 
company  by  any  officer  authorized  by  deed  of  settlement  or  by-iaw 
in  that  behalf."  Every  such  bill  or  note  is  then  to  be  reported  to 
the  proper  officer,  who  shall  enter  it  in  the  pro2:)er  books  ;  and  if  it 
be  not  so  reported  and  entered,  the  officer  omitting  to  report  or 
enter  it,  shall  be  liable  to  repay  the  amount  the  company  may  pay 
or  be  liable  to  pay  on  it.  Neither  the  secretary  nor  the  officer  thus 
becomes  liable  oh  the  bill,  nor  do  the  directors,  except  as  share- 
holders ;  and  the  company  shall  and  may  sue  and  be  sued  on  any 
such  bill  or  note  "  as  fully  and  effectually,  and  in  the  same  manner, 
as  in  the  case  of  any  contract  made  and  entered  into  under  their 
common  seal."  All  (r)  deeds  and  instruments  bearing  the  seal  of 
the  company  shall  be  signed  by  two  at  least  of  the  directors.  All 
(5)  by-laws  must  be  in  writing  and  -under  the  common  seal ;  and 
until  registered  in  the  registry,  are  of  no  force.  They  must  be 
printed,  and  a  copy  given  to  every  officer  or  shareholder  requirino- 
it ;  and  {t)  in  all  legal  proceedings  for  the  enforcement  of  such  by- 
laws, or  penalties  for  the  breach  thereof,  a  written  or  printed  copy, 
with  the  seal  of  the  registrar  affixed  thereto,  shall  be  sufficient 
evidence.  The  directors  (m)  .  must  also  keep  a  book  called  the 
"Eegister  of  Shareholders,"  in  which  they  must  enter  from  time 
to  time  the  names  and  addresses  of  all  persons  or  corporations  be- 
ing shareholders ;  the  number  of  shares  to  which  such  shareholders 
shall  respectively  be  entitled,  distinguishing  each  share  by  ita 
number ;  and  the  amount  of  the  instalments  paid  on  such  shares ; 


(r)  Sect.  48.  (s)  Sect.  47. 

CO  Sect.  48.  (m)  Sect.  49. 


126  MERCANTILE  PERSOXS. 


Joint  Stock  Companies — how  formed  and  dissolved. 


which  register  {v)  is  to  be  open  to  the  insiDection  of  every  share 
holder  gratis,  and  of  which  he  may  require  a  co^jy,  on  payment  of 
6(1.  for  every  100  words  required  to  be  copied.  On  the  demand 
of  the  {lu)  holder  of  any  share,  the  company  shall  cause  a  certificate 
of  the  proprietorship,  specifying  the  share  and  the  amount  paid  up 
in  respect  of  it,  in  a  prescribed  form,  under  the  common  seal,  to  be 
delivered  to  him,  for  which  the  company  may  demand  a  sum  not 
exceeding  Is.  This  certificate  (.x)  is  made  primd  facie  evidence  of 
the  title  of  the  shareholder  to  the  share  specified  in  it:  but  the 
want  of  such  certificate  will  not  prevent  the  holder  of  any  share 
from  disposing  of  it,  and  a  fresh  certificate,  (?/)  in  case  of  injury  or 
loss,  may  upon  certain  conditions  be  procured.  Subject  (2)  to  the 
regulations  contained  in  the  act,  and  any  deed  of  settlement,  every 
shareholder  is  entitled  "  to  sell  and  transfer  his  shares  therein  by 
deed  duly  stamped,  in  which  the  full  amount  of  the  pecuniary  con- 
sideration for  such  sale  shall  be  truly  expressed,  and  which  instru- 
ment shall  be  according  to  the  form  in  the  schedule  to  the  act 
annexed,  or  to  the  like  effect."  Upon  its  production  the  directors 
must  cause  a  memorial  of  it  to  be  entered  in  the  registry  of  trans- 
fers, and  the  entry  to  be  indorsed  on  the  transfer,  upon  payment 
of  Is.  Until  the  production  of  it  for  such  registration  the  pur- 
chaser is  not  entitled  to  receive  any  profits,  or  to  vote  ;  and  unless 
there  is  a  provision  to  the  contrary  in  the  deed  of  settlement,  if 
the  shareholder  shall  not  have  paid  the  full  amount  due  on  every 
share  held  by  him,  he  shall  not  be  entitled  to  transfer  any  share. 
The  company  (a)  may  sue  a  shareholder  failing  to  pay  any  instal- 
ments, in  an  action  of  debt,  and  declare  therein  in  a  compendious 
form,  and  upon  proof  that  the  defendant  was  the  holder  of  any  share 
when  the  instalments  for  which  the  action  is  brought  became  due, 
the  company  may  recover  them  and  five  per  cent,  interest.  In  the  (h) 
case  of  shares  held  jointly,  notice  to  the  person  whose  name  stands 
first  on  the  register  of  shareholders  suffices,  and  he  is  entitled  to 
vote  and  have  all  the  privileges  conferred  on  shareholders.  At 
•;very(c)  principal  place  of  business,  copies  of  an  abstract  of  the 
deed  of  settlement,  approved  by  the  registrar ;  a  list  of  the  share- 

{v)  Sect.  50.  (?o)  Sect.  51.  {x)  Sect.  52 

(,V)  Sect.  53.  {z)  Sect.  54.  (a)  Sect  55. 

(6)  Sect.  56.  (c)  Sect.  57. 


JOINT  STOCK  COMPANIES.  127 

Joint  Stock  Companies — how  formed  and  dissolved. 

holders  and  of  the  shares  held  by  them ;  a  list  of  the  directors  and 
officers ;  and  a  copy  of  the  by-laws,  sealed  with  the  company's  seal, 
must  be  kept,  which  any  shareholder  or  person  authorized  in  writ- 
ing by  him  has  a  right  to  inspect,  under  a  penalty  on  the  directors 
or  officers  refusing  it.  Companies  existing  (cZ)  on  the  1st  Nov.  1844 
were  required  to  make  a  return  to  the  registrar ;  but  their  condition  is 
not  affected  by  the  act.  It  is,  (e)  however,  provided  that  any  such 
company  may  obtain  a  certificate  of  complete  registration,  and  be  en- 
titled to  the  benefit  of  the  act,  if  its  deed  of  settlement  accord  with 
the  deeds  prescribed  for  future  companies,  or  is  made  to  accord  with 
them,  but  its  incorporation  shall  not  affect  previous  obligations,  (/) 
The  Board  of  Trade,  (^7)  upon  a  memorial  presented  within  five 
years  by  any  company,  except  assurance  companies,  may,  after 
giving  certain  notices,  dispense  with  or  modify  the  provisions  of  the 
act.  And  (h)  "  forasmuch  as  great  injury  has  been  inflicted  on  the 
public  by  companies  falsely  pretending  to  be  patronized,  or  directed, 
or  managed  by  eminent  or  opulent  persons;  for  the  purpose  of  pre- 
venting such  false  pretences,  be  it  enacted,  with  regard  to  every 
company  or  pretended  company  whatsoever,  whether  registered  or 
not,  and  whether  then  existing  or  not,  that  if  any  person  shall 
make  any  such  false  pretences,  knowing  the  same  to  be  false,  in  any 
advertisement  or  other  paper,  whether  printed  or  written,  and 
whether  published  in  any  newspaper,  or  hand-bill,  or  placard,  or 
circular,  then  every  such  person  shall  forfeit  for  every  such  offence 
a  sum  not  exceeding  £10."  Judgments,  (i)  decrees,  or  orders  ob- 
tained against  any  company  completely  registered,  in  any  legal 
proceeding  by  or  against  it,  may  be  enforced,  and  execution  issued 
thereon,  not  only  against  the  property  and  effects  of  the  company, 
but  also,  if  due  diligence  shall  have  been  used  to  obtain  satisfaction 
of  it  by  execution  against  the  property  and  effects  of  such  company, 
"then  against  the  person,  property  and  effects  of  any  shareholder 
for  the  time  being,  or  any  former  shareholder  in  his  natural  or  in- 
dividual capacity;  provided,  in  the  case  of  execution  against  an}'- 
former  shareholder,  that  he  was  a  shareholder  at  the  time  when  the 
contract  or  agreement,  for  which  such  judgment,  decree,  or  order 


(d)  Sect.  58.  («)  Sect.  59.  (/)  Sect.  61. 

{</)  Sect,  62.  {h)  Sect.  65.  (i)  Sect.  66. 


J  28  MERCA^'TILE  FERSOXS. 


Joint  Stock  Companies— how  formed  and  dissolved. 


may  have  been  obtained,  was  entered  into,  or  became  a  shareholder 
■during  the  time  it  was  unexecuted  or  unsatisfied,  or  was  a  share- 
holder at  the  time  of  the  judgment,  decree,  or  order,  being  ob- 
tained ;"  provided  that  in  no  case  shall  such  execution  be  issued 
against  a  former  shareholder  after  three  years  from  his  ceasing  to 
be  a  shareholder.     Every  (j)  person,  against  whom  such  execution 
has  issued,  may  recover,  against  the  company  all  loss,  costs,  dama- 
ges, and  charges  he  may  have  incurred  by  reason  of  such  execution, 
and  after  due  diligence  used  to  obtain  satisfaction  thereof  against 
the  property  and  effects  of  the  company,  he  may  recover  contri- 
bution from  the  several  other  persons  "against  whom  execution 
upon  such  judgment,  decree,  or  order  might  have  been  issued  under 
the  act,  and  he  shall  recover  it  in  like  manner  as  contribution  in 
ordinary  cases  of  co-partnership.     In  the  (k)  case  of  execution  to  be 
issued  under  the  act  "  against  the  person,  or  against  the  property 
and  effects  of  any  shareholder  or  former  shareholder,  or  against  the 
property  or  effects  of  the  compan}'-,  at  the  suit  of  any  shareholder 
or  former  shareholder,  in  satisfaction  of  any  moneys,   damages, 
costs,  and  expenses  paid  or  incurred  by  him  as  aforesaid  in  any 
action  or  suit  against  the  company,  such  execution  may  be  issued 
by  leave  of  the  court,  or  of  a  judge  of  the  court,  in  which  such 
judgment,  decree,  or  order,  shall  have  been  obtained,  upon  motion 
or  summons  for  a  rule  to  show  cause,  or  other  motion  or  summons 
consistent  with  the  practice  of  the  court,  without  any  suggestion  or 
scire  facias  in  that  behalf,"     The  court  or  judge  may  grant  or  dis- 
miss the  application,  and  give  directions  as  to  the  costs,  or  make 
any  other  order  therein ;  and  the  form  of  writs  of  execution  shall 
be  such  as  the  judges  shall -.think  fit  to  direct.     In  the  case  of  an 
order  of  a  judge  an  appeal  is  granted  to  the  court,  and  no  motion 
shall  be  made,  or  summons  granted  to  charge  a  shareholder,  until 
ten  days  notice  thereof  shall  have  been  given  to  the  person  sought 
to  be  charged.     Provisions  {!)  are  also  contained  for  the  recovery 
of  the  penalties,  which  in  some  cases  are  enforced  before  two  jus- 
tices ;  in  other  cases  by  action ;  but  (m)  the  consent  of  the  attorney- 
general  is  in  all  cases  necessary. 


(;•)  Sect.  67.  (jfc)  Sect.  68. 

{I)  Sects.  69,  TO,  Tl,  72,  73,  74,  15,  76.  (wi)  Sect.  77. 


JOINT  STOCK  COMPANIES.  129 

Joint  Stock  Companies — how  formed  and  dissolved. 

As  to  joint  stock  banking  companies,  they  were,  since  May  6, 
1844,  governed  by  a  law  of  their  own,  stat.  7  &  8  Vict.  c.  113. 

By  sect.  1  of  that  act,  all  banks  of  more  than  six  j^artners, 
formed  since  May  6,  1844,  are  to  obtain  letters  patent,  the  mode  of 
procuring  which  is  pointed  out  by  sects.  2  and  3.  The  patent  is  to 
contain,  among  other  things,  the  provisions  of  their  deed  of  part- 
nership, which  is  to  be  in  a  form  provided  by  sect.  4. 

By  sect.  5  no  company  is  to  commence  business  till  the  deed 
has  been  executed,  all  the  shares  subscribed  for,  and  half  the 
amount  paid  up.  The  charter  may,  by  sect.  6,  incorporate  the 
company ;  but  by  sect.  7  is  not  to  take  away  the  liability  of  share- 
holders. By  sect.  9  shareholders  may  sue  and  be  sued  by  the  com- 
pany. In  case  of  a  judgment  against  the  company,  judgment  is  to 
go  first  against  it,  and  then,  m  default  of  satisfaction,  against  the 
individual  members  who  were  such  when  the  cause  of  action  arose, 
provided  they  would  have  been  liable  thereto  as  partners,  and  pro- 
vided judgment  has  been  obtained  within  three  years  after  their 
ceasing  to  be  members.  The  act  contains  provisions  for  the  reim- 
bursement of  individual  shareholders;  as  to  the  mode  in  which 
execution  is  to  be  obtained ;  for  the  registration  of  a  memorial  con- 
taining the  title  of  the  company,  the  names  of  its  members  and  of- 
ficers and  its  place  of  business;  for  the  signature  of  bills  and 
notes  ;  the  transfer  of  shares ;  the  mode  of  making  and  enforcino- 
calls,  and  service  of  notice  upon  the  company.  A  mode  is  also 
pointed  out  of  bringing  existing  companies  within  the  act. 

As  to  the  dissolution  of  a  joint  stock  company,  (n)  that  can  be 
hardly  said,  as  in  the  case  of  an  ordinary  firm,  to  take  place  upon 
the  change  of  each  individual  member,  though  certainlv,  as  far  as 
the  individual  is  personally  concerned,  his  retirement,  by  selling  out 
his  share,  has  the  same  effect  upon  his  rights  and  liabilities  as  the 
retirement  of  the  member  of  a  firm  has  upon  his,  and  the  company 
must  therefore,  perhaps,  strictly  speaking,  be  considered  a  new  one 
upon  each  change  of  shareholders.  Where  there  is  a  private  act, 
indeed,  the  legislature  either  impliedly  or  expressly  recognizes  the 
continuance  of  its  identity  under  such  circumstances.     The  same 


(n)  See  the  mode  adopted  for  winding  up  the  affairs  of  the  Imperial  Distillery 
Company,  on  its  dissolution.     Wilson  v.  Butler,  4  Bingh.  N.  C.  156. 
9 


130  MERCANTILE  PERSONS. 


Jo?nt  Stock  Companies'— rights  and  liabilities  of  members  inter  se. 


observation  applies  to  every  company  formed  by  charter  under  stat. 
1  Vict.  cap.  73,  (o)  and  is  involved  in  the  very  definition  of  the 
word  Oompany^  in  cases  within  the  statute  7  &  8  Vict.  110. 

In  order  to  effect  the  dissolution  of  a  joint  stock  company,  the 
provisions  for  that  purpose  contained  in  the  deed  of  settlement 
must  be  pursued,  {jj)  Resolutions,  even  of  general  meetings,  to  re- 
duce the  capital,  or  ihe  number  of  shares  prescribed  by  the  deed, 
will  not  bind  persons  who  are  absent,  and  such  acts  do  not  dissolve 
the  company,  but  are  wholly  inoperative  and  void,  {q) 

In  consequence  of  statute  7  &  8  Vict.  c.  Ill,  a  joint  stock  com- 
pany, whether  existing  under  1  Vict,  c,  73,  or  7  &;  8  Vict.  c.  110, 
may  now  be  dissolved  by  its  becoming  bankrupt,  and  the  company 
thereupon  being  determined  by  order  of  the  crown  under  sect.  26 
of  the  same  act.  That  act  which  provides  a  new  system  of  bank- 
ruptcy, applicable  to  such  companies,  is  set  out  at  the  end  of  the 
chapter  on  bankruptcy,  to  which,  in  order  to  avoid  the  necessity 
of  repetition,  the  reader  is  referred  for  its  provisions. 


Section  III. — Rights  and  Liabilities  of  Members  inter  se. 

"With  regard  to  the  rights  of  members  of  a  joint  stock  company 
among  themselves ;  these  are  provided  for  and  regulated  by  their 
deed  of  settlement,  and  if  infringed,  must  be  vindicated  in  the  same 
manner  as  the  rights  of  ordinary  partners  inter  se,  except  always 
so  far  as  the  private  act  of  parliament  may  have  provided  the  con- 
trary. And  whenever  there  is  no  act  or  charter,  and  the  deed  of 
settlement  is  silent,  the  'general  law  of  partnership  prevails,  and 
supplies  its  omissions.  Thus,  in  the  absence  of  some  stipulation 
to  the  contrary,  each  member  has  a  right  to  inspect  the  books  of 


(o)  See  Wilson  v.  Craven,  8  M.  &  "W.  584. 

(p)  See  Lyon  v.  Haynes,  5  M.  &  G.  504,  as  to  the  effect  of  dissolution,  and  the 
mode  of  winding  up  the  affairs.  The  only  other  modes  of  dissolving  a  company,  seem 
to  be  by  obtaining  the  consent  of  each  member,  or  by  a  bill  in  equity,  to  which  all 
the  members  must  be  parties.  See  the  recent  authorities  collected  upon  the  laet 
point  note  (a;),  p.  132. 

((?)  Smith  V.  Goldsworthy,;4  Q.  B.  430. 


JOINT  STOCK  COMPANIES.  131 

Joint  Stock  Companies — rights  and  liabilities  of  members  inter  ae 

the  company.  (?')  So,  one  member  cannot  maintain  an  action 
Rgainst  the  rest,  or  the  rest  against  him,  on  a  contract  made  with 
the  company,  (s)  It  has  been  usual  to  endeavor  to  obviate  the  ef- 
fect of  this  rule,  by  inserting  a  clause  in  the  deed  of  settlement,  in 
which  the  members  bind  themselves  to  take  no  advantage  of  it  in 
legal  proceedings  by  and  against  the  company,  and  expressly  agree 
and  declare  themselves  to  be  estopped  from  so  doing.  But  the  va- 
lidity of  such  a  clause  has  never  been  established,  and  is  perhaps 
more  than  questionable. 

Companies  regulated  by  the  statute  7  &  8  Vict.  c.  110,  and 
completely  registered,  may  sue  and  be  sued  by  their  registered 
name,  in  respect  to  any  claim  by  or  upon  a  member.  As  to  joint 
stock  banking  company,  that  is,  by  1  &  2  Vict.  c.  96,  (i!)  as  well 
as  by  7  &  8  Vict.  c.  113,  empowered  to  sue,  and  to  be  sued  by  its 
members,  whose  shares  in  the  concern  cannot  be  made  matter  of 
set-off  in  an  action.  And,  as  in  the  case  of  partnership,  a  member 
may  recover  from  the  company  for  work  done  previously  to  his 
having  become  interested  in  it.  {iC) 

As  the  management  of  the  company  is  confided  by  the  deed  of 
settlement  to  the  directors  and  their  agents,  and  the  bulk  of  the 
shareholders  must  necessarily  continue  passive,  the  courts  of  equi- 
ty are  very  strict  in  enforcing  the  due  execution  of  the  trust  re- 
posed in  those  functionaries,  (y)     In    ^Vallworth  v.   Holt,  4  M.  & 


(r)  Baldwin  v.  Lawrence,  2  Sim.  &  Stu.  18. 

(s)  Holmes  v.  Higgins,  1  B.  &,.  C.  74.  Wilson  v.  Curzon,  15  M.  &.  W.  532.  Chad- 
Trick  V.  Clark,  1  C.  B.  700.  Neal  v.  Turton,  4  Bingh.  149  ;  12  B.  M.  365.  Teague  v. 
Hubbard,  1  M.  &,  R.  869;  8  B.  &  C.  345;  Dans.  &  L.  118.  Moneypenny  «j.  Hart- 
land,  1  C.  &  P.  352 ;  2  C.  &  P.  378.  Parkin  v.  Fry,  2  C.  &  P.  311.  Melburn  v.  Codd^ 
1  M.  &  R.  238  ;  7  B.  &  C.  419.  Goddard  v.  Hodges,  3  Tyrwh.  209;  1  C.  <fe  M.  33. 
Perring  v.  Hone,  4  Bingh.  28.  Vide  Davies  v.  Hawkins,  3  M.  &  S.  488,  where  an  at- 
tempt was  made  to  evade  this  rule. 

{t)  Bosanquet  v.  "Woodford,  5  Q.  B.  310. 

(m)  Lucas  V.  Beach,  1  M.  &  Gr.  417. 

(y)  Difficulty  sometimes  arises  as  to  the  parties  to  the  bill.  Tlie  inclination  of  the 
Coiirt,  however,  is,  as  far  as  possible,  to  obviate  the  technical  difficulty  that  would 
arise  if  all  were  to  be  made  parties.  Cockburn  v.  Thompson,  16  Ves.  321.  Long  v. 
Young,  2  Sim.  369.  Vide  Hitchens  v.  Congreve,  4  Russ.  562.  Vansandau  v.  Moore, 
1  Russ.  441,  and  Lord  Cottenham's  judgment  in  Wallworth  v.  Holt,  4  M.  &  Cr.  619, 
and  the  cases  quoted  in  the  two  next  notes.  See  the  rule  that  where  the  parties  in 
tcrested  are  numerous  and  the  suit  for  an  object  common  to  all,  one  may  sue  foi 


132  MERCANTILE  PERSONS. 


Joint  Stock  Companies — rights  and  liabilities  of  members  inter  se. 

Cr.  619,  the  affairs  of  a  joint  stock  bank  having  fallen  into  a  very 
disastrous  condition,  the  Lord  Chancellor  entertained  a  bill  against 
the  public  officer,  directors  and  trustees,  filed  by  some  of  the  share- 
holders in  behalf  of  the  rest,  praying  for  an  account  of  the  assets, 
and  a  due  application  of  them  to  the  liabilities.  The  authority  of 
this  case  has  been  recognized,  and  the  rule  laid  down  by  it  acted 
upon  in  several  recent  instances,  {iv)  in  some  of  which  an  attempt 
has  also  been  made  to  extend  the  relief  to  a  decree  for  the  disso- 
lution of  the  company,  but  the  courts  have  refused  to  entertain  a 
bill  for  such  a  purpose,  without  making  the  whole  of  the  members 
parties  to  the  suit,  (x)  Where  a  projected  company  has  never  been 
brought  into  actual  operation,  the  persons  who  have  advanced 
money  on  the  fliith  of  the  completion  of  the  undertaking,  may 
maintain  an  action  to  recover  it.  (y)  And  equity  will  give  effec- 
tual relief  where  the  scheme  turns  out  a  mere  bubble,  concocted  in 
fraud.  (2) 

The  chief,  or  one  of  the  chief  questions  which  commonly  oc- 
curs between  the  company  and  its  individual  members,  relates  to 
the  payment  of  money  due  from  them  in  respect  to  their  shares. 
The  power  of  the  directors  to  make  calk  for  these  must  be 
strictly  followed,  (a)  To  use  the  expression  of  Lord  Denman  in 
Meighy.  Clinton, {b)  "it  is  a  specific  power,  and  must  be  strictly 
pursued."      The   liability  of  the   shareholders  or  subscribers,  (c) 

himself  and  the  rest,  applied  to  the  case  of  a  company  in  Taylor  v.  Salmon,  4  M.  <& 
Cr.  134.     Fenn.  v.  Craig,  3  Y.  &  Coll,  216. 

{w)  Richardson  v.  Hastings,  7  Bear.  323.  Decks  v.  Stanhope,  14  Sim.  57.  Har 
vey  V.  Bignold,  8  Beav.  343. 

(x)  Richardson  v.  Hastings,  7  Beav.  323,  per  Lord  Langdale.  Decks  v.  Stanhope; 
14  Sim.  57.  Harvey  v.  Bignold,  8  Beav.  343;  and  see  Abraham  v.  Hannay,  13  Sim, 
681.  But  see  Richardson  v.  Larpent,  2  Y.  &  Coll.  C.  C.  507,  and  Apperley  v.  Page, 
16  L.  J.  C.  C.  100. 

(y)  Nockles  v.  Crosby,  3  B.  &  C.  814 ;  5  D.  &  R.  751.  Kempson  v.  Saunders,  4 
Bingh.  5;  12  B.  M.  44.  Watkins  v.  Huntley,  2  C.  <fe  P.  410.  Walstau  v.  Spottia- 
woode,  15  M.  &  W.  501. 

{z)  Colt  V.  Woollastan,  2  P.  "Wms.  154.  Green  v.  Barrett,  1  Sim.  45.  Blain  v. 
Agar,  2  Sim.  289.     As  to  the  form  of  proceeding,  Harvey  v.  CoUett,  15  L.  J.  C.  C.  376*. 

(a)  Moore  v.  Hammond,  6  B.  &  C.  456. 

(6)  11  Ad.  &E.  428. 

(c)  As  to  the  meaning  of  which  word,  see  Great  North  of  England  262.  Londom 
Grand  Junction  Railway  Co.  v.  Freeman,  2  M.  &  Gr.  606.     Railway  Co.  v.  Biddulph, 


JOINT  STOCK  COMPANIES.  133 

Joint  Stock  Companies — I'ights  and  liabilities  of  members  inter  se. 

depends,  of  course,  mainly  on  the  deed  or  act  of  parlia- 
ment, (d) 

"Where  there  were  no  express  words  in  the  act  prohibiting  it,  it 
has  been  held,  that  the  calls  might  be  made  to  take  effect  infuturo, 
and  the  time  and  mode  of  payment  fixed  by  an  act  subsequent  to 
the  resolution  making  the  call.  There  had,  it  may  be  observed, 
been  no  intermediate  change  in  the  direction,  (e) 

It  has  also  been  decided  that  the  member  of  a  joint  stock  com- 
pany who  has  been  forced  to  pay  calls  made  after  he  had  parted 
with  his  shares,  on  account  of  his  not  having  formally  perfected  the 
transfer,  has  no  right  to  maintain  an  action  to  recover  the  amount 
on  an  implied  assumpsit  by  the  transferee.  (/) 

There  is  generally  a  power  vested  in  the  directors  to  declare  the 

7  M.  &  "W.  Meigh  v.  Clinton,  11  Add.  &,  E.  428.  See  as  to  the  construction  of  a 
power  to  make  calls  on  shareholders  for  the  tvne  being,  Ayelsbury  Railway  Co.  v. 
Mount,  4  M.  &  Gr.  651  ;  7  M.  &  Gr.  898,  and  Thames  Tunnel  Company  v.  Sheldon, 
6  B.  &  C.  341.  See  also  The  Midland  Great  Western  Railway  Co.  v.  Gordon,  16  L. 
J.  Ex.  166. 

{d)  See  Huddersfield  Canal  Co.  v.  Buckley,  7  T.  R.  36.  Norwich  and  Lowestoff 
Navigation  v.  Theobald,  M.  &  M.  151.  Stratford  and  Morton  Railway  Co.  v.  Strat- 
ton,  2  B.  <fe  Ad.  519.  Cromford  and  Highpeake  Railway  Co.  v.  Lacy,  3  Y.  <fe  J.  80: 
as  to  the  pleadings  in  actions  for  calls  see  Edinburgh  and  Leith  Railway  Co.  v.  Ileb- 
blewhite,  6  M.  &  W.  711 ;  and  see  London  and  Brighton  Railway  Co.  v.  Fairclough, 
3  Scott^  N.  R.  68,  2  M.  &  Gr.  674,  in  which  a  variety  of  points  were  decided  on  the 
construction  of  the  act  and  the  evidence  in  the  action.  For  instance,  the  act  direct* 
ing  that  the  books  should  be  evidence,  one  book  alone  was  not  allowed  to  be  so ;  but 
though  the  act  directed  a  memoi'ial  of  each  transfer  to  be  made,  the  deed  of  transfer 
was  allowed  to  be  evidence,  without  proof  of  the  memorial.  And  though  the  trans- 
fer was,  by  the  act,  to  be  executed  by  the  purchaser,  j'et  the  deed  of  transfer  was 
held  to  require  a  fresh  stamp  on  the  alteration  of  the  name  of  the  purchaser  from  A. 
to  B.,  as  before  A.'s  execvition  of  it. 

There  is  usually  a  provision  in  the  act  that  the  register  shall  be  evidence  in  these 
actions,  and  in  such  case  it  will  be  prima  facie  evidence,  although  irregularly  kept. 
Birmingham,  Bristol,  and  Thames  Railway  Co.  v.  Locke,  1  Q.  B.  256.  In  Chelten- 
ham and  Great  Western  Railway  Co.  v.  Daniel,  2  Q.  B.  292,  Lord  Denman  said  that 
he  considered  it  settled  by  Sheffield  and  Manchester  Railway  Co.  v.  Woodcock,  7  M. 
&  W.  580,  that  all  difficulties  which  arise  from  not  adopting  the  machinery  of  the 
act,  are  got  over  by  the  conduct  of  parties  who  claim  to  be  placed  in  the  situation 
of  proprietors,  and  are  so  placed  accordingly. 

(e)  Sheffield  and  Manchester  Railway  Co.  v.  Woodcock,  7  M.  &  W.  574 :  see  Great 
North  of  England  Railway  Co.  v.  Biddulph,  7  M.  &  W.  24.3. 

(/)  Humble  v.  Livingston,  7  M.  &  W.  517.  In  the  case  of  a  mortgage,  as  to  the 
liability  of  the  mortgagor  to  indemnify  the  mortgagee,  see  Phene  v.  Gillam,  5  Hare  1. 


134  MERCANTILE  PERSOIS'S. 

Joint  Stock  Companies — rights  against,  and  liabilities  to  third  parties. 

shares  of  defaulters  forfeited ;  and,  under  ordinary  circumstances, 
equity  it  seems  will  not  relieve  against  the  exercise  of  this  power,  {g) 
The  power  generally  is  to  be  exercised  by  giving  a  certain  number 
of  days'  notice  to  pay,  otherwise,  that  the  shares  will  be  forfeited ; 
but  the  mere  circumstance  of  such  a  notice  having  been  given  is 
not  a  defence  in  an  action  for  the  calls,  {h) 


Section  IV. — Bights  against,  arul  Liabilities  to  third  Parties. 

It  sometimes  happens,  that  a  joint  stock  company  created  by 
act  of  parliament  has,  under  the  provisions  of  its  act,  peculiar  rights 
against,  and  is  subject  to,  peculiar  liabilities  to  third  persons ;  foi 
instance,  a  canal  company  is  sometimes  empowered  to  levy  tolls  b_y 
way  of  distress ;  {%)  and  in  some  cases,  as  in  the  case  of  railway  or 
market  companies,  the  act  gives  a  right  of  taking  other  persons' 
land,  and  points  out  a  mode  of  compensating  the  owners,  {j)  The 
powers  and  mode  of  taking  land  for  undertakings  of  a  public 
nature,  imder  acts  passed  since  May  8th,  1845,  are  regulated  by 
statute  8  &  9  Vict.  c.  18,  usually  called  the  Land  Clauses  Consoli- 
dation Act.     The  mode  in  w^hich  such  acts  are  to  be  construed  has 


{g)  Trendergast  v.  Turton,  1  Y.  &  Coll.  Ch.  98. 

[h)  Birmingham  B.  &  T.  Railway  Co.  v.  Locke,  1  Q.  B.  256.  Edinburgh  and  Leith 
Co.  V.  Ilebblewhite,  6  M.  &  W.  707. 

(i)  A  canal  company  empowered  to  levy  tolls  b}^  way  of  distress  is  bound  to  keep 
the  navigation  secure,  and  is  liable  in  tori  in  case  of  mischief  occasioned  \>y  its  failure 
in  so  doing.  Parnaby  v.  Lancaster  Canal  Co.  Lancaster  Canal  Co.  v.  Parnaby,  11 
Ad.  &  E.  223.     See  Parrett  Navigation  Co.  v.  Robins,  10  M.  &  W.  693. 

{j)  See  as  to  construction,  Doe  v.  Bristol  and  Exeter  Railway  Co.,  6  M.  AW 
820.  Grand  Junction  Railway  Co.  v.  White,  8  M.  &,  W.  222.  Fenton  v.  Trent  and 
Mersey  Nav.  Co.,  9  M.  &  "W.  203.  Barret  v.  .Stockton  and  Darlington  Railway  Co., 
2  M.  &  Gr.  134,  3  M.  &.  Gr.  956,  1  M.  &,  Gr.  8*70.  R.  v.  London  and  Greenwich  Rail- 
way Co.,  3  Q.  B.  VtQ.  As  to  landowners'  right  of  passage  across  the  railway,  Man- 
ning V.  Eastern  Counties  Railway  Co.,  12  M.  »&  W.  237.  In  R.  v.  Scott,  3  Q.  B.  543, 
■where  a  company  had  power  to  obstruct  a  highway,  making  one  equally  convenient, 
their  default  in  so  doing  was  held  to  render  them  indictable  for  a  nuisance  to  the 
road  obstructed.  In  railway  acts  there  usually  are  clauses  requiring  the  company 
to  carry  for  reasonable  and  equal  rates,  and  then  they  are  liable  to  actions  for 
exceeding.  See  Pickford  v.  Grand  Junction  Railway  Co.,  10  M.  &  "W.  399,  and  Parket 
V.  Great  Western  Railway,  7  M.  &  G.  253. 


i 


JOINT  STOCK  COMPANIES.  135 

Joint  Stock  Companies — rights  against,  and  liabilities  to  third  parties. 

been  already  pointed  out.  Tliey  are  looked  upon  as  bargains  made 
between  the  public  and  the  company,  and  to  be  construed  liberally 
in  favor  of  the  former,  who  had  no  hand  in  concocting  them,  and 
whose  rights  are  nevertheless  affected  by  them.  "Where  land  is 
taken  it  is  usually  provided  that  if  the  owner  do  not  agree  with  the 
company  upon  a  compensation  it  shall  be  assessed  by  a  jury.  Qc) 
As  to  the  mode  in  which  such  inquisitions  are  construed,  see  Doe 
d.  Payn  v.  Bristol  and  Exeter  Railway  Company.  {[)  It  is  laid  down 
by  Baron  Parke  in  that  case,  that,  as  an  extraordinary  jurisdiction 
is  to  be  exercised,  every  thing  requisite  ought  to  appear  on  the  in- 
quisition. At  the  same  time  the  decision  shows  that  there  are 
matters  which  come  by  way  of  defeasance  to  the  powers  given  by 
the  act,  and  need  not  be  stated.  Questions  sometimes  arise  as  to 
the  nature  of  the  property  in  respect  cf  which  the  owner  is  entitled 
to  compensation.  In  such  cases,  the  act  is  to  be  construed  liberally, 
so  as  to  include  every  interest  atl'ected.  {in) 

In  ordinary  cases,  however,  a  member  of  a  joint  stock  company 
is,  like  members  of  an  ordinary  firm,  entitled  to  the  benefit  of  all 
its  contracts,  and  responsible  for  engagements  made  by  the  agents 
of  the  concern,  and  for  its  purposes,  {n)  His  liability  commences 
with  the  commencement  of  the  company,  and  he  is  not  responsible 
for  contracts  made  before  that  period  by  its  intended  members  or 
directors,  while  preliminaries,  on  the  accomplishment  of  which  he 
had  agreed  to  join  the  company,  are  unaccomplished,  (o)     Thus, 

{k)  The  effect  of  such  an  assessment  is  not  at  once  to  vest  the  land  in  the  com- 
pany. Upon  their  paying  tlie  amount  into  the  Bank  of  England,  they  should  first 
call  on  the  owner  to  produce  his  title,  and  to  convey,  though  before  the  assessment 
he  had  refused  to  do  so.  Doe  de  Hutchinson  v.  Manchester,  Bmy,  Rossendale  Eail- 
way  Co.,  14  M.  &  TV.  687. 

(Z)  6  M.  <fe  W.  320. 

(?»)  Ex  parte  Farlow,  2  B.  tfe  Ad.  341.  R.  v.  Eastern  Counties  Railway  Co.,  2  Q. 
B.  347. 

(n)  Carlen  v.  Drury,  1  V.  &  B.  157.  Keasley  v.  Codd,  2  C.  &  P.  408.  Harvey  v. 
Kay,  9  B.  &  C.  356.  Maudesley  v.  Le  Blanc,  2  C.  <fe  P.  409,  n.  So  if  he  holds  him- 
self out.     Braithwaite  v.  Scholfield,  9  B.  &  C.  401. 

(o)  Fox  V.  Clifton,  6  Bingh.  776.  Dickenson  v.  Valpy,  10  B.  &  C.  142.  Bourne 
V.  Freeth,  9  B.  &  C.  632.  Pitchford  v.  Davis,  5  M.  &  W.  2.  Barnett  v.  Lambert,  15 
M.  &  W.  489.  Reynell  v.  Lewis,  ibid.  517.  See  also  Walstab  v.  Spottiswoode,  ibid. 
501.  For  cases  where  the  partnership  liability  was  held  to  have  attached,  see  Har- 
vey V.  Ka}',  ^lhi  supra.     Ellis  v.  Schmoeck,  5  Bingh.  521.     Lawler  v.  Kershaw,  M.  A 


136  MERCANTILE  PERSONS. 

Joint  Stock  Companies — rights  against,  and  liabilities  to  third  parties. 

"  where  a  prospectus  is  issued  and  shares  collected  for  a  speculation 
to  be  carried  on  by  means  of  a  certain  capital,  to  be  raised  in  a 
certain  number  of  shares,  a  subscriber  is  not  liable  in  the  first  in- 
stance, unless  the  terms  of  the  prospectus  in  that  respect  are  ful- 
filled ;  but  if  it  be  shown  that  he  knows  the  directors  are  carrying 
on  the  undertaking  with  a  less  capital,  and  has  acquiesced  in  their 
so  doing,  he  may  become  answerable  for  their  future  contracts."  {p) 
And,  in  a  late  case,  his  writing  letters  to  the  directors,  who  were 
carrying  on  the  undertaking  with  the  smaller  capital,  requiring 
them  to  call  a  meeting,  has  been  held  evidence  of  acquiescence,  (g)* 
And  though  in  the  absence  of  acquiescence,  no  partnership  takes 
place  till  the  preliminaries  are  completed,  yet  when  the  partnership 
has  once  begun,  every  member  is  liable  in  respect  of  a  contract 
made  by  the  directors  or  agents  in  the  iisual  course  of  business, 
though  contrary  to  the  original  stipulations,  {r)  Persons,  also,  who 
consent  to  become  members  of  the  provisional  committee  of  a  pro- 
jected company,  do  not  thereby  authorize  the  other  members  of  the 
committee  to  engage  their  credit,  even  for  things  necessary  to  estab- 

M.  93.  Doubleday  v.  Muskett,  4  M.  &  P.  150;  T  Bingh.  110;  and  Hutt  v.  Giles,  12 
M.  &  W.  492,  where  in  an  action  for  calls,  the  subscription  of  the  whole  capital  was, 
under  the  terms  of  the  deed  then  in  question,  held  not  to  be  a  condition  precedent. 

(p)  Per  Lord  Abinger,  in  Pitchford  v.  Davis,  5  M.  &  W.  2.  Steigenberger  v.  Carr. 
3  M.  &  Gr.  191. 

(q)  Tredwen  v.  Bourne,  G  M.  &  W.  461. 

(r)  Hawken  v.  Bourne,  8  M.  &  W.  703. 

*  "The  question,"  saj's  Mr.  Bisset,  in  his  treatise  on  Joint  Stock  Companiesi 
Wliat  constitutes  partnersJiip  ?  can  onlj' arise  in  the  case  of  joint  stock  companies, 
when  they  are  in  the  preliminary  stages,  which  precede  complete  registration  or 
incorporation.  For  the  deed  of  settlement,  or  act  of  pai'liament,  or  charter,  will 
place  the  question  of  partnership,  as  regards  any  individual  who  has  been  registered 
xmder  it,  beyond  a  doubt.  The  result  of  the  cases  is,  that  in  a  scheme  for  a  com- 
pany which  has  not  advanced  to  completion,  that  is,  which  has  not  arrived  at  a 
point  held  out  by  the  promoters  or  provisional  directors  to  the  subscribers  as  the 
starting  point — wiiich  point  may  be  stated  to  be  complete  registration  and  incorpo- 
ration respectiveh' — there  is  no  partnership  existing  quoad  strangers;  and  therefore 
that  the  subscribers  or  allottees  are  not  liable  for  debts  incurred  to  strangers  in  the 
name  of  the  company  merely,  qua  subscribers  or  allottees,  where  they  have  not 
expressly  authorized  the  directors  to  jii'oeeed  with  the  smaller  or  incomplete  sub 
scription  or  capital,  and  where  they  have  not  in  any  way  held  themselves  out  aa 
personally  res2)ousible.'' 


JOINT  STOCK  COMPANIES.  137 

Joint  Stock  Companies — I'ights  against,  and  liabilities  to  third  parties. 

lish  tlie  compan3\  The  bare  fact  of  allowing  their  names  to  be 
published  to  the  world,  as  members  of  such  a  committee,  (s)  will 
not  render  them  liable.  If,  however,  they  have  done  any  acts,  in 
relation  to  the  proposed  company,  those  acts  raise  a  question  for  the 
jury,  as  to  whether  they  authorized  the  pledging  of  their  credit  for 
matters  necessary  to  the  formation  of  the  company.  So  their  per- 
mitting their  names  to  be  inserted  in  a  prospectus,  which  represents 
certain  persons  as  the  agents  of  the  committee,  e.  g.  solicitors  and 
secretaries,  should  be  submitted  to  the  jury,  and  it  is  for  them  to 
judge  whether  by  so  doing,  they  did  not  intend  to  authorize  those 
agents  to  do  all  such  things  on  their  behalf,  as  are  usually  done  by 
them  in  similar  cases.  If  the  prospectus  also  states  the  names  of 
an  acting  committee,  it  is  for  the  jury  to  say,  whether  the  meaning 
of  that  is,  that  the  acting  committee  is  to  take  the  whole  manage- 
ment, to  the  exclusion  of  the  provisional  committee,  their  pro- 
visional character  having  ceased,  in  which  case  they  would  not  be 
liable ;  or  that  the  provisional  committee  have  appointed  the  acting 
committee,  or  the  majority  of  it,  on  their  behalf,  and  as  their  agents, 
in  which  event  they  would  be  liable  upon  contracts  made  by  them 
as  such  agents.  It  is,  however,  quite  clear  that  they  cannot  be 
charged  for  goods  supplied  or  debts  incurred  previously  to  their 
consenting  to  act.  {t) 

It  has  been  decided  that,  in  the  absence  of  proof  to  the  con- 
trary, one  member  of  a  joint  stock  company  cannot  bind  the  re- 
mainder by  negotiable  instruments.  In  Bramah  v.  Roberts,  {u)  a  bill 
was  drawn  by  one  of  the  directors  of  a  joint  stock  gas  light  and 
coke  company  on  himself  and  the  other  directors,  and  accepted  by 
the  chairman  for  himself  and  the  other  directors,  the  acceptance  was 
held  not  to  bind  them.  "  The  address  of  a  bill,"  said  Tindal,  C. 
J.,  delivering  the  judgment  of  the  Court,  "  to  the  directors  of  a 
metropolitan  compan}^,  and  the  frame  of  acceptance  by  the  chair- 
man of  such  directors  for  himself  and  the  other  directors,  can  only 
be  referable,  unless  some  explanation  is  given,  to  a  company  of  the 

(«)  Rej-nell  v.  Lewis,  Wyld  v.  Hopkins,  15  M.  &  "W.  51Y.  Cooke  v.  Tonkin,  16  L. 
J.  Q.  B.  153.  Barker  v.  Stead,  ibid.  C.  P.  160.  See  also  Lake  v.  The  Duke  of  Argyle^ 
6  Q.  B.  2.     Woods  V.  Tlie  Duke  of  Argyle,  6  M.  &  G.  928. 

(0  Barnett  v.  Lambert,  15  M.  &  W.  489. 

(ti.)  3  Bingh.  N.  C.  963.     See  also  Steele  v.  Harraer,  14  M.  &.  W.  831. 


138  MERCANTILE  PERSONS. 


Joint  Stock  Companies — rights  against,  and  liabilities  to  third  parties. 

description  well  known  in  all  the  courts  of  law  and  equity  in  "West- 
minster Hall  as  joint  stock  companies^  and  not  to  ordinary  partner- 
ships in  trade.  It  was  proved  upon  the  trial  of  the  cause,  that 
Clare,  the  drawer  of  the  bill,  from  whom  the  plaintiffs  derived  title, 
and  upon  whose  indorsement  they  rely,  was  the  same  William  Clare 
who  is  one  of  the  acceptors  and  one  of  the  defendants  in  his  capa- 
city of  acceptor.  So  that  the  bill  is  drawn  by  one  of  the  directors 
upon  himself  and  the  other  directors,  paying  to  his  own  order,  and 
accepted  by  another  director  for  himself  and  the  rest.  But  the 
right  of  one  director  to  draw  a  bill  upon  the  rest,  and  still  further, 
the  power  of  one  director  to  accept  a  bill  for  himself  and  the  others, 
so  as  to  make  those  others  liable,  according  to  the  case  of  Dicken- 
son V.  Valpy^  (v)  in  the  authority  of  which  case  we  entirely  concur, 
is  not  a  right  or  power  implied  by  law,  like  that  which  belongs  to 
one  member  of  an  ordinary  partnership  in  trade,  with  respect  to 
bills  drawn  and  accepted  for  the  purposes  of  the  trade  ;  it  must  de- 
pend upon  the  powers  given  by  the  charter,  or  deed,  or  agreement, 
under  which  the  company  is  established  or  constituted,  or  some 
other  agreement  between  the  parties,  whether  a  bill  so  drawn  and 
accepted  shall  or  shall  not  have  that  legal  effect.  But  upon  the 
trial  of  this  cause,  no  evidence  whatever  was  given  by  the  plain- 
tiffs of  the  constitution  of  this  company,  nor  of  any  authority  given 
by  deed  or  otherwise  to  any  one  of  the  directors  to  bind  the  other 
directors,  or  to  bind  the  company  at  large,  by  his  acceptance  of  bills 
of  exchange ;  and  in  the  absence  of  such  evidence,  we  are  of  opinion 
that  no  such  authority  is  to  be  implied  by  law,  or  can  be  held  to 
exist." 

In  Tredwen  v.  Bourne^  [w)  Lord  Abinger  expressed  an  opinion 
that  the  question  whether  the  directors  of  a  mining  company  have, 
in  the  absence  of  express  provision,  power  to  bind  the  company  by 
dealing  on  credit,  must  depend  on  the  general  nature  of  the  con- 
cern, and  is  a  matter  for  the  jury  to  decide  on ;  "and,  I  think," 
added  his  lordship,  "  they  would  not  have  had  much  difficulty  in 
saying  that  it  is  the  general  nature  of  mining  concerns  to  deal  on 
credit  for  the  purpose  of  carrying  on  their  business."     In  the  sub- 


(v)  10  B.  &  C.  142.  (w)  6  M.  &  ^Y.  465. 


JOIXT  STOCK  COJIPAXrES.  I39 

Joiut  Stock  Companies — rights  against,  and  liabilities  to  third  parties. 

sequent  case  of  Hawlcen  v.  Bourne^  {x)  proof  to  that  effect  was  given 
in  a  Cornish  case. 

It  is  apprehended,  that  as  the  general  nature  of  a  joint  stock  com- 
pany is  to  contract,  through  the  medium  of  its  directors  or  their 
agents  only,  the  contract  of  a  private  member  would  in  no  case 
bind  the  others,  unless  recognized.  This  observation  appears  to  be 
in  some  degree  sanctioned  by  the  judgment  in  Bain  v.  Cooper,  {y) 
It  has  been  expressly  held,  that  an  agent  appointed  by  the  directors 
has  no  implied  power  to  borrow  money  for  the  use  of  a  mining 
company,  however  urgent  may  be  the  necessity,  (z) 

The  liability  of  the  member  of  a  joint  stock  company  will,  in 
the  absence  of  any  special  arrangement,  be  determined  in  the  sama 
manner  as  that  of  an  ordinary  partner,  (a) 


(a;)  8  M.  <fe  TV.  '703. 

{y)  9  M.  &,  W.  701 :  see  particularly  the  judgment  of  the  L.  C.  Baron  at  p.  708. 
(2)  Hawtayne  v.  Bourne,  7  M.  &,  W.  595. 

(a)  Weald  of  Kent  Canal  Co.  v,  Kobinson,  5  Taunt.  801.     Kidwelly  Canal  C<w  «• 
Raby,  2  Price,  93. 


CHAPTER  rV 


COEPOEATIONS. 

A  CORPORATION  aggregate  (a)  consists  of  several  individuals  united 
in  such  a  manner,  that  they  and  their  successors  constitute 
but  one  person  in  law,  a  person  distinct  from  that  of  any  of  the 
members,  though  made  up  of  them  all,  and  whose  privileges  and 
possessions,  when  once  vested  in  it,  will  be  forever  vested,  withoifl 
any  new  conveyance  to  new  successors ;  for  all  the  individual  mem 
bers  that  have  existed  from  the  foundation  to  the  present  time,  or 
that  shall  ever  hereafter  exist,  are  but  one  person  in  law ;  as  the 
river  Thames  is  still  the  same  river,  though  the  parts  which  com- 
pose it  are  changing  every  instant.  (5) 

From  this  distinction  between  the  aggregate  existence  of  the 
corporation  and  the  individual  existence  of  each  of  its  members,  it 
follows  that  they  may  sue  and  may  be  sued  by  one  another  in  a 
court  of  law.  (c)* 

(a)  The  consideration  of  corporation  sole  is  foreign  to  the  subject  of  this  treatise. 

(6)  1  Black.  Coram.  468. 

(c)  See  Garden  v.  General  Cemetery  Company,  5  Bingh.  N.  C.  253. 

*  A  question  of  the  highest  importance  and  interest  was  decided  in  the  case  of 
tlie  Bank  of  Augusta  v.  Earle,  13  Peters,  519,  after  an  eloquent  and  elaborate  discus- 
sion by  the  most  eminent  counsel  in  the  country.  The  plaintiffs,  a  corporation  crea- 
ted by  the  laws  of  another  state,  had  discounted  a  bill  of  exchange,  through  their 
agent,  in  Alabama :  and  it  was  contended  that  the  corporation  could  have  no  legal 
existence,  for  any  purpose,  out  of  the  boundaries  of  the  sovereignty  by  which  it  was 
established,  and  consequent!}-,  no  capacity  to  contract.  The  court,  Mr.  Justice 
McKinley  dissenting,  overruled  the  objection,  and  held  that  there  was  no  greater  ob- 
jection to  the  capacity  of  an  artificial,  than  a  natural  person,  by  its  agents,  to  make 
a  contract  within  the  scope  of  its  limited  powers,  without  the  sovereignty  in  which 
it  resides :  provided  the  contract  is  valid  according  to  the  laws  of  the  place  where 
made ;  that  the  right  of  foreign  corporations  to  make  contracts  without  the  jurisdic- 
tion creating  them,  had  been  long  acknowledged  by  the  comity  of  nations ;  and  that 


CORPORATIONS.  141 


Corporations. 


A  corporation  may  exist  by  force  of  the  common  law,  prescrip- 
tion, the  king's  charter,  {d)  or  an  act  of  parliament,  (e)  When 
erected,  a  name  must  be  given  to  it,  and  by  that  name  alone  it 
must  sue  and  be  sued,  and  perform  all  legal  acts :  the  courts  are, 
however,  more  strict  in  compelling  the  exact  insertion  of  the  name 
in  actions  brought  by  corporations  than  in  deeds  executed  by  them, 
for  in  the  former  case  a  mistake  may  be  remedied,  not  so  in  the 
latter.  (/)  With  respect  to  their  deeds,  therefore,  the  rule  is,  that 
in  grants  or  conveyances  the  name  of  a  corporation  must  be  the 
same  in  substance  with  the  true  name,  but  need  not  be  the  same 
in  words  or  syllables,  {g)  Such  name  is  the  very  ceing  of  its  con- 
stitution, the  knot  of  its  combination,  without  which  it  could  not 
perform  its  corporate  functions.  When  it  has  been  so  formed  and 
named,  it  requires  the  right  to  have  perpetual  succession,  to  sue  or 
be  sued,  implead  or  be  impleaded,  grant  or  receive  by  its  corporate 

[d)  "When  a  charter  for  a  trading  company  is  applied  for,  and  the  application  re- 
ferred to  the  Privy  Council,  the  applicants  must  insert  the  same  advertisements  as 
are  required  by  stat.  1  Vict.,  c.  73,  s.  32,  to  be  inserted  by  a  company  making  a  simi- 
lar application,  in  the  Gazette  and  a  county  newspaper. 

(e)  When  a  corporation  is  created  by  a  public  act  of  parliament,  the  courts  take 
judicial  notice  of  it.  Church  v.  Impl.  Gas  Light  Comp.,  3  K  tfe  P.  37 ;  6  Ad.  &,  E. 
846.  But  not  where  it  exists  merely  by  charter,  see  Cooch  v.  Goodman,  2  Q.  B.  580. 
In  such  an  act  it  was  provided  that  no  action  should  be  brought  against  any  person 
for  any  thing  done  under  it  without  twenty  days'  notice.  The  word  person  was 
held  to  include  the  corporation.  Boyd  v.  Croydon  Railway  Company,  4  Bing.  N.  C. 
669. 

(/)  10  Rep.  120,  a. 

{g)  Per  Parke,  J.,  in  Rex  v.  Haughley,  4  B.  &  Ad.  655.  See  on  this  subject,  Mellor 
V,  Spateman,  1  Wms.  Saund.  340,  in  notis. 

the  rules  and  principles  of  comity  were  alike  applicable  between  the  different  states 
of  the  Union.  This  case  in  some  of  its  aspects  is  inconsistent  with  the  decision  of 
the  Court  of  Appeals  of  Virginia,  in  the  earlier,  but  well-considered  case  of  the 
Bank  of  Marietta  v.  Posidall,  2  Rand.  Rep.  466. 

It  has  been  held  in  Virginia — Bank  of  IT.  States  v.  Merchants'  Bank  of  Balti- 
more, 1  Robin.  Rep.  573,  that  under  an  act  authorizing  proceedings  in  courts  of 
equity  against  absent  debtors,  a  creditor  of  a  corporation,  created  by  another  state, 
may  maintain  a  suit  in  equity  against  such  corporation,  as  a  defendant  out  of  the 
commonwealth,  where  there  are  persons  within  the  same  who  have  in  their  hands 
effects  of,  or  are  indebted  to,  such  absent  defendant ;  or  may  maintain  a  suit  in  equity 
against  such  corporation  as  an  absent  defendant,  where  it  has  lands  or  tenements 
■within  the  commonwealth. 


142  MERCANTILE  PERSONS. 

Corporations. 

name,  and  do  all  other  acts  as  natural  persons  may.  Being,  how- 
ever, an  invisible  body,  it  cannot  manifest  its  will  by  oral  commu- 
nication :  a  peculiar  mode  has,  therefore,  been  devised  for  the  au- 
thentic expression  of  its  intention,  namely,  the  affixing  of  its  com- 
mon seal ;  and  it  is  held,  that  though  the  particular  members  may 
express  their  private  consents  by  words,  or  signing  their  names, 
3^et  this  does  not  bind  the  corporation  ;  it  is  the  fixing  of  the  seal, 
and  that  only,  which  unites  the  several  assents  of  the  individuals 
composing  it,  and  makes  one  joint  assent  of  the  A^hole.  (A)  How- 
ever, it  has  been  considered  that  a  trading  corporation  may  differ 
from  others,  as  to  its  powers  of  contracting,  and  its  remedies  on 
contracts  relating  to  the  purposes  for  which  it  was  formed,  {i)  Thus, 
such  a  corporation  may  in  some  cases  bind  itself  by  promissory 
notes,  {j)  and  bills  of  exchange ;  {k)  and  it  was  even  held  that  the 
Bank  of  England  might,  without  deed,  appoint  an  agent  for  such 
purposes,  (l)  But  a  corporation  will  not  have  these  extraordinary 
powers,  unless  the  nature  of  the  business  in  which  it  is  engaged 
raises  a  necessary  implication  of  their  existence.  (?n)*     It  certainly 

(7<)  Arnold  v.  Maj-or  of  Poole,  4  M.  &,  Gr.  860.  Mayor  of  Ludlow  v.  Charlton,  6 
M.  &"W.  815.  The  corporation  of  London  indeed  appoints  an  attorney  without  seal, 
but  that  is  of  record  in  the  Court  See  Arnold  v.  Mayor  of  Poole,  judgment  Fish- 
mongers' Co.  V.  Robertson,  5  M.  &  Gr.  200.  East  London  Water  Works  Company  v. 
Bailey,  4  Bingli.  283.  Gibson  v.  East  India  Company,  5  Bingh.  K  C.  263.  Vide 
tamen  Church  v.  Imp.  Gas  Companj-,  3  K  &  P.  37.     6  Ad.  &  E.  846. 

[i)  3  B.  <L'  Ad.  131.  Church  v.  Imp.  Gas  Light  Company,  3  N.  &,  P.  37.  6  Ad. 
&  E.  846. 

( j)  Stat  9  Anne,  c.  1,  and  Bayley  on  Bills,  5th  edit  p.  67. 

(k)  R.  V.  Bigg,  3  P.  Wms.  419.  Edie  v.  E.  L  Company,  2  Burr.  1216,  admitted 
arguendo  in  Broughton  v.  Manchester  and  Salford  Water  Works  Company,  3  B.  <fe 
A.  3. 

{I)  R.  V.  Bigg,  supra,  N.  B.     There  was  a  difference  of  opinion.     See  1  Str.  18. 

()>i)  Broughton  v.  Manchester  and  Salford  Water  Works  Company,  3  B.  <fe  A.  1. 
Murray  v.  E.  I.  Compy.,  5  B.  <fe  A.  204.  Dunstan  v.  Imp.  Gas  Light  Company,  3  B 
&  Ad.  125.  Slark  v.  Highgate  Archway  Compy.,  5  Taunt.  792.  Steele  v.  Ilarmer,  14 
M.  &  W.  831.  The  principle  on  which  the  exception  depends  seems  to  be  "conveni- 
ence almost  amounting  to  neccssiti/."  Per  curiam  in  Church  v.  Imp.  Gas  Light  Compy., 
3  K  A  P.  37,  6  Ad.  &.  E.  846. 


*  More  just  and  rational  principles  prevail  in  our  own  country,  in  reference  to 
the  capacity  of  corporations ;  and  such  as  have  been  referred  to  witli  respect  by  tho 
most  distinguished  English  judges,  who,  while  adhering  to  the  strictness  of  the  old 


CORPORATIONS.  143 


Corporations. 


appears,  that  there  are  other  acts,  mostly  of  a  trifling  nature,  which 
every  corporation  may  do  without  seal,  or  even  writing.  Such,  it 
has  frequently  been  said,  is  the  hiring  a  common  servant,  or  the 
appointment  of  a  bailiff  to  distrain ;  {n)  yet,  it  is  so  doubtful  what 
acts  are  included  within  this  exception,  and  the  authorities  are  so 
conflicting,  (o)  that  it  is  impossible  to  speak  on  the  subject  with 

(n)  Plowd.  91;  Vin.  Abr.  Corp.  K.;  Bro.  Corp.  47;  3  Lev.  127;  1  Salk.  191; 
Com.  Dig.  Franchises  F.  13.  R.  v.  Bigg,  supra.  Yarborough  v.  B.  of  England,  16 
East,  6.  4  H.  7,  6.  13  H.  7,  17.  13  H.  8,  12.  1  Sauiid.  305,  b.  Smith  v.  Birming- 
ham Gas  Light  Co.,  1  Ad.  &  E.  526,  ubi  per  Taunton,  J.  "The  distinction  is  between 
matters  that  do,  and  matters  that  do  not,  affect  any  interest  of  the  corporation- 
Thus  they  must  appoint  a  bailiff  by  deed  for  entering  lands  for  condition  broken  in 
order  to  revisit  their  estate.  But  they  need  not  do  so  when  the  bailiff  is  only  to  dis- 
train for  rent." 

(o)  1  Mod.  18;  Bro.  Corp.  24,  34.  Dunstan  v.  Imp.  Gas  Light  Compy.,  3  B.  it  Ad. 
125.  Home  v.  Ivy,  1  Vent.  47.  See  an  enumeration  of  them  in  the  judgment  of 
Best,  C.  J.,  in  East  London  Water  Works  v.  Bailey,  4  Bingh.  283. 

doctrine,  have  adverted  to  the  obvious  circumstances  which  justify  our  advancing 
with  somewhat  freer  step  to  the  discussion  of  the  ancient  rules  of  the  common  law 
The  reasoning  upon  which  the  American  courts  have  proceeded  is  unfolded  with 
great  learning  and  ability  by  Judge  Story,  in  the  case  of  the  Bank  of  Columbia  v. 
Patterson's  Adra'rs,  7  Cranch,  299,  and  Fleckner  v.  Bank  of  the  U.  States,  8  Wheat. 
338.  "Whatever,"  saj's  he,  "may  be  the  original  correctness  of  this  doctrine,  as 
applied  to  corporations  existing  by  the  common  law,  in  respect  even  to  which  it  has 
certainly  been  broken  in  upon  in  modern  times,  it  has  no  application  to  corporations 
created  by  statute,  whose  charters  contemplate  the  business  of  the  corporation  to  be 
transacted  exclusively  by  a  special  body,  or  a  board  of  directors.  And  the  acts  of 
such  body,  or  board,  evidenced  by  a  written  vote,  are  as  completely  binding  upon 
the  corporation,  and  as  complete  authority  to  their  agents,  as  the  most  solemn  acts 
done  under  the  corporate  seal.  In  respect  to  banks,  from  the  very  nature  of  their 
operations  in  discounting  notes,  in  receiving  deposits,  in  paying  cliecks,  and  other 
ordinary  and  daily  contracts,  it  would  be  impracticable  to  affix  the  corporate  seal, 
as  a  confirmation  of  each  individual  act.  And  if  a  general  authority  for  such  pur- 
poses, under  the  corporate  seal,  would  be  binding  upon  the  corporation  because  it  is 
the  mode  prescribed  by  the  common  law,  must  not  the  like  authority,  exercised  by 
agents,  in  the  mode  prescribed  by  the  charter,  and  to  whom  it  is  exclusively  given 
oy  the  charter,  be  of  as  high  and  solemn  a  nature  to  bind  the  corporation  ?  To 
suppose  otherwise,  is  to  suppose  that  the  common  law  is  superior  to  the  legislative 
authority,  and  that  the  legislature  cannot  dispense  with  forms,  or  confer  authorities 
whicli  the  common'  law  attaches  to  general  corporations."  "The  existing  law  on 
this  subject  is,"  says  Ch.  Walworth,  "that  a  corporation  may  be  bound  by  the  acta 
of  its  agents,  although  not  under  its  corporate  seal,  and  even  where  they  are  not  re- 
duced to  writing;  except  in  those  cases  where,  by  the  provisions  of  the  Statute  of 


144  MERCANTILE  PERSONS. 


Corporations. 


confidence.  Every  exception  of  this  kind  stands  on  the  ground  of 
necessity,  {p)  Assumpsit  lies  against  a  trading  corporation  on  an 
executed  contract  for  goods  sold,  {g)  and  hy  it  upon  an  executory 
contract  to  accept  and  pay  for  them,  (r)  And  a  corporation  may 
maintain  assumpsit  upon  a  parol  contract  performed  on  their  parts, 
notwithstanding  they  could  not  have  been  sued  upon  it  for  want  of 
the  affixing  of  the  common  seal,  (5)  and  may  be  sued  in  this  form 
of  action  for  money  which  it  has  wrongfully  received,  (f)  Where 
a  corporation  can  become  a  party  to  a  bill,  it  may  be  sued  upon  it 
in  assumpsit ;  {u)  and  in  actions  upon  policies  of  insurance,  made  by 
the  two  incorporated  insurance  companies,  and  which  are,  there- 
fore, always  by  deed,  a  general  form  of  plea  is  given  to  the  defend- 
ants by  stat.  11  Geo.  1,  c.  30,  s.  43.  In  some  cases  a  trading  cor- 
poration is  exempted  by  the  act  incorporating  it  from  liability  to 
actions,  in  order  to  equalize  the  rights  of  its  creditors,  whose  debts 


{p)  See  judgment  in  Beverly  v.  Lincoln  Gas  Light  Compy.,  6  Ad.  &  E.  844-5. 

Iq)  Beverley  v.  Lincoln  Gas  Light  Comp}-.,  1  N.  &  Perr.  283;  6  Ad.  &.  E.  829 

(r)  Church  v.  Imp.  Gas  Light  Compj^,  3  K  Perr.  37  ;  6  Ad.  A  E.  846 

(s)  Fishmongers'  Company  v.  Robertson,  5  M.  &  Gr.  131. 

{t)  Hall  V.  the  Mayor  of  Swansea,  5  Q.  B.  526 

(?<)  Edie  V.  E.  I.  Compy.,  2  Burr.  1216.  Murray  v.  E.  I.  Compy.,  5  B.  <fe  A.  204 
Slark  V.  Highgate  Archway  Compy.,  5  Taunt.  TS)2.  Broughton  v.  Manchester  and 
Salford  Water  Works,  3  B.  &  A.  1. 


Frauds,  or  otherwise,  a  contract  must  be  in  writing  to  render  it  valid,  if  m.ide  by  a 
private  person.  And  the  acts  and  assent  of  corporations,  like  those  of  individuals, 
when  not  reduced  to  "writing,  may  be  inferred  from  other  facts  and  circumstances, 
without  a  violation  of  any  known  rule  of  evidence."  The  American  Insurance  Co. 
V.  Oakley,  9  Paige,  496.  See  Dunlap's  Paley  on  Agency,  155,  where  there  is  a  full 
and  learned  examination  of  the  subject. 

In  the  recent  case  of  Melledge  v.  Boston  Iron  Company,  5  Cnsh.  R.  175,  C.  J. 
Shaw,  delivering  the  opinion  of  the  Court,  uses  this  language :  "It  seems  to  be  now 
well  settled  in  this  commonwealth,  since  the  great  multiplication  of  corporations, 
extending  to  almost  all  the  concerns  of  business,  that  trading  corporations,  whose 
dealings  embrace  all  transactions  from  the  largest  to  the  minutest,  and  affect  almost 
every  individual  in  the  community,  are  affected  like  private  persons  with  obligations 
arising  from  implications  of  law,  and  from  equitable  duties  Avhich  imply  obligations, 
with  constructive  notice,  implied  assent,  tacit  acquiescence,  ratifications  from  acts 
and  from  silence,  and  from  their  acting  upon  contracts  made  by  those  professing  to 
be  their  agents,  and  generally  by  those  legal  and  equitable  considerations  which  af- 
fect the  rights  of  natural  persons." 


CORPORATIONS.  145 


Corporations. 


are  all  directed  to  be  secured  by  mortgages  upon  its  property.  The 
instances  of  this  are  generally  canal  companies,  (v) 

It  has  been  held  in  equity,  that  an  incorporated  joint  stock 
company  is  bound  to  make  good  expense  necessarily  incurred  in 
order  to  its  own  formation,  (tv) 

A  corporation  has  a  right  to  make  by-laws  for  its  own  govern- 
ment, which  are  binding  upon  the  members,  unless  contrary  to  the 
law  of  the  land  or  the  directions  of  their  charter ;  (cc)  and  this 
power  of  making  by-laws  may  be  delegated  by  the  whole  body  to 
a  select  part,  which  thus  becomes  the  representative  of  the  whole 
community,  (i/)* 

The  above  were  the  principal  incidents  to  a  corporation  at 
common  law ;  but  by  stat.  1  Vict.  c.  73,  sect.  29,  the  crown,  when 
it  creates  a  corporation,  may  confer  upon  it  any  of  the  incidents  to 
the  species  of  joint  stock  company  created  by  that  act. 

A  corporation  may  be  dissolved,  first,  by  act  of  parliament; 
secondly,  by  the  natural  death  of  all  its  members ;  thirdly,  by  sur- 
render of  its  franchise  to  the  crown ;  fourthly,  by  forfeiture  of  its 
charter  through  negligence  or  abuse  of  its  franchise.  These  are 
the  only  modes  in  which  it  could  have  been  dissolved  at  common 

{v)  See  Pontet  v.  Basingstoke  Canal  Comp.,  3  Bingh.  K  C,  433 ;  also  Pardoe  v. 
Price,  11  M.  &  W.  427.     13  M.  &  W.  267. 

(w)  Edwards  v.  Grand  Junction  Railway,  1  M.  &  Cr.  650. 

{x)  R.  V.  Cutbush,  4  Burr.  2204.  Kirk  v.  No  well,  1  T.  R.  118.  See  4  Burr.  2260; 
3  Burr.  1827,  47 ;  2  Bro.  P.  C.  394,  329 ;  2  M.  <fe  S.  58 ;  7  T.  R.  643  ;  1  Burr.  12 ;  6  T. 
R.  732  ;  11  Rep.  54.     Graves  v.  Colby,  1  P.  <fe  D.  235.     9  Ad.  &  E.  356. 

(y)  Per  Ld.  Mansfield,  3  Burr.  1837.    Rex  v.  Westwood,  7  Bingh.  1. 

*  A  novel  and  interesting  point,  involving  the  relations  of  the  directors  of  a  cor- 
poration to  the  individual  stockholders,  was  decided  by  the  Supreme  Court  of  Mas- 
sachusetts, in  the  case  of  Smith  v.  Hurd  et  ah.,  12  Mete.  371.  A  stockholder  of  an 
incorporated  bank  brought  an  action  on  the  case  against  its  directors  for  so  negli- 
gently conducting  its  business  through  a  series  of  years,  as  to  waste  the  entire  capi- 
tal, and  thus  render  the  shares  of  the  plaintiff  worthless.  The  court  held  that  the 
action  could  not  be  maintained.  The  directors  were  not  the  agents  of  the  individual 
stockholders,  but  of  the  corporation.  To  this  body  politic,  having  a  separate  exist- 
ence as  a  distinct  person  in  law,  all  its  officers  and  servants  were  responsible  for  neg- 
ligence or  other  delinquency  in  the  discharge  of  their  duties.  The  stockholders,  as 
individual  members  of  the  corporation,  could  not  severally  or  jointly  exercise  any 
control  over  the  directors.  If  an  action  could  be  brought  by  any  one  stockholder 
the  directors  might  be  subject  for  the  same  default  to  a  great  number  of  actions. 
10 


146  MERCANTILE  PERSONS. 


Corporations. 


law :  there  is  now,  however,  a  fifth,  namely,  by  the  expiration  of 
i  its  charter,  since  charters  of  incorporation  may,  by  stats.  1  Yict.  c. 
73,  sect.  29,  and  7  &  8  Vict.  c.  113,  be  granted  for  limited  periods. 
A  trading  corporation  also  may,  in  consequence  of  the  provisions 
of  7  &  8  Vict.  c.  Ill,  be  now  dissolved  by  bankruptcy  :  the  pro- 
visions of  that  act  are  fully  stated  at  the  end  of  the  chapter  on 
bankruptcy ;  and  under  the  Joint  Stock  Companies  Eegistration  Act 
(?/)  such  societies  may  be  dissolved  in  the  mode  prescribed  by  their 
deeds  of  settlement. 

Here  it  is  to  be  observed,  that  debts  to  or  from  a  corporation 
/  are,  generally  speaking,  wholly  extinguished  by  its  dissolution,  so 
that  the  members  cannot  recover  or  be  charged  with  them  in  their 
natural  capacity;  however,  by  stat  6  Geo.  4,  c.  91,  it  was  enacted, 
that  in  any  charter  thereafter  to  be  granted  by  his  Majesty,  his 
heirs  or  successors,  for  incorporation  of  any  body  or  company  of 
persons,  it  should  be  lawful  to  provide,  that  the  members  should  be 
individually  liable  in  their  persons  and  property  for  the  debts,  con- 
tracts, and  engagements  of  such  corporation,  to  such  extent,  and 
subject  to  such  regulations  and  restrictions  as  his  Majesty  might 
deem  fit,  and  the  members  should  be  liable  accordingly.  In  conse- 
quence of  this  act,  when  trading  companies  were  incorporated,  it 
was  usual  to  provide  in  the  charter,  that  the  private  property  of  in- 
dividual partners  should  be  liable  to  the  debts  of  the  company,  in 
case  of  an  execution  on  a  judgment  obtained  against  it,  in  propor- 
tion to  their  individual  shares.  That  statute  is  indeed  repealed  by 
1  Vict.  c.  73,  which,  however,  effects  the  same  object  by  enabling 
her  Majesty,  in  any  charter  of  incorporation  thereafter  to  be  grant- 
ed, to  make  the  corporation  and  its  officers  or  members  subject  to 
all  the  provisions,  directions,  and  liabilities,  applicable,  under  that 
statute,  to  joint  stock  companies,  and  which  are  above  enumerated 
in  chap.  3.  In  the  recent  statutes  7  &  8  Vict.  cc.  110,  111,  113, 
provisions  are  contained,  which  effectually  guard  against  the  extin- 
guishmefit  of  the  debts  of  the  companies  to  which  they  relate  by 
their  dissolution. 

{z)  See  ante,  pp.  115  and  118. 


CHAFI'EIl  V. 

PEINCIPAL     AND     AGENT. 

Sect.  1.  Definition  and  character  of  agent. 

2.  Rights  of  principal  against  agent. 

3.  Rights  of  agent  against  principal. 

4.  Rights  of  third  parties  against  principal, 

5.  Rights  of  principal  against  third  parties. 

6.  Rights  of  agent  against  third  parties. 

7.  Rights  of  third  parties  against  agent. 


i 


Section  I, — Definition  and  character  of  Agent. 

As  a  comparatively  small  part  of  an  extensive  business  can  be  car- 
ried on  by  the  unassisted  exertions  of  the  trader,  whether  sole  or 
the  member  of  a  partnership  or  corporation,  the  agents  by  whom 
he  is  obliged  to  transact  the  remainder  constitute  an  important, 
though  subordinate,  class  of  mercantile  persons;  this  book  will 
therefore  conclude  with  a  sketch  of  the  law  relating  to  them. 

An  agent  is  a  person  authorized  to  do  some  act  or  acts,  in  the 
name  of  another,  who  is  called  his  principal.  Whatever  a  man 
has  power  to  do  in  his  own  right,  he  may  (except  in  one  or  two 
very  peculiar  cases)  (a)  appoint  an  agent  to  do  for  him,  I  say  in 
his  own  right,  for  one  agent  cannot  nominate  another  to  perform  the 


(a)  An  agent  cannot  sign  an  acknowledgment  for  the  purpose  of  taking  a  case 
out  of  the  Statute  of  Limitations ;  Hyde  v.  Johnson,  2  Bingh.  N,  C.  777  ;  nor  could 
a  devise  be  executed  by  an  agent,  because  the  Statute  of  Frauds  expressly  required 
the  signature  of  the  testator ;  but  now  see  7  W.  4,  &  1  Vict.  4,  c.  26,  s.  9. 


148  MERCANTILE  PERSONS. 


Definition  and  character  of  Agent. 


subject  of  his  agency,  vicarius  non  hahet  vicarium.  (b)^  It  is  true, 
that  when,  from  the  nature  of  his  trust,  it  cannot  be  expected  that 
he  should  accomplish  it  all  by  his  own  personal  exertions,  he  will 
be  allowed  to  employ  others  to  assist  him ;  and  therefore,  where  a 
factor  lodged  goods  in  the  warehouse  of  the  South  Sea  Company, 
the  Court  held  that  he  had  a  right  to  do  so,  for  that  a  bailiff  aa 
merchandkandum  is  not  obliged  to  keep  the  goods  always  about 
him.  (c)  So  where  the  guardians  of  the  poor  of  Witney  Union 
employed  Kempthorne  to  draw  a  specification  for  a  workhouse,  and 
Kempthorne  employed  Moon  to  make  calculations,  the  Court  of 
Common  Pleas  decided  that  Moon,  though  he  had  no  communi- 
cation with  the  guardians,  might  sue  them  for  a  compensation, 
having  first  proved  that  Kempthorne,  in  employing  him,  had  acted 
in  accordance  with  the  custom  of  his  trade  of  architecture ;  "  for," 
said  the  L.  C.  J.,  "  in  contractis  tacite  insunt  quce  sunt  moris  et  con- 
suetudinisr  {d)  In  these  cases,  however,  he  does  not  so  much  dele- 
gate his  agency,  as  exercise  a  power  impliedly  contained  in  his 
appointment ;  in  doing  which,  he  must  act  with  precaution,  and  not 
exceed  what  is  proper  under  the  circumstances  of  the  case,  and 
■warranted  by  the  usage  of  trade. 


(6)  Roll.  Abr.  330;  9  Co.  11,  b.  Coles  v.  Trecothick,  9  Ves.  236,  251,  252.  Solly 
V.  Rathbone,  2  M.  &  S.  289.  Cockran  v.  Irlam,  2  M.  <fe  S.  301.  Schraaling  v.  Tom- 
linson,  6  Taunt.  147.  Catlin  v.  Bell,  4  Camp.  184.  Doe  d.  Rhodes  v.  Robinson,  3 
Bingh.  K  C.  678.  Clark  v.  Dignam,  3  M.  <fe  "W.  318.  Ess  v.  Truscott,  2  M.  &  W. 
385.     Maryatt  v.  Broderick,  2  M.  &  "W.  369.     Miles  v.  Bough,  3  Q.  B.  845. 

(c)  Goswell  V.  Dunkley,  Str.  681.     See  Bromley  v.  Coxwell,  1  B.  &  P.  438. 

((f)  Moon  V.  Guardians  of  "Witney  Union,  3  Bingh.  K  C.  817. 


*  This  maxim  is  sometimes  thus  expressed : — delegata  potestas  non  potest  delegan 
Agency  is  a  personal  trust  and  confidence,  which  cannot  be  delegated  unless  thb 
principal  has  conferred  such  a  power  of  substitution  in  express  terms,  or  by  impli 
cation  fairly  to  be  deduced  from  the  nature  of  the  employment.  Thus,  a  factor  can- 
not transfer  a  consignment  made  to  him,  for  sale,  to  another  factor,  without  the 
authority  of  his  principal.  So,  it  has  been  held  that  where  powers  requiring  the 
exercise  of  discretion  have  been  confided  to  a  corporation,  they  cannot  be  delegated 
to  the  directors,  but  must  be  exercised  solely  by  the  corporation,  at  a  legal  meeting 
held  for  that  purpose.  Ex  parte  Henry  "Winsor,  3  Story  C.  C.  R.  411.  These  general 
principles  are  recognized  and  enforced  in  the  later  case  of  Warner  v.  Martin,  11  How 
e.  C.  R.  224. 


rPJXCIPAL  AXD  age:s't.  149 

Definition  and  character  of  Agent. 

Some  persons  may  be  agents  for  others  who  could  not  act  in 
their  own  capacity.  An  infant,  or  feme  covert^  may  become  an 
agent,  the  latter  even  for  her  own  husband,  (e)  But  it  has  been 
decided  that  one  of  two  contracting  parties  cannot  be  agent  for  the 
other,  even  with  that  other's  consent,  so  as  to  bind  him  by  a  writ- 
ing within  the  Statute  of  Frauds.  (/) 

An  agent  may  in  general  be  appointed  by  bare  words,  or  such 
appointment  may  be  inferred  from  the  conduct  of  his  supposed 
principal  respecting  him ;  {g)  there  are,  however,  cases  in  which  the 
nomination  must  be  in  writing,  or  even  by  deed.  (A)  The  appoint- 
ment of  an  agent  for  the  purposes  specified  by  the  1st,  2d,  and  3d 
sections  of  the  Statute  of  Frauds  (^)  must  be  by  writing  ;*  and  it  is 
a  general  rule  that  an  agent  who  is  to  execute  a  deed,  {j)  or  to  take 
or  give  livery  of  seisin,  {k)  must  be  appointed  by  deed  for  that  pur- 
pose.    Moreover,  as  a  corporation  aggregate  can  in  general  act  only 


(e)  Co.  Litt.  62,  a.  Emerson  v.  Blonden,  1  Esp.  142.  Palethorpe  v.  Furnish,  2 
Esp.  511.  Prestwick  v.  Marshall,  7  Bingh.  565.  Prince  v.  Brunatte,  1  Bingh.  N.  C. 
438. 

(/)  Wright  V.  Dannah,  2  Camp.  203.  Farebrother  v.  Simmons,  5  B.  &  A.  333. 
Raynor  v.  Linthorn,  R.  &  M.  325.  Cooper  v.  Smith,  15  East,  103.  See,  however 
Bii'd  V.  Boulter,  4  B.  <fe  Ad.  448,  and  dicta  of  the  Judges  there. 

(g)  See  post,  sec.  4. 

(Ji)  Bac.  Abr.  Authority,  A- 

{i)  29  Car.  2  cap.  3. 

(j)  Harrison  v.  Jackson,  "7  T.  R.  209.  Elliott  v.  Davis,  2  B.  <fe  P.  338.  Horsley  v. 
Rush,  cited  7  T.  R.  209.  Berkeley  v.  Hardy,  5  B.  <fe  C.  355.  Williams  v.  Walsby,  4 
Esp.  220.  Stfciglitz  v.  Egginton,  1  Holt,  141.  See  Hunter  v.  Parker,  7  M.  &.  W.  322, 
from  which  it  appears  that  though  an  agent  cannot  bind  his  principal  by  deed,  unless 
himself  appointed  by  deed,  yet  the  deed  executed  by  the  agent  may  sometimes  bind 
the  principal  as  a  writing. 

(k)  2  Roll.  Abr.  R.  pi.  3,  4. 

*  The  4th  and  I7th  sections  of  the  statute  contains  no  such  provision,  and  it  has 
been  held  in  England  and  in  many  of  the  United  States,  that  an  agent  may  be  ap- 
pointed to  enter  into  a  contract  respecting  real  estate  by  parol,  although  an  instru- 
ment of  writing  will  be  necessary  to  bind  the  principal.  Clinan  v.  Cooke,  1  Sch.  & 
Lefr.  31.  Coles  v.  Trecothick,  9  Ves.  234.  Shaw  v.  Nudd,  8  Pick.  9.  Yerby  v. 
Grigsby,  9  Leigh,  387.  Talbot  v.  Bowen,  1  Marsh  K.  R.  436.  Mortimer  v.  Crom- 
well,  1  HofF.  R.  351 ;  but  the  opposite  doctrine  has  been  ruled  in  Pennsylvania,  & 
Berg.  &  Raw.  90. 


150  MERCANTILE  PERSONS. 


Definition  and  character  of  Agent. 


by  deed,  its  agent  must  be  so  appointed,  (Z)*  though  it  would  seem 
that  some  trifling  agencies,  even  for  corporations,  may  be  created 
without  one ;  (m)  and  there  is  one  case  in  which  it  was  considered 
that  a  corporation  might,  without  deed,  empower  an  agent  to  do 
acts  in  the  common  course  of  its  corporate  business,  as  to  make 
notes  for  a  banking  corporation. 

There  are  two  extensive  classes  of  mercantile  agents,  viz.,  factors, 
who  are  intrusted  with  the  possession  as  well  as  the  disposal  of 
property,  and  hrolcers^  who  are  employed  to  contract  about  it,  with- 
out being  put  in  possession.  But  though  brokers  are  usually  em- 
ployed in  the  manner  just  stated,  yet  every  person  so  employed  is 
not  a  hroher ;  thus  it  would  seem,  that  neither  auctioneers  (n)  nor 
merchants  acting  by  commission  from  correspondents  abroad,  (o) 
can  properly  be  called  brokers.  It  is  perhaps  strange  that  the 
meaning  of  the  word  should  not  be  better  ascertained,  for  by  stat. 
6  Anne,  c.  16,  and  57  Geo.  8,  c.  60,  brokers  in  London  must  be 
admitted  by  the  mayor  and  aldermen,  paying  £5  on  admission,  and 
a  like  sum  annually,  under  a  penalty  of  £100 ;  in  pursuance  of 
■  which  act,  regulations  were  afterwards  made  by  the  court  of  mayor 
and  aldermen  concerning  the  admission  of  brokers,  whereby  they 
are  required  to  take  an  oath,  and  enter  into  a  bond  for  the  observ- 
ance of  certain  regulations,  respecting  which,  and  the  mode  in 
which  the  bond  itself  is  construed,  the  authorities  cited  in  margine 
may  be  consulted.  (p)f 

(Z)  9  Edw.  4.  pi.  59 ;  Bro.  Corp.  2-t,  34;  1  Roll.  Abr.  514;  1  Mod.  18.  Arnold  v. 
Maj^or  of  Poole,  4  M.  <fe  Gr.  860. 

{m)  Plowd.  91;  Vin.  Abr.  Corp.  K.  R.  v.  Bigg,  3  P.  Wms.  419.  See  stat.  3  <fe  4 
Anne,  c.  9 ;  Bro.  Corp.  47,  per  Townsend,  J.  Ibid.  48,  per  Littleton,  J.,  3  Lev.  127  ;  3 
Salk.  191-2.  See  stat.  6  Geo.  4,  c.  16,  s.  46.  See  also  Dunstan  v.  Imperial  Gas  Light 
Compy.,  3  B.  &  Ad.  125,  and  Dean  and  Chapter  of  "Windsor  v.  Gover,  2  Wms.  Saund, 
305,  b. 

{n)  Wilks  V.  Elliss,  2  H.  Bl.  555. 

(o)  Janson  v.  Green,  4  Burr.  2,  104.  See  also  as  to  who  are  brokers,  Milford  v, 
Hughes,  16  Mees  &  "Wels,  174. 

{p)  1  Meriv.  156,  157;  1  Holt,  N.  P.  C.  431-433;  7  Taunt.  260;  1  Moore  6;  2 
Stark,  14 ;  1  Nev.  &,  Mann.  492. 

*  The  more  liberal  rule  of  the  American  courts  is  stated  in  the  note  to  ehaptei 
•jn  corporations,  page  142. 

■j-  There  is  a  vast  variety  of  forms  of  mercantile  agency.     With  some  modifi 


PRINCIPAL  AXD  AGEXT.  151 


Definition  and  character  of  Agent. 


It  is  decided  that  a  person  who  does  work  iu  London  as  a 
broker,  without  being  duly  qualified  under  the  above  acts,  cannot 
recover  any  compensation,  (q) 

(q)  Cope  V.  Rowlands,  2  M.  &  "W.  loY. 


cations,  growing  out  of  the  business  in  which  they  may  be  employed,  the  same  gene^ 
ral  principles  regulate  the  rights,  duties,  and  responsibilities  of  all  agents,  for  what- 
ever  purpose  constituted. 

Judge  Story,  iu  his  work  on  Agency,  considers  particularly  six  classes  of  com- 
mercial agents:  auctioneers,  brokers,  factors,  ship  husbands,  masters  of  ships,  and 
partners.  The  peculiar  principles  applicable  to  each  of  these  relations,  except  that 
of  brokers  and  factors,  are  discussed  in  different  parts  of  this  treatise.  And  in  refer- 
ence to  these,  the  present  seems  a  proper  place  to  enlarge  upon  the  brief  statements 
m  the  text.  Tlie  distinction  between  them  cannot  be  stated  with  more  accuracy, 
perspicuit3r,  or  comprehensiveness,  than  in  the  language  of  Mr.  Justice  Holroyd,  in 
the  leading  case  of  Baring  et  al.  v.  Come,  and  2  Barn.  &  Aid.  137.  "A  factor  who 
lias  the  possession  of  goods,  differs  materially  from  a  broker.  The  former  is  a  person 
to  whom  goods  are  sent  or  consigned,  and  he  has  not  only  tiie  possession,  but  in  con- 
sequence of  its  being  usual  to  advance  money  upon  them,  has  also  a  special  property 
in  them,  and  a  general  lien  upon  them.  "When,  therefore,  he  sells  in  his  own  right, 
it  is  within  the  scope  of  his  authority ;  and  it  may  be  right,  therefore,  that  the  prin- 
cipal should  be  bound  by  the  consequences  of  such  a  sale  ;  amongst  which  the  right 
of  setting  off  a  debt  due  from  the  factor  is  one.  But  the  case  of  a  broker  is  differ- 
ent; he  lias  not  the  possession  of  the  goods,  and  so  the  vendee  cannot  be  deceived 
by  that  circumstance ;  and  besides,  the  employing  of  a  person  to  sell  goods  as  a 
broker,  does  not  authorize  him  to  sell  in  his  own  name.  I^  therefore,  he  sell  in  hia 
own  name,  he  acts  beyond  the  scope  of  his  authorit}',  and  his  principal  is  not  bound. 
But  it  is  said  that  by  these  means  the  broker  would  be  enabled,  by  his  principal,  to 
deceive  innocent  persons.  The  answer,  however,  is  obvious,  that  this  cannot  be  so, 
unless  the  principal  delivers  over  to  him  the  possession  and  indicia  of  property.  Tht 
rule  stated  in  the  case  in  Salkeld  (Hern  v.  Nicholas),  must  be  taken  with  some  quali- 
fications ;  as,  for  instance,  if  a  factor,  even  with  goods  in  his  possession,  act  beyond 
the  scope  of  his  authority-,  and  pledge  them,  the  principal  is  not  bound ;  or  if  a 
broker,  having  goods  delivered  him,  be  desired  not  to  sell  them,  and  he  does  sell 
them,  but  not  in  market  overt,  the  principal  may  recover  them  back.  The  truth  is, 
that  in  all  cases,  except  where  goods  are  sold  in  market  overt,  the  rule  of  caveat 
emptor  applies."  A  broker  is  a  person  employed  in  the  negotiation  of  mercantile 
contracts,  and  according  to  the  branch  of  business  to  which  he  devotes  himself,  he 
is  called  an  exchange  broker,  a  stock  broker,  a  merchandise  broker,  a  ship  broker,  or 
an  insurance  broker.  The  character  of  factor  and  broker,  however  capable  of  being 
distinguished,  are  frequently  combined;  the  broker  having  possession  of  what  he  is 
employed  to  sell,  or  being  empowered  to  obtain  possession  of  what  he  is  employed 
to  purchase;  thus  a  broker  is  commonly  intrusted  with  negotiable  instruments,  in- 
dorsed in  blank,  for  sale.     In  these  cases  he  is,  properly  speaking,  a  factor,  clothed 


152  MERCAXTILE  PERSONS. 


Definition  and  character  of  Agent. 


There  are  some  peculiar  enactments  relating  to  stock  brokers. 
Stat.  10  Anne,  c.  19,  s.  12,  limits  their  commission  on  government 
stock  to  25.  9d.  per  cent.,  and  7  Geo.  2,  c.  8,  commonly  called  Sir 
John  Barnard's  Act,  requires  each  of  them  to  keep  a  book,  called 
the  'broker's  hook,  in  which  he  is  to  enter  all  contracts  for  stock  made 
by  him  on  the  same  day,  with  the  names  of  the  parties  and  the  day 
which  book  he  is  to  produce  when  lawfully  required,  (r) 


(r)  See  Dunbar  v.  Wilson,  6  Bro.  P.  C.  6. 


with  the  rights,  and  suhject  to  the  responsibilities  of  that  relation.  See  Story  on 
Agenc}-,  from  28  to  35,  and  the  following  cases  on  the  authority,  duties,  and  respon. 
sibilities  of  factors:  Evans  v.  Potter,  2  Galli.  Rep.  13.  Van  Amringe  v.  Peabody,  1 
Mass.  C.  C.  R.  440.  Thompson  v.  Perkins,  b  ibid.  232.  Loraine  v.  Cartwright,  3 
Wash.  C.  C.  R.  151.  Brown  v.  McGran,  14  Peters,  479.  Leverick  v.  Meigs,  1  Cow- 
645.  Williams  v.  Littlefield,  12  Wend.  362.  Jackson  v.  O'Hara,  5  Leigh,  456.  Beck- 
with  V.  Sibley,  11  Pick.  482.     Clark  v.  Moody,  17  Mass.  145-148. 

The  cashier  of  a  bank  is  a  commercial  agent  so  common  in  our  own  country,  that 
it  is  important  to  ascertain  the  extent  of  his  authority.  "  The  cashier  of  a  bank, ' 
says  J.  Story,  is,  in  virtute  officii,  generally  intrusted  with  the  notes,  securities,  and 
other  funds  of  the  bank,  and  is  held  out  by  the  bank  as  its  general  agent  in  the  nego- 
tiation, management,  and  disposal  of  them.  Prima  facie,  therefore,  he  must  be  deemed 
to  have  authority  to  transfer  and  indorse  negotiable  securities,  held  by  the  bank  for 
its  use  and  in  its  behalf  No  special  authority  for  this  purpose  is  necessary  to  be 
proved.  If  any  bank  chooses  to  depart  from  this  general  course  of  business,  it  is  cer- 
tainly at  liberty  so  to  do  ;  but  it  is  incumbent  upon  the  bank,  in  such  case,  to  show 
that  it  has  interposed  a  restriction,  and  that  such  restriction  is  known  to  those  with 
whom  it  is  in  the  habit  of  doing  business.  Wild  v.  Bank  of  Passamaquoddy,  3 
Mass.  505. 

The  cashier  has  no  authority  to  bind  the  bank  by  any  agreement  with  the  makers 
or  indorsers  of  a  note  which  is  offered  at  bank  for  discount,  by  which  the  legal  effect 
of  the  written  instrument  is  varied  or  controlled.  It  is  not  his  duty  to  make  such 
contracts,  and  he  has  no  authoritj'  to  bind  the  bank,  except  in  the  discharge  of  his 
ordinai-y  duties.  Bank  of  the  United  States  v.  Dunn,  6  Peters,  51.  Nor  has  he  any 
power  to  accept  bills  of  exchange  on  behalf  of  the  bank,  for  the  accommodatiou 
merely  of  the  drawers.  Farmers'  and  Mechanics'  Bank  v.  Troy  City  Bauk,  1 
Dougl.  457 

A  cashier  cannot  be  protected  in  any  known  departure  from  his  official  duties, 
either  by  the  connivance  or  direct  sanction  of  the  board  of  directors  ;  as  for  exam- 
ple, in  the  case  of  a  usage,  to  allow  certain  customers  to  overdraw,  and  to  have  their 
checks  and  notes  charged  up  without  present  funds  in  the  bank ;  a  usage,  in  other 
words,  to  misapply  the  funds  of  the  bank.  No  court  of  justice  could  countenance 
such  a  practice.  Minor  et  al.  v.  Mechanics'  Bank  of  Alexandria,  ]  Peters,  46.  The 
student  will  find  the  American  cases  collected  in  a  note  to  Mr.  Dunlap's  edition  of 
Paley  on  Agency,  156,  Note  2. 


PRINCIPAL  AND  AGENT.  153 


Rights  of  Principal  against  Agent. 


Having  stated  what  is  and  who  may  be  an  agent,  how  and  by 
whom  he  may  be  nominated,  let  us  proceed  to  consider  the  results 
of  such  nomination  as  they  affect, 

1.  The  mutual  rights  of  the  agent  and  his  principal. 

2.  Those  of  the  principal  and  third  parties. 

3.  Those  of  the  agent  and  third  parties. 


Section  II. — Rights  of  Principal  against  Agent. 

The  duties  of  the  agent  to  his  principal  must  of  course  depend 
on  the  instructions  contained,  either  expressly  or  impliedly,  in  his 
appointment ;  for,  be  those  what  they  may,  his  duty  is  to  carry 
them  into  effect,  if  possible,  to  the  letter ;  (s)  unless,  indeed,  his 
obedience  would  involve  a  fraud  on  third  persons,  for  no  contract 
can  oblige  a  man  to  make  himself  the  instrument  of  fraud,  {t)  The 
appointment  is  his  only  authority ;  it  may  be  general^  to  act  in  all 
his  principal's  affairs,  or  special^  concerning  some  particular  object; 
it  may  be  limited^  by  certain  instructions  as  to  the  conduct  he  is  to 
pursue,  or  unlimited,  i.  e.,  leaving  his  conduct  to  his  own  discretion ; 
but  this  discretion  should  not  be  exercised  at  random,  for  in  the 
absence  of  specific  instructions,  it  is  his  duty  to  pursue  the  accus- 
tomed course  of  that  business  in  which  he  is  employed,  {u)  or,  if 
prevented  by  some  unforeseen  obstruction,  at  all  events  to  give  due 

(s)  Guerreiro  v.  Peile,  3  B.  &  A.  616. 

{t)  Bex-well  v.  Christie,  Cowp.  395. 

(m)  Russell  V.  Palmer,  2  Wilson,  325.  See  Moore  v.  Mourge,  Cowp.  480 ;  2  T.  R. 
188,  hi  notis.  Pitt  v.  Yalden,  4  Burr.  2061.  Russell  v.  Hankey,  6  T.  R.  12.  War- 
wick V.  Nokes,  Peake,  68.  Bee  Forster  v.  Pearson,  5  Tyrwh.  267  ;  1  C.  M.  &  R.  849. 
Heiteh  v.  Carrington,  5  C.  tk  P.  471.  Thus  a  banker  is  bound  to  honor  his  customer's 
drafts,  if  he  have  assets  lodged  with  him  within  a  reasonable  time  for  tliat  purpose, 
and  the  drafts  be  duly  presented  to  him.  Marzetti  v.  Williams,  1  B.  »fc  Ad.  415. 
Whitaker  v.  Bank  of  England,  1  C.  M.  &  R.  744  ;  5  Tyrwh.  268.  But  he  is  not  bound 
to  do  so,  if  they  be  not  presented  during  banking  hours,  ibid. ;  though  possibly  there 
would  be  a  neglect  imputable  to  him,  if  it  were  shown  that  he  had  a  person  stationed 
at  the  bank  after  banking  hours  to  give  answers,  and  that  person  had  omitted  to  in- 
form the  holder  of  the  draft  that  there  were  assets  to  meet  it,  ibid.  So  it  had  been 
held  that  a  known  stockbroker  employed  to  sell  may  bind  his  principal  to  the  ordi- 
nary rules  of  the  exchange,  Sutton  v.  Tatham,  10  A.  &  E.  27,  and  in  certain  trades 
a  factor  may  by  custom  sell  in  his  own  name.     Johnston  v.  Usborne,  11  Ad.  <fe  K  549. 


154  MERCANTILE  PERSONS. 


Rights  of  Principal  against  Agent. 


notice  to  his  principal.  (?;)*  And  lie  must  possess  a  competent  de- 
gree of  skill,  in  order  to  enable  liim  to  do  so ;  if  lie  engage  with- 
out such  skill  he  is  a  deceiver,  and  will  be  justly  liable  for  the  con- 
sequences of  his  incapacity ;  he  is,  moreover,  responsible  not  only 
for  himself,  but  for  those  whom  he  may  employ  under  him.  {w)f 

(v)  Callander  v.  Olerich,  5  Bing.  K  C.  58. 

(mi)  Lord  North's  case,  Dy.  171.  Mackersy  v.  Ramsays,  9  CI.  &  Fin.  818.  Tlie 
principal  in  most  instances  has  no  remedy  directly  against  the  sub-agent^  there  being 
no  privity  between  them.  See  Cobb.  v.  Becke,  6  Q.  B.  930.  See  also,  Wilson  &  Co. 
t;.  Smith,  3  How.  S.  C.  R.  363. 


*  The  distintion  betwen  a  general  and  an  unlimited  authority  is  pointed  out  in 
the  following  cases.  Whitehead  v.  Tuckett,  15  East,  408.  Anderson  v.  Cronley,  21 
Wend.  299.  Odiorne  v.  Maxcy,  13  Mass.  Rep.  181.  Hewes  v.  Doddridge,  1  Rob.  v. 
R.  143.     St.  John  v.  Redmond,  9  Porter  R.  428.     Russell  on  Factors  and  Brokers,  15. 

■j-  The  responsibility  of  an  agent  to  whom  commercial  paper  has  been  intrusted 
for  collection,  is  considered  very  much  at  large  by  Chief  Justice  Marshall,  in  the  case 
of  Hamilton,  Donaldson  &  Co.  v.  Cunningham,  2  Brok.  350.  The  rule  deduced  from 
the  authorities  is,  that  the  agent  does  not  bear  the  same  relation  to  his  principal  as 
the  holder  of  a  bill  of  exchange  does  to  the  drawer  or  indorser;  but  his  responsibil- 
ity is  to  be  determined  b}'  the  law  regulating  the  relation  of  principal  and  agent 
generallj'.  The  actual  loss  sustained  by  the  principal,  in  consequence  of  the  miscon- 
dncs  of  the  agent,  is  the  amount  of  damage  for  which  the  latter  is  responsible.  In 
accordance  with  the  same  principles,  it  was  held  by  Judge  Stor}^  in  the  case  of 
the  United  States  Bank  v.  Goddard,  5  Mason,  366,  that  an  agent  is  only  bound  to 
give  notice  of  the  dishonor  of  a  note  which  has  been  committed  to  him  for  collec- 
tion to  his  principal,  the  holder,  and  not  to  the  indorsers,  although  the  latter  might 
receive  information  much  sooner  from  him  than  the  principal.  "The  agency,"  says 
J.  Story,  "does  not  include  any  such  duty.  If  the  agent  contracts  with  his  principal 
to  give  such  notice,  it  is  a  mere  private  contract  between  the  parties,  with  which  an 
indorser  has  nothing  to  do.  It  neither  enlarges  nor  limits  his  rights.  It  may  be  in- 
convenient for  him  to  receive  a  circuitous  notice,  but  that  is  not  sufficient  to  change 
the  law.  I  think  it  would  be  far  more  inconvenient  to  establish  the  doctrine  now 
contended  for  in  the  defence.  All  that  is  required  by  law  is,  that  the  holder  should 
give  notice  to  the  indorser,  in  a  reasonable  time  after  he  has  notice  of  the  dishonor, 
and  that  there  should  be  no  laches  in  getting  that  knowledge,  if  an  agent  has  been 
employed."  S.  P.  Bank  of  the  United  States  v.  Davies,  2  Hill's  Rep.  451.  But  the 
failure  of  an  agent  to  give  reasonable  notice  to  his  principal,  of  the  dishonor  of  a 
bill  of  exchange,  which  he  has  taken  on  the  sale  of  his  property,  will  render  him  an 
insurer  of  the  solvency  of  the  purchaser.  Harve}'  v.  Turner,  4  Rawle,  223.  For- 
resteir  v.  Bordman,  1  Story's  C.  C.  Rep.  44.  See  also  Allen  v.  Suydam,  17  Wend.  868, 
20  Wend.  321. 

The  deposit  of  a  bill  in  one  bank  to  be  transmitted  for  collection  to  another,  is  a 
common  usage  of  great  public  convenience.     The  benefit  which  the  collecting  bank 


PPJXCIPAL  AXD  AGEXT.  155 

Eights  of  Principal  against  Agent. 

The  most  satisfactory  mode  of  determining  whether  he  have  exer- 
cised such  skill  is,  to  show  by  evidence  whether  a  majority,  or  even 
moiety,  out  of  a  given  number  of  skilful  and  experienced  persons, 
would  have  acted  as  he  has  done,  {x)  Of  whatever  description  his 
authority  may  be,  if  he  exceed  it  and  any  loss  ensue,  that  loss  will 
fall  on  him  ;  (y)  though  if  a  benefit  result,  he  will  not  be  allowed 
to  share  it,  but  must  account  for  it  to  his  employer,  (z)     However, 

(x)  Chapman  v.  Walton,  10  Bingh.  63. 

(y)  Catliu  v.  Bell,  4  Camp.  184.     Barrow  v.  Fitzgerald,  5  Bing.  K  C.  201. 

[z)  Russell  V.  Palmer,  2  Wils.  325,  and  post. 


derives  from  the  use  of  the  funds  whilst  in  its  custody,  and  the  profits  on  exchange, 
are  a  valuable  compensation  for  the  labor  and  expense  to  which  the  business  subjects 
it,  and  constitute  such  bank,  in  acting  for  others,  an  agent  for  reward;  and  of  course 
clothe  it  with  the  responsibilities  belonging  to  that  character.  If  the  principal  sus- 
tains any  damage  from  the  failure  of  the  bank  to  use  due  and  legal  diligence  in  the 
performance  of  its  duty,  the  bank  will  be  responsible  to  him  in  an  action  on  the  case. 
Bank  of  Washington  v.  Trij^lett,  1  Peters,  25.  Fabens  v.  Mercantile  Bank,  23  Pick. 
330.  Bank  of  Utica  v.  Smeade,  3  Cow.  662.  Mechanics'  Bank  at  Baltimore  v.  Mer- 
chants' Bank  at  Boston,  6  Mete.  Rep.  13.  Van  Wart  v.  Wooley,  3  Barn.  &  Cress.  419. 
To  fix  the  responsibility  of  the  bank,  two  facts  must  be  established;  first,  that  the 
drawer  or  indorser  has  been  discharged  ;  and  second,  that  this  result  has  been  owing 
to  the  neglect  or  want  of  due  skill  on  the  part  of  the  bank.  It  is  a  very  interesting 
and  important  question,  whether  a  bank  receiving  a  note  for  collection,  and  placing 
it  in  the  hands  of  a  notary  in  time  for  demand  and  payment,  is  liable  for  the  neglect 
of  the  notary  to  give  notice,  if  it  is  the  cause  of  actual  damage.  In  some  of  the 
cases,  it  has  been  held  that  the  bank  is  not  responsible  for  the  negligence  or  miscon- 
duct of  the  notary,  if  it  used  reasonable  care  and  diligence  in  making  the  selection. 
Such  is  said  to  be  the  general  rule,  wherever  it  is  necessary  for  one  agent  to  employ 
a  sub-agent  to  transact  the  business.  Bellemire  v.  Bank  of  United  States,  1  Miles, 
1T3.  Hyde  &  Goodrich  v.  Planters'  Bank  of  Mississippi,  17  Louisiana  Rep.  560. 
Tiernan  et  al.  v.  Commercial  Bank  of  Natchez,  7  How.  Miss.  648.  East  Haddam  Bank 
V.  Scovill,  12  Conn.  Rep.  303.  Dorchester  <fe  Milton  Bank  v.  New  England  Bank,  1 
Cush.  177.  The  same  doctrine  was  held  by  the  Chancellor  and  Supreme  Court  of 
New  York,  in  the  case  of  Allen  v.  The  Merchants'  Bank,  22  Wend.  215.  But  the 
Court  for  the  Correction  of  Errors  reversed  the  judgment  below  in  the  last  case,  and 
declai'ed  the  law  to  be,  that  in  the  absence  of  any  express  contract,  a  bank  in  New 
York  receiving  for  collection  a  bill -of  exchange  drawn  there  upon  a  person  in  another 
state,  was  liable  for  any  neglect  of  duty  occurring  in  its  collection,  whether  arising 
from  the  default  of  its  oflicers  at  home,  or  its  correspondents,  and  that  the  neglect 
of  a  notar}',  who  was  a  commissioned  public  officer,  did  not  vary  the  rule.  He  acted 
pro  hac  vice,  merely  as  the  agent  of  his  employers,  and  not  in  his  official  capacity. 
In  South  Carolina  the  rule  has  been  settled  as  in  New  York.  Thompson  v.  The  Banij 
of  the  State  of  South  Carolina,  3  Hill  S.  C.  R  77 


156  MERCANTILE  PERSONS. 


Rights  of  Principal  against  Agent 


if  his  principal  subsequently  recognize  his  departure  from  the  letter 
of  his  instructions,  he  is  exonerated ;  for  omnis  ratihibitio  retroira- 
hitur  et  mandato  cequiparatur.  And  such  a  recognition  may  be  in- 
ferred from  the  employer's  conduct ;  thus,  the  receipt  of  interest  on 
a  sum  lent  by  the  agent  recognizes  the  loan,  (a)^ 

It  has  been  already  said,  in  the  chapter  on  Partnership,  that 
from  a  person  standing  in  a  situation  of  confidence  with  regard  to 
another,  the  strictest  good  faith  is  required.  This  maxim  applies 
in  full  force  to  agents,  (b)  of  whose  morals  the  law  is  so  careful 
that  it  will  not  suffer  them  even  to  incur  temptation ;  thus  an  agent 
employed  to  sell  is  not  allowed  to  be  the  purchaser,  at  least  not 
unless  he  make  known  that  he  intends  to  become  such,  and  furnish 
his  employer  with  all  the  knowleclge  he  himself  possesses,  (c)  or 
unless  the  court,  perceiving  that  the  principal  would  lose  by  a 

(a)  Clarke  v.  Perry,  2  Freem.  48.     Prince  v.  Clarke,  1  B.  &  C.  186. 

(6)  Huguenin  v.  Basely,  14  Vcs.  273. 

(c)  Lowther  v.  Lowther,  13  Ves.  103.  Wren  v.  Kirton,  8  Ves.  502.  Coles  v.  Tre* 
cothick,  9  Ves.  234.  Morse  v.  Royal,  12  Ves.  355.  Crow  v.  Ballard,  3  Bro.  C.  C.  119 
Charter  v.  Trevelyan,  11  CI.  <fc  Fin.  714. 


*  The  ratification  of  the  acts  of  an  unauthorized  agent  will  not  bind  the  principal, 
unless  he  was  fully  informed  at  the  time  of  all  the  circumstances  of  the  transaction. 
Owings  V.  Hull,  9  Peters,  60*7.  Copeland  v.  Merchants'  Insurance  Co.,  6  Pick.  202. 
Fletcher  v.  Dysart,  9  B.  Monr.  413,  Mount  v.  Derick,  5  Hill,  K  Y.  R.  455.  The 
general  principle  is  affirmed  in  Bell  v.  Cunningham,  3  Peters,  81.  Richmond  Manu- 
facturing Co.  V.  Stark,  4  Mason's  Rep.  296.  Delafield  v.  State  of  Illinois,  26  Wend. 
226.  Weed  v.  Carpenter,  4  Wend.  219.  Cairnes  v.  Bleeker,  12  Johns.  R.  300.  Hooe 
&  Harrison  v.  Oxley  &  Hancock,  1  Wash.  V.  23.  Horton  &  Hutton  v.  Townes,  6 
Leigh.  47.  Culver  v.  Ashley,  19  Pick.  300.  Burn  v.  Denman,  2  Exch.  Rep.  167, 
Wilson  V.  Tamman,  6  Man.  &  Gran.  236.  If  the  act  of  the  agent  was  in  itself  un- 
lawful, and  directly  injurious  to  another,  no  subsequent  ratification  will  operate  to 
make  the  principal  a  trespasser,  unless  the  trespass  was  committed  for  his  use  and 
benefit ;  an  authority  to  commit  a  trespass  does  not  result  by  mere  implication  of 
law.  2  Green  on  Evid.  62.  This  proposition,  however,  seems  inconsistent  with  the 
later  authorities.  See  Bird  v.  Brown,  14  Jurist  132.  Wilson  v.  Tamman,  6  Man.  &  9, 
242.  Burn  v.  Denman,  2  Exch.  167.  A  principal  will  not,  however,  be  liable  for  a 
wilful  trespass  committed  by  his  servant,  because  approved  by  his  genei-al  agent. 
Vanderbilt  v.  Richmond  T.  Co.,  2  Comst.  479.  A  corporation  as  well  as  an  indivi- 
dual maj'  render  itself  liable  by  affirming  the  unauthorized  act  of  its  agent.  New  Eng- 
land Insurance  Co.  v.  De  Wolfe,  8  Pick.  55.  Mass.  v.  The  Rossic  Lead  Mining  Co.,  5 
Hill's  Rep.  137 :  or  the  act  of  an  unauthorized  agent,  Merchants  Bank  of  Macon  v. 
Central  Bank  of  Georgia,  1  Kelly  Rep.  418. 


PRINCIPAL  AND  AGENT.  157 

Rights  of  Principal  against  Agent. 

re-sale,  think  fit  on  that  account  to  upliold  the  transaction ;  {d)  so 
neither  can  an  agent  employed  to  purchase  be  himself  the  seller, 
unless  there  was  a  plain  understanding  between  him  and  his  prin- 
cipal to  that  effect,  (e)  And  if  an  agent  who  is  employed  to  pur- 
chase, purchase  for  himself,  he  will  be  considered  a  trustee  for  his 
principal.  (/)  This  is  in  accordance  with  the  rule  of  the  Civilians. 
Tutor  rem  impilli  emere  non  potest:  Idem  que  porrigendum  est  ad 
similia,  id  est  ad  curatores^  procuratores  et  qui  negoti  aaliena  gerunt. 
Dig.  1.  18,  tit.  1.  The  Legislature  has,  in  one  instance,  enforced 
these  doctrines,  by  prohibiting  agents,  employed  to  buy  or  sell  cat- 
tle in  London,  from  buying  or  selling  on  their  own  account ;  (g) 
and  it  has,  as  we  have  seen,  been  held  that  one  contracting  party 
cannot  act  as  the  agent  of  the  other,  even  with  that  other's  consent, 
so  as  to  bind  him  by  a  writing  within  the  Statute  of  Frauds.  An 
agent  will  not  be  allowed  to  dispute  the  title  of  his  principal  to 
the  subject  matter  of  the  agency,  (h)  Thus,  a  wharfinger  who  has 
acknowledged  that  he  holds  goods  for  a  particular  transferee,  can- 
not afterwards  refuse  to  deliver  them  to  him,  and  if  he  do  refuse, 
is  liable  to  trover. 

It  is  a  very  essential  part  of  the  good  faith  required  from  him, 
that  he  should  keep  a  clear  account  and  communicate  the  result 
from  time  to  time  to  his  employer ;  (^)  though  an  inferior  agent  is 


[d]  Lowther  v.  Lowther,  Lord  Hardwick  v.  Vernon,  4  Ves.  41 L  Whitcombe  v. 
Minchin,  5  Madd.  91.  Oliver  v.  Court,  Dan.  391 ;  8  Price,  127 ;  and  if  he  hav3  sold 
again  for  a  profit,  the  Court  ■will  consider  him  a  trustee  to  that  extent  for  his  em- 
ployer.    Baker  v.  Harrison,  2  Coll.  C.  C.  546. 

(e)  Massay  v.  Davies,  3  Ves.  jun.  227.  See  E.  I.  Company  v.  Henchman,  I  Ves. 
jun.  289. 

(/)  Lees  V.  Nuttall,  2  M.  <fe  K  819.     Taylor  v.  Salmon,  2  M.  &  Cr.  139. 

(g)  Stat.  31  Geo.  2,  c.  40,  s.  11. 

(h)  Holl.  V.  Griffin,  10  Bingh.  246,  where  the  acknowledgment  was  prospective. 
Dixon  V.  Hammond,  2  B.  <fe  A.  310.  Roberts  v.  Ogilby,  9  Price,  269.  Gosling  v. 
Birnie,  1  Bingh.  339.  White  v.  Bartlett,  9  Bingh.  378.  Gillett  v.  Hill,  4  Tyrwh. 
290.  2  C.  &  M.  530.  Kieran  v.  Saunders,  6  Ad.  &  E.  516.  Betteley  v.  Reid,  4  Q.  B. 
511.  Vide  Sims  v.  Brittain,  4  B.  <fe  Ad.  376.  However  if  the  property  in  the  agent's 
hands  have  heen  fraudulently  obtained  by  the  principal  from  third  persons,  this  rule 
does  not  apply ;  Hardman  v.  "VVilcox,  9  Bingh.  382 ;  for  no  man  is  bound  to  make 
himself  the  instrument  of  a  fraud,  ante,  page  88.  See  Grawshay  v.  Thornton,  2  M. 
AC.  1. 

(»)  Lord  Chedworth  v.  Edwards,  8  Ves.  jun.  49.     Lord  Hardwicke  v.  Vernon,  14 


J  58  MERCANTILE  PERSONS. 


Rights  of  Principal  against  Agent. 


accountable  only  to  his  own  immediate  master ;  (j )  unless  indeed 
he  have  been  a  party  to  a  breach  of  trust,  for  then  the  rule  of  equity 
applies,  viz.,  that  all  parties  to  a  breach  of  trust  are  equally  liable, 
'and  there  is  between  them  no  primary  liability,  {k)     In  stating  this 
account,  the  principal  will,  in  the  absence  of  his  own  express  or 
implied  agreement    to    the    contrary,  (0  be  entitled  to  every  m- 
crease  made  from  his  own  property,  (m)     Thus  an  agent  who  has 
made  interest  upon  his  principal's  money  will,  in  general,  be  obliged 
to  account  for  it;  (n)  however,  a  mere  stakeholder,  such  as  an  auc- 
tioneer receiving  a  deposit,  will  be  excused;  (o)  and  no  interest  is 
due  for  money  which  has  lain  dead  in  the  agent's  hands,  unless  his 
employment  was  of  such  a  nature  as  to  render  it  his  duty  to  invest 
it.  (p)    He  will  also  be  charged  with  all  payments  actually  made 
to  him,  and  with  all  losses  incurred  by  his  own  negligence,  or  even 
through  the  imposition  of  a  forger  ;  for  when  an  agent  is  called  on 
0  to  transicr  his  employer's  property  by  virtue  of  an  authority  given 
to  a  stranger,  he  must  examine  into  its  validity  at  his  peril,  (q) 

Ves.  510.     Topham  v.  Braddick,  1  Taunt.  572.    Lady  Ormond  v.  Hutchinson,  13  Ves. 
47.     Lupton  V.  White,  Panton  v.  Panto n,  15  Ves.  436. 

(;•)  Cartwright  v.  Hateley,  1  Ves.  jun.  292.     Pinto  v.  Santos,  5  Taunt.  447.     Ste- 
phens V.  Badcock,  8  B.  &  Ad.  357.     Howell  v  Batt,  5  B.  &  Ad.  504.     Cobb  v.  Becke, 
6  Q.  B.  930.     See  Baron  v.  Husband,  4  B.  &  Ad.  611. 
(it)  Wilson  V.  Moore,  1  Myl.  &  K.  146. 

(/)  Lord  Chedworth  v.  Edwards,  8  Ves.  48.     Beaumont  v.  Boultbee,  11  Ves.  360. 
Bee  Shepherd  v  Maidstone,  10  Mod.  144. 

(»«)  Brown  v.  Litton,  1  P.  Wms.  141.     Massey  v.  Davies,  2  Ves.  jun.  317.     v. 

JoUand,  8  Ves.  72.  Docker  v.  Simes,  2  Myl.  &  K.  655.  Diplock  v.  Blackburne,  3 
Camp.  43.  See  Taylor  v.  Plumer,  3  M.  &  S.  562.  It  is  on  this  principle,  viz.,  that 
the  employer  has  a  right  to  every  increase  made  from  his  own  propertj',  that  if  he 
engage  a  servant  or  agent,  stipulating  for  his  whole  time  and  labor,  ex.  g.  the  mas- 
ter of  a  ship,  and  that  servant  undertake  another  agency,  the  first  employer  will  be 
entitled  to  retain  against  the  servant  any  remuneration  earned  by  him  in  his  second 
occupation.  For  the  servant's  whole  time  and  labor  is  the  master's  property,  and 
consequently  the  remuneration  earned  therewith  is  an  increase  made  from  his  pro- 
perty. Tliomson  v.  Havelock,  1  Camp.  529  Lidgate  v.  Williams,  4  Hare,  465.  Dip 
lock  V.  Blackburne,  3  Camp.  43 ;  Abb.  on  Shipp.  part  2,  cap.  4.  See  Patmore  «.  Col- 
burn,  4  Tyrwh.  847.  1  C.  N.  &  R.  65. 
(w)  See  Rogers  v.  Boehm,  2  Esp.  704. 
(o)  Harrington  ii.  Hoggart,  1  B.  &  Add.  577. 

(p)  1).  JoUand,  8  Ves.  72. 

(y)  Foster  v.  Clements,  2  Camp.  17.     See  Smith  v.  Mercer,  6  Taunt.  76.     Kcgom 


PRINCIPAL  AXD  AGENT.  159 

Eights  of  Principal  against  Agent. 

But  he  will  not  be  chargeable  with  any  loss  incurred  by  him,  with- 
out default  or  negligence,  while  he  is  engaged  in  the  prudent  exer- 
cise of  his  discretion,  and  in  pursuance  of  the  regular  and  accus- 
tomed course  of  trade,  (r)  It  seems,  however,  that  if  he  place  his 
principal's  money  to  his  own  account  at  his  banker's  without  any 
mark  distinguishing  it  from  his  own,  he  will  be  answerable  for  it 
if  the  banker  fail ;  for  otherwise  he  might  treat  it  as  his  own  if 
the  banker's  solvency  continued,  and  as  his  principal's  in  case  of 
failure.  (5)*  • 

V.  Kelly,  2  Camp.  123.  Wilkinson  v.  Johnson,  3  B.  <&  C.  428.  Innes  v.  Stephenson, 
1  M.  &  Rob.  147. 

(r)  Russell  v.  Hankey,  6  T.  R.  12.  Knight  v.  Lord  Plymouth,  Atk.  480.  £x  parte 
Parsons,  Ambl.  219.     "Warwick  v.  Noakes,  Peake,  68. 

(«)  See  Wren  v.  Kirton,  II  Ves.  382;  Massey  v.  Banner,  1  J.  &  W.  241 ;  4  Madd. 
413 ;  Fletcher  v.  Walker,  3  Madd.  73.    Darke  v.  Martyn,  1  Bev.  526. 


*  The  duties  of  an  agent  towards  his  principal  may  be  reduced  to  these  three : 
obedience  to  instructions ;  the  exercise  of  competent  skill,  reasonable  care,  and  entire 
good  faith  in  the  discliarge  of  his  business ;  and  the  rendition  of  an  account  of  his 
agency  upon  its  termination.  The  breach  of  any  of  these  obligations  to  the  preju- 
dice of  the  principal,  will  confer  upon  him  a  right  to  recover  compensation  in  dam- 
ages proportioned  to  the  extent  of  the  injury.  An  agent  will  be  justified  in  disobey- 
ing instructions  only,  when  they  involve  a  breach  of  good  morals,  or  a  violation  of 
the  rules  of  law,  or  where  they  are  impracticable,  or  where  the  agent  has  acquired 
some  right  in  the  subject  matter  of  the  instructions  which  he  is  not  bound  to  sacri- 
fice upon  the  order  of  the  principal.  An  Illustration  of  the  latter  exception  occurs 
where  an  agent  is  directed  to  sell  goods  on  which  he  has  acquired  a  lien.  As  to  the 
skill  and  care  which  an  agent  is  bound  to  bestow  upon  the  business  of  his  principal, 
there  is  a  distinction  between  agents  who  act  for,  and  those  who  act  without  reward. 
The  latter  are  not  required  to  use  more  diligence  than  a  prudent  man  would  exer- 
cise in  the  management  of  his  own  affairs.  Pate  v.  M'Clure,  4  Rand.  1G4.  Wilson  v. 
Brett,  11  Mees  and  Wels,  113.  Doormau  v.  Jenkins,  2  Ad.  &  Ell.  256.  Dartnall  v. 
Howard,  4  Bar.  &  C.  345. 

Although  a  mercantile  agent  is  in  general  bound  to  possess  such  a  knowledge  of 
law  as  may  be  essential  to  the  proper  discharge  of  his  trust,  it  by  no  means  follows 
that  every  mistake  he  may  commit  can  be  justly  considered  as  an  error  of  ignorance 
and  negligence  that  will  render  him  personally  liable  for  its  consequences.  2  Duer  on 
Insurance,  214.  This  subject  was  very  fully  discussed  in  the  Supreme  Court  of  ilas- 
eachusetts  in  the  case  of  Mechanics'  Bank  v.  Merchants'  Bank,  6  Met.  13.  The  defend- 
ants had  mistaken  the  law  in  not  allowing  the  usual  days  of  grace  on  yost  notes 
which  they  were  emplo^'ed  to  collect.  The  eft'ect  of  this  mistake  was  to  discharge 
the  indorsers  ;  yet  it  was  held  by  the  Court  that  the  defendants  were  not  liable,  as 
when  they  committed  the  error,   the  practice  was  various  and  the  law  doubtful 


IQQ  aiERCANTILE  PERSONS. 


Eights  of  Principal  against  Agent. 


It  was  once  hinted,  that  an  action  of  account  was  the  only 
mode  of  investigating  a  running  account  between  agent  and  prin- 
cipal in  a  court  of  law,  {t)  which  would  be  equivalent  to  saying, 


(t)  Scott  V.  M'Intosh,  2  Camp.  238. 


"The  maxims,  that  every  man  is  bound  to  know  the  law,  and  that  ignorance  of  the 
law  excuses  no  man,  are  undoubtedl}^  salutary,"  said  C.  J.  Shaw,  "  but  they  must  be 
confined  to  the  case  for  which  they  were  adopted.  They  have  no  application  to  the 
duty  of  an  agent,  of  whom  only  ordinary  skill  is  required.  Reasonable  skill  and 
knowledge  only  is  demanded  in  every  other  branch  of  science ;  why  should  absolute 
knowledge  and  consummate  skill  be  required  in  a  department  where  it  is  often  impos- 
sible to  know  the  law,  in  its  application  to  a  particular  state  of  facts,  until  it  has 
been  authoritatively  decided?" 

To  secure  entire  good  faith  towards  the  principal  and  induce  the  agent  to  act 
with  an  eye  single  to  his  interest,  the  law  does  not  allow  him  to  derive  any  personal 
benefit  from  the  exercise  of  his  agency  to  the  prejudice  of  the  principal.  He  can 
acquire  no  interest  adverse  to  his  duty.  This  rule  takes  away  the  sting  of  tempta. 
tion.  Thus,  if  an  agent  authorized  to  pay  a  debt,  compounds  with  the  creditor  for  a 
)ess  amount,  and  takes  an  assignment  of  the  claiij  for  his  own  benefit,  he  will  not  be 
permitted  to  make  himself  a  creditor  of  his  employer  for  a  larger  sum  than  that  ac- 
tually advanced.  Reid  v.  Norris,  2  Myl.  A  Craig,  375.  Reed  v.  Warren,  5  Paige, 
650.  So,  although  the  usage  of  trade  may  warrant  a  factor  in  selling  on  credit,  and 
taking  a  note  from  the  purchaser  pavable  to  himself,  yet  he  must  not  deal  with  such 
note  as  his  own  property  and  for  his  own  benefit.  Where,  for  example,  the  factor 
in  such  case  discounted  the  note  for  his  own  use,  and  the  maker  became  insolvent 
before  its  maturity,  the  factor  was  held  absolutely  responsible  to  the  principal.  The 
factor  had  made  the  note  his  own,  for  it  is  evident  that  had  the  maker  continued 
solvent,  and  the  factor  become  insolvent,  the  note  on  its  maturity  would  have  been 
the  property  of  the  indorsee,  and  the  factor  a  debtor  to  the  principal  for  the  amount. 
Johnson  &,  Duggens  v.  O'Hara,  5  Leigh.  456.  S.  P.  Myers  v.  Entriken,  6  "Watts  & 
Serg.  44.  Jackson  v.  Baker,  1  Wash.  C.  C.  R.  394.  "A  usage,"  said  Lord  Ellenbo- 
rough,  "authorizing  an  agent  to  make  a  profit  by  a  bill  on  his  principal,  would  be 
a  usage  of  fraud  and  plunder."    Diplock  v.  Blackburen,  3  Camp.  43. 

The  agent,  when  the  agency  has  closed,  is  bound  to  render  an  account  thereof  to 
his  principal.  Viner's  Abridg.  Acco.  c.  7,  d.  16.  Mathews  v.  Walwyn,  4  Ves.  25. 
White  V.  Lady  Lincoln,  8  Ves.  369.  Bacon's  Abridg.  Merchant.  B.  Agents  Account- 
ing. Wilkin  V.  Wilkin,  1  Salk.  9.  Clark  v.  Moody,  17  Mass.  145.  Cooley  v.  Belts, 
24  Wend.  203.  American  Leading  Cases,  Vol.  L  p.  697,  second  edition.  The  rule 
as  to  the  liability  of  agents  to  be  called  to  account,  must  be  taken  with  this  qualifi- 
cation, that  where,  as  in  the  case  of  clerks,  shopmen,  and  apprentices,  the  agency  is 
but  an  execution  from  time  to  time  of  the  immediate  orders  of  the  principal,  the  ex- 
ecution of  such  orders,  and  the  communication  of  the  result  to  his  principal,  or  the 
entry  of  the  same  by  the  agent  in  his  principal's  books  in  pursuance  of  his  prescribed 
duty,  will  discharge  the  agent  from  the  necessity  of  sending  in  formal  accounts,  or 


PRINCIPAL  AND  AGENT.  161 

Rights  of  Principal  against  Agent. 

that  the  parties  must  have  recourse  to  equity.  However,  it  is  now 
clear,  that  if  the  items  can  be  proved,  indebitatus  assumpsit  will  lie 
for  the  balance ;  {u)  and  according  to  Gibbs,  C.  J.,  the  foundation 
of  an  action  of  account  is,  that  the  party  wants  an  account  and  is 
not  able  to  prove  his  items  without  it,  in  which  case  he  may  either 
maintain  a  special  action  against  his  agent,  for  his  breach  of  duty 
in  refusing  to  account,  {v)  or  seek  relief  in  equity,  {iv)  where  he 
may  have  a  discovery  of  books  and  papers,  and  the  benefit  of  the 
defendant's  oath. 

As  mercantile  agents  are  generally  employed  in  sales  or  pur- 
chases, let  us  examine  somewhat  more  particularly  their  duties 
with  reference  to  those  contracts. 

A  factor  is  bo  and  to  keep  the  goods  in;rusted  to  him  for  sale 
with  the  same  care  that  a  prudent  man  would  keep  his  own  ;  (x)  he 
is  not  liable  in  case  of  robbery,  fire,  or  other  accidental  damage, 
happening  without  his  default,  (y)  unless  previous  to  such  damage 

(m)  Tompkins  v.  Wiltshire,  1  Marsh.  115  ;  5  Taunt.  431.  Arnold  v.  Webb,  5  Taunt 
432,  in  notis. 

(v)  Wilkins  v.  Wilkins,  Carth.  89 ;  Salk.  9. 

(mi)  Mackenzie  v.  Johnson,  4  Madd.  373.     See  Scott  v.  Surman,  Willes,  404. 

(x)  Coggs  V.  Barnard,  2  Ld.  Raym.  917  ;  Vere  v.  Smith,  1  Vent.  121. 

(y)  Co.  Litt.  89,  a;  Anon.  2  Mod.  100.  Vere  v.  Smith,  1  Vent.  121.  The  liability 
of  carriers  and  innkeepers  is  more  extensive.  As  to  the  former,  see  Book  3,  ch.  Con- 
tracts with  Carriers.  As  to  innkeepers,  they  are  bound  to  keep  their  guests'  property- 
safe  from  thieves,  Calye's  case,  8  Rep.  33,  a.  Richmond  v.  Smith,  8  B.  &  C.  9.  Kent 
V.  Shuckland,  2  B.  &  Ad.  803.     Jones  v.  Tyler,  1  Ad.  &  E.  622.     Farnworth  v.  Pack- 


from  having  his  past  transactions  inquired  into,  unless  some  prima  facie  ease  of 
fraud  is  made  out  against  him.  Pulling  on  Mercantile  Accounts,  p.  36.  Co.  Litt. 
172.  a.     Evans  v.  Birch,  3  Camp.  10.     Anon.  1  Vern.  136,  208. 

By  neglecting  to  keep  proper  accounts,  an  agent  may  not  only  forfeit  his  whole 
title  to  compensation,  but  become  liable  for  any  loss  to  which  this  default  may  sub- 
ject his  principal.  Lord  Chedworth  v.  Edwards,  8  Ves.  48.  Lupton  v.  White,  15 
Ves.  439.     Hart  v.  Ten  Eyck,  2  Johns.  C.  R.  108. 

In  compensation  for  the  burthen  thus  imposed  on  the  agent  of  keeping  and  ren- 
dering an  account,  the  law  attributes  to  it  a,  prima  facie  credit.  It  is  for  the  benefit 
of  the  principal  that  this  duty  should  be  performed,  and  when  performed,  it  would 
be  unreasonable  that  he  should  have  the  power  of  rendering  it  wholly  nugatory,  and 
throwing  upon  the  agent  the  task  of  furnishing  evidence  in  relation  to  the  transac- 
tion, which  may  involve  minute  details,  difiicult  of  proof.  Mertens  v.  Nottebohms, 
4  Gratt.  Va.  Rep.  163. 
11 


1(52  MERCANTILE  PERSONS. 


Rights  of  Principal  against  Agent. 


he  had  committed  some  improper  act,  had  it  not  been  fbr  which  the 
property  might  have  escaped ;  for  then  he  will  be  answerable,  (2) 
and  will  not  be  allowed  to  say,  that  perhaps  it  might  not  have  es- 
caped, even  had  he  acted  rightly,  for  it  is  a  rule  of  law  that  7io  man 
shall  qualify  his  own  zvrong.  (a)  Where  goods  are  consigned  to  a  fac- 
tor, it  is  his  duty  to  insure  them,  or  at  least  make  every  usual  exer- 
tion to  insure  them,  at  the  request  of  his  principal,  if  in  the  course 
of  their  previous  dealings  he  have  been  used  to  do  so,  or,  even 
thouo-h  he  may  not  have  been  used,  if  he  have  effects  in  hand 
enough  to  cover  the  expenses  of  insurance,  or  if  the  bill  of  lading 
contain  a  requisition  to  insure,  for  by  accepting  the  goods  under  it 
he  ao-rees  to  such  requisition.  In  any  of  these  cases,  if  he  neglects 
to  make  the  fit  insurance,  he  will  be  responsible  for  damage  which 
would  have  been  covered  thereby,  {b)  And  where  it  is  the  duty  of 
an  agent  to  insure,  it  is  his  duty  also  to  give  notice  to  his  principal 
in  case  of  his  being  unable  to  effect  an  insurance,  (c) 

If  any  price  be  limited  by  his  instructions,  he  must  sell  for 
that,  and  he  will  not  be  justified  in  deviating  from  them  by  the 
circumstance,  that  he  has,  subsequently  to  receiving  them,  made 
advances  to  his  principal,  and  given  him  reasonable  notice  requir- 
ing payment,  and  informing  him  of  his  intention  to  sell ;  for  al- 
though advances  made  by  a  factor  create  a  lien  on  the  goods  in  his 
favor,  and  may  perhaps  render  the  authority  to  sell,  -which  he  had 
at  the  time  of  making  them,  irrevocable,  yet  they  do  not  create  a 
pledge;  neither  by  the  failure  of  repayment  of  them  within  a  rea- 
sonable time  after  demand  is  the  authority  of  the  factor  enlarged, 
so  that  he  has  an  absolute  right  to  sell  at  any  time  for  the  best 


wood,  1  Stark.  K  P.  C.  251,  et  notas:  unless  indeed  the  guests  were  guilty  of  gross 
negligence.  Burgess  v.  Clements,  4  M.  <t  S.  306,  or  the  thieves  were  his  own  compa- 
nions or  servants,  Calye's  case,  8  Co.  2.  The  innkeeper  is  liable  for  any  loss  or  injury 
arising  "pro  defectu  hospitatoris,  vel  servientum  suorum,"  and  the  loss  or  injury  will  be 
presumptive  evidence  of  negligence.  Dawson  v.  Chamney,  5  Q.  B.  164.  But  this  pe- 
culiar liability  of  the  carrier  and  innkeeper  is  on  account  of  the  peculiar  nature  of 
their  respective  employments.     2  Ld.  Raym.  916,  917. 

(2)  Caffrey  v.  Darby,  6  Ves.  496. 

(a)  Davis  v.  Garrett,  6  Bingh.  723. 

(6)  Smith  V.  Lascelles,  2  T.  R.  189.  Smith  v.  Cadogan,  2  T.  R.  188,  in  notis.  Wal 
lace  V.  Telfair,  ibid.     Delany  v.  Stoddart,  2  Ves.  239. 

(c)  Callendar  v.  Olerich,  5  Bingjh.  N.  C.  63. 


PRINCIPAL  AXD  AGENT.  163 

Rights  of  Principal  against  Agent. 

price  that  can  be  obtained,  -vvitliout  regard  to  ttie  interests  of  the 
principal,  (c/)  If  no  price  be  limited,  then  he  must  sell  for  what 
the  goods  are  fairly  worth ;  and,  if  the  property  be  of  a  description 
commonly  sold  for  ready  money  only,  he  must  not  sell  upon  credit; 
for  an  agent  employed  generally  to  do  any  act,  is  authorized  to  do 
it  only  in  the  usual  way  of  business,  (e)  But  if  he  be  a  factor  in 
a  sort  of  dealing  or  trade  where  the  usage  is  to  sell  upon  credit, 
then  if  he  sell  to  a  person  of  good  credit  at  the  time,  he  is  dis- 
charged, and  will  be  entitled  to  his  commission,  though  such  ven- 
dee may  afterwards  become  insolvent,  (/)  provided  that  the  credit 
which  he  gave  was  reasonable  and  usual,  and  that  his  principal 
was  made  acquainted  with  the  transaction  within  a  reasonable  and 
usual  space  of  time.  However,  as  some  merchants  do  not  choose 
to  run  this  risk,  and  to  trust  so  implicitly  to  the  discretion  of  their 
factors,  an  agreement  called  del  credere  has  been  invemed,  the  name 
of  which  is  taken  from  an  Italian  mercantile  phrase,  signifying 
guarantee ;  and  by  which  the  factor,  for  additional  premium  beyond 
the  usual  commission,  when  he  sells  goods  on  credit  becomes  bound 
to  warrant  the  solvency  of  the  purchaser,  {g)  It  was  at  one  time 
thought,  that  an  agent  acting  under  a  del  credere  commission  was 
not  merely  a  surety,  responsible  only  in  case  of  the  default  of  the 
purchaser,  but  that  he  was  liable  to  his  principal  in  the  first  in- 
stance ;  (A)  but  that  doctrine  has  been  questioned,  and  at  last  over- 
turned by  subsequent  authorities,  {i)  which  have  settled,  that  he  is 
but  a  surety.*    If  indeed  the  factor,  after  the  sale,  remit  his  own 

{d)  Smart  v.  Saunders,  5  Man.  Grang.  &,  S.  895. 

(e)  Wiltshire  v.  Sims,  1  Camp.  258.  Earl  of  Ferrers  v.  Robins,  5  Tj-rwh.  ^05.  2 
C.  M.  <fe  R.  152.     Sykes  v.  Giles,  5  M.  &  W.  645. 

(/)  Anon.  12  Mod.  514.  Scott  v  Surnam,  Willes,  406.  See  Russell  v.  Hankey,  6 
T.  R.  12.     Knight  v.  Plymouth,  3  Atk.  480. 

{g)  See  Mackenzie  v.  Scott,  6  Bro.  P.  C.  280,  Tomlin's  ed. 

(/t)  Grove  v.  Dubois,  1  T.  R.  112.  Bize  v.  Dickason,  1  T.  R.  285.  Weinolt  v. 
Roberts,  2  Camp.  586. 

ij)  Morris  v.  Cleasby,  4  M.  &  S.  566.  Hornby  v.  Lacy,  6  M.  &  S.  166.  Ciimraing 
».  Forrester,  1  M  tii:  S.  494.     Baker  v.  Langhorn,  6  Taunt.  519. 

*  This  is  tlie  conclusion  of  Judge  Stor^*,  Chancellor  Kent,  and  Mr.  Duer,  who  have 
soch  examined  the  questions  elaborately'.  Thompson  v.  Perkins,  3  Mason  C.  C.  R. 
232.     2  Kent's   Comm.  624,  625,  and  notes.     Story  on  Agency,  s.  215.     Leveriek  v. 


164  MERCANTILE  PERSONS. 


Rights  of  Principal  against  Agent. 


note  or  acceptance  to  his  principal  for  the  amount  of  the  proceeds, 
he  will  be  liable  on  that,  whether  employed  under  a  del  creden-t 
commission  or  not,  and  whether  the  vendee  be  or  be  not  solvent. 
For,  by  giving  such  an  instrument,  he  lulls  all  the  suspicions  of 
his  employer,  and  causes  him  to  dismiss  all  care  about  the  solvency 
of  the  purchaser,  (j) 

With  respect  to  imrchases.  As  no  agent  can  lawfully  exceed  his 
orders,  it  follows,  that  if  he  do  so,  his  principal,  though  he  may 
perhaps  insist  upon  keeping  them,  if  he  think  it  for  his  advantage, 
{k)  has  a  right  to  refuse  the  goods  improperly  purchased ;  and  it 
has  been  said,  that,  in  such  case,  if  he  have  advanced  money  on 
them,  he  may,  instead  of  returning,  take  upon  himself  to  dispose  of 
them,  as  factor  for  the  agent  who  transgressed  his  orders.  (Z)  But 
then  he  must  repudiate  the  transaction,  and  give  notice  of  his  dis- 
agreement to  the  agent  within  a  reasonable  time,  else  he  will  be 
taken  to  have  adopted  it,  and  the  loss,  if  any,  will  fall  upon  him- 
self; (m)  and  it  has  been  intimated,  (n)  that  though  an  agent  exceed 
the  price  named  in  his  instructions,  yet  if,  by  means  of  doing  so,  he 
effect  a  saving  on  the  same  goods  equal  in  amount  to  the  excess  of 
price,  equity  at  least  would  consider  him  as  justified. 

An  agent  employed  to  purchase  goods  which  are  to  be  shipped 
abroad,  ought  to  transmit  the  bill  of  lading  to  his  employer  as  soon 
as  possible,  (o) 


(y)  Lefevre  v.  Lloyd,  5  Taunt.  "749.  Simpson  v.  Swan,  3  Camp.  29L  Goupy  v. 
Harden,  7  Taunt.  159. 

{k)  Taylor  v.  Plummer,  3  M.  &  S.  562. 

{I)  Paley  on  P.  &  A.  cap.  1,  sect.  1.  Cornwall  v.  Wilson,  1  Ves.  sen.  509.  See 
Kemp  V.  Prior,  Y  Yes.  jun.  240. 

{m)  Cornwall  v.  Wilson,  1  Ves.  sen.  509.     Prince  v.  Clarke,  1  B.  <fe  C.  186. 

in)  In  Cornwall  v.  Wilson. 

(o)  Barber  v.  Taylor,  5  M.  &,  W.  5  27. 


Meigs,  1  Cow.  R.  645.  Duer  on  Insurance,  vol.  ii.  p.  331,  371.  In  the  later  case  of 
Wolff  V.  Koppel,  2  Denio  R.  368,  there  was  a  conflict  of  judicial  opinion  on  this 
point.  See  also  Swan  v.  Nesmith,  7  Pick.  220,  and  Couturier  v.  Hastie,  recently  de- 
cided in  the  Court  of  Exchequer,  16  E.  L.  &  E.  R  562,  where  an  agreement  by  a  fac- 
tor to  sell  upon  a  del  credere  commission  was  declared  not  to  be  a  promise  to  answer 
for  the  debt,  default,  or  miscarriage  of  another  person,  within  the  4th  section  of 
the  Statute  of  Frauds,  and  therefore  valid,  although  not  in  writing. 


PRINCIPAL  AND  AGENT.  16c 

Rights  of  Principal  against  Agent. 

In  conclusion  of  this  head  we  must  observe,  that  there  is  a  dif-  j 
ference  between  the  principal's  rights  against  a  remunerated  and 
against  an  unremunerated  agent.  The  former  having  once  en- 
gaged, may  be  compelled  to  proceed  to  the  task  which  he  has  un- 
dertaken; the  latter  cannot,  for  his  promise  to  do  so,  being  induced  / 
bj  no  consideration,  the  rule  ex  nudo  pacto  non  oritur  actio  applies. 
{l))  But  if  he  do  commence  his  task,  and  afterwards  be  guilty  of 
misconduct  in  performing  it,  he  will,  though  unremunerated,  be 
liable  for  the  damage  so  occasioned ;  since,  by  entering  upon  the 
business,  he  has  prevented  the  employment  of  sctne  better  qualified 
jjerson,  and  the  detriment  thus  occasioned  to  his  principal  is  a  suf- 
ficient consideration  to  uphold  an  undertaking  on  his  part  to  act 
with  care  and  fidelity,  {q)  Less  skill,  however,  is  required  fronr 
him  than  from  a  paid  agent ;  he  is  bound  to  use  such  skill  as  he 
jjossesses  (r)  but  is  bound  to  that  only,  and  it  is  for  gross  negligence 
alone  that  he  can  be  held  answerable ;  (s)  unless  he  act  in  a  public 
or  professional  character,  in  which  case  he  holds  himself  out  as  pos- 
sessing, and  will  be  assumed  to  possess,  skill,  his  omission  to  use 
which  constitutes  gross  negligence,  {t) 

Embezzlements  and  fraudulent  conversions  of  their  employers' 
property  committed  by  agents  in  breach  of  the  confidence  reposed 
in  them,  are  punished  criminally  by  stats.  7  &  8  Geo.  4,  cap.  29, 
sects.  49,  50,  51,  52,  and  5  &  6  Vic.  c.  39,  s.  6.* 


{p)  Elsee  V.  Gateward,  5  T.  R.  143;  1  Esp.  '74.  Coggs  v.  Bernard,  2  Ld.  Raym. 
909. 

(?)  ^''SSS  '»•  Bernard,  2  Ld,  Raym.  909.  Wilkinson  v.  Coverdale,  1  Esp.  '74.  Door* 
man  v.  Jenkins,  4  Fev.  &  Mann.  170,  2  Ad.  &,  K  256.  Beaucliamp  v.  Powley,  1  M.  & 
Rob.  40.     Whitehead  v.  Greetham,  2  Bing.  464.     Shillibeer  v.  Glynn,  2  M.  &,  W.  143. 

(r)  Wilson  v.  Brett,  11  M.  &  W.  113. 

(«)  2  Ld.  Raym.  909 ;  2  Atk.  406.  Doorman  v.  Jenkins,  4  Nev.  &  Mann.  170  ;  2 
Ad.  &  E.  256.  Dartnell  v.  Howard,  4  B.  &  C.  345.  In  Wilson  v.  Brett,  11  M.  &  W, 
113,  Baron  Rolfe  observed  that  he  could  see  no  difference  between  negligence  and 
gross  negligence,  that  gross  negligence  was  only  negligence  with  a  vituperative 
epithet. 

{t)  Shiells  V.  Blackburne,  1  H.  Bl.  161.  See  Bourne  v.  Diggles,  2  Chitt.  311. 
Dartnall  v.  Howard,  4  B.  <fe  G.  345.     Lamphier  v.  Phipos,  8  C.  <fe  P.  475. 

*  It  is  well  settled,  that  wherever  the  principal  can  trace  his  own  propertj',  or  its 
proceeds,  and  distinguish  it  from  the  mass  of  the  property  of  his  factor,  he  may  re- 


16G  MERCANTILE  PERSOXS. 


Eights  of  Agent  against  Principal. 


Section  III. — Rights  of  Agent  against  Principal. 

The  chief  right  of  the  agent  is  to  receive  his  remuneration,  or 
as  it  is  often  called,  commission ;  the  amount  of  which  is  fixed 
either  by  contract  between  him  and  his  employer,  or  by  the  usage 
of  trade  in  like  cases,  (w)  or,  in  some  few  instances,  as  in  those  of 
navy  agents  and  brokers,  or  solicitors  negotiating  annuities  and 
loans,  by  act  of  parliament,  {v)  or,  if  there  be  no  usage,  contract,  or 
enactment  applicable  to  the  case,  the  value  of  his  services  must  be 
determined  by  the  verdict  of  a  jury.  He  may,  however,  be  de- 
prived of  it  in  several  ways ;  if  the  object  of  his  employment  be 
illegal,  he  can  of  course  claim  none ;  {iv)  he  may  also  forfeit  it  by 
misconduct,  as  by  neglect  to  keep  an  account,  that  being  an  essen- 
tial part  of  his  employment,  (x)  or  if  gross  negligence  or  want  of 
skill  on  his  part  prevent  his  employer  from  deriving  any  benefit 
from  his  services,  [y]  a  fortiori^  if  he  betray  his  trust  and  act  ad- 
versely to  his  j)i'incipal.  (2)     As  the  usage  of  trade  may  regulate 

(m)  See  Eicke  v  Meyer,  3  Camp.  412.  Cohen  v.  Paget,  4  Camp.  96.  Roberts  v. 
Jackson,  2  Stark.  225.  Levi  v.  Barnes,  1  Holt,  412.  Chapman  v.  De  Tastet,  2  Stark. 
294.     Stewart  v.  Kahle,  3  Stark,  161.     See  also  Bower  v.  Jones,  8  Bingh.  65. 

{v)  31  Geo.  2,  c.  10,  s.  30;  17  Geo.  3,  c.  26;  12  Anne,  stat.  2,  c.  16,  s.  2.  See 
Pryce  v.  Wilkinson,  2  Bingh.  470. 

(w)  Stackpole  v.  Earle,  2  Wils.  133.  Josephs  v.  Pebrer,  3  B.  &  C.  639.  Cope  v. 
Rowlands,  2  M.  &  W.  157.  See  tlie  Bicffst,  lib.  3,  tit.  27.  "  liei  turpis  nullum  man- 
datum  est ;  illud  quoque  mandatum  non  est  obligatorium  quod  contra  bonos  mores  est, 
veluti  si  Titius  defurto  aut  de  damno  faciendo,  aut  de  injuria  faciendd  mandet  tibi,  licet 
enim  pcenam  istius  facti  nomine  prcestiteris  non  tamen  ullam  habes  adeersus  Titium  ac- 
tionem." 

(x)  "White  V.  Lady  Lincoln,  8  Ves.  371.    See  11  Yes.  355. 

(y)  Denew  v.  Daverell,  3  Camp.  451.  White  v.  Chapman,  1  Stark.  113.  Ham- 
mond V.  Holida}",  1  C.  <fe  P.  384.  Hill  v.  Featherstonhaugh,  7  Bingh.  596.  Turner  v^ 
Robinson,  6  C.  &  P.  16.  Shaw  v.  Arden,  9  Bingh.  287.  Gill  v.  Laugher,  1  Tyrwh.  124. 
1  C.  &  J.  170. 

{z)  Hurst  V.  Holding,  3  Taunt.  32.    Brown  v.  Croft,  6  C.  <fe  P.  16,  n.  g. 

claim  it ;  and  it  is  immaterial  whether  the  factor  had  or  had  not  a  del  credere  com- 
mission. If,  however,  the  factor  so  blends  the  money  thus  received  with  his  own 
funds,  that  it  cannot  be  distinguished,  in  the  event  of  his  death  or  insolvency,  the 
principal  must  come  in  as  a  common  creditor.  Thompson  v.  Perkins,  3  Mason  C.  C. 
E.  232.     See  also  Overseers  of  Poor  v.  Bank  of  Virg.  2  Gratt.  544. 


PRINCII'AL  AND  AGENT.  161 

Eights  of  Agent  against  Principal. 

the  amount  of  bis  commission,  so  it  may,  under  certain  circum- 
stances, deprive  him  entirely  thereof:  thus  it  would  seem,  that  a 
shipbroker  can  charge  a  shipowner  nothing  for  his  labor  in  procur- 
ing a  charterer  for  the  ship,  unless  the  owner  think  proper  to  con- 
clude a  charter-party  Avith  him :  (a)  in  these  cases  the  usage  is 
looked  on  as  incorporated  into  the  contract  of  agency.  But  we 
have  seen,  that  in  ordinary  cases  the  agent,  if  he  act  with  compe- 
tent discretion  and  fidelity,  and  without  deviating  from  the  regular 
course  of  business,  will  not  be  answerable  for  any  loss  that  may 
occur  to  his  employer's  property,  and  will,  notwithstanding  such 
loss,  be  entitled  to  his  commission. 

Besides  commission,  he  has  a  right  to  charge  his  principal  with 
all  advances  made  by  him  in  the  regular  ccxrse  of  his  employment 
I  say  in  the  rerjular  course^  for  such  advances  the  principal  who 
deputed  him  in  a  business  where  they  are  necessary  has  impliedly 
requested  him  to  make,  (h)  Such  are  the  charges  for  duties,  ware- 
housing, and  porterage ;  concerning  the  first  of  which  it  has  been 
said,  that  if  an  agent  at  his  own  risk  evade  the  payment  of  the 
foreign  customs,  he  may  charge  them  to  his  principal  as  paid;(c) 
but  not  so  of  home  customs,  for  that  would  be  a  fraud  upon  the 
king,  {d)  However,  the  former  part  of  this  proposition  has  been 
questioned,  (e)  and  appears  very  questionable.  But  though  the 
principal's  request  may  be  inferred,  where  the  advances  are  made 
in  the  regular  course  of  trade,  or  even  on  the  spur  of  some  pressing 
exigency,  not  provided  for  by  any  ordinary  rule,  since  the  employer 
may  fairly  be  taken  to  have  authorized  the  employed  to  do,  under 
any  circumstances,  that  which  a  prudent  man  would  conceive  ne- 
cessary for  the  safeguard  of  his  interests,  ex.  gr.  to  insure  a  cargo, 
which  is  in  extraordinary  danger  on  account  of  the  lateness  of  the 

(a)  Broad  v.  Thomas,  1  Bingh.  99.  Read  v.  Rann,  10  B.  &  C.  440.  Lloyd  and 
"Welsh}',  121.  Dal  ton  v.  Irvin,  4  C.  <fe  P.  289  ;  and  see  8  C.  &  P.  1.  In  some  cases  a 
doubt  has  arisen,  whether  on  the  special  framing  of  the  contract  the  agent  or  servant 
•was  not  left  to  his  emploj'er's  mercy  in  respect  of  his  remuneration.  See  Bryant  v 
Flight,  5  M.  &  "W.  114.    Taylor  v.  Brewer,  1  M.  &  S.  290. 

(b)  See  Sutton  v.  Tatham,  10  A.  &  E.  27. 

(c)  Smith  V.  Oxenden,  1  Ch.  Ca.  25 ;  Eq.  C.  Ab.  369.  See  Boulton  v.  Arlesden,  3 
Balk.  235  ;  Skinner,  149. 

((/)  Borr  V.  Vandall,  1  Ch.  Ca.  30 ;  Eq.  Ca.  Ab.  370 
{r)  13  Viner's  Abr.  3,  by  Lord  North. 


IQQ  MERCANTILE  PERSOIS^S. 


Rights  of  Agent  agciinst  Principal. 


season ;  (/)  yet,  if  an  agent  think  fit  to  make  a  payment  out  of  the 
regular  course  of  business,  lie  will  not,  unless  he  can  show  circum- 
stances from  which  his  principal's  authority  may  be  inferred,  be 
entitled  to  repayment,  (g)  Moreover,  though  he  is  entitled  to  be 
repaid  his  regular  expenses,  yet,  if  he  conduct  himself  so  negligently 
in  his  employment  as  to  incur  expenses  which  would  not  have 
been  necessary  had  he  acted  rightly,  he  will  be  allowed  nothing  on 
account  of  them.  (A) 

An  agent  is  entitled  to  indemnity  when  acting  in  obedience  to 
the  lawful  orders  of  his  principal,*  or  when,  in  conformity  to  that 


(/)  Wolff  V.  Horncastle,  1  B.  &  P.  323. 

(g)  French  v.  Backhouse,  5  Burr.  2*727.  Edaiiston  v.  "Wright,  1  Camp.  88.  How- 
ard V.  Tucter,  1  B.  &  Ad.  112.  Child  v.  Moiiej,  8  T.  R.  610.  "Wilson  v.  Creighton, 
1  T.  R.  113.     Stokes  v.  Lewis,  1  T.  R.  20. 

{h)  Capp  V.  Topham,  6  East,  392. 


*  The  law  relative  to  the  rights  of  a  factor,  who  has  made  advances  to  his  prin- 
cipal upon  the  goods  consigned  to  him  for  sale,  was  discussed  in  the  case  of  Brown 
&  Co.  V.  McGrann,  14  Peters,  479.  Judge  Storj-,  in  delivering  the  opinion  of  the 
Court,  says,  ""We  understand  the  true  doctrine  on  this  subject  to  be  this: — 

"Whenever  a  consignment  is  made  to  a  factor  for  sale,  the  consignor  has  a  right, 
generally,  to  control  the^  sale  thereof,  according  to  his  own  pleasure,  from  time  to 
time,  if  no  advances  have  been  made,  or  liabilities  incurred  on  account  thereof;  and 
the  factor  is  bound  to  obey  his  orders.  This  arises  from  the  ordinary  relation  of 
principal  and  agent.  If,  however,  the  factor  makes  advances,  or  incurs  liabilities  on 
account  of  the  consignment,  by  which  he  acquires  a  special  property-  therein,  then 
the -factor  has  a  right  to  sell  so  much  of  the  consignment  as  may  be  necessary  to  re- 
imburse such  advances  or  meet  such  liabilities,  unless  there  is  some  existing  agree- 
ment between  himself  and  the  consignor  which  controls  or  varies  this  right.  Thus, 
for  example,  if  contemporaneous  with  the  consignments  and  advances  or  liabilities, 
there  are  orders  given  by  the  copsignor,  which  are  assented  to  by  the  factor,  that 
the  goods  shall  not  be  sold  until  a  fixed  time,  in  such  a  case,  the  consignment  is  pre- 
sumed to  be  received  by  the  factor  subject  to  such  orders;  and  he  is  not  at  liberty  to 
sell  the  goods  to  reimburse  his  advances  or  liabilities  until  after  that  time  has  elapsed. 
The  same  rule  will  apply  to  orders  not  to  sell  below  a  fixed  price ;  unless,  indeed,  the 
consignor  shall,  after  due  notice  and  request,  refuse  to  provide  anj^  other  means  to 
reimburse  the  factor.  And  in  no  case  will  the  factor  be  at  liberty  to  sell  the  con- 
signment contrary  to  the  orders  of  the  consignor,  although  he  has  made  advances  or 
incurred  liabilities  thereon,  if  the  consignor  stands  ready  and  offers  to  reimburse  and 
discharge  such  advances  and  liabilities. 

"On  the  other  hand,  where  the  consignment  is  made  generally,  without  any  spe- 
cific orders  as  to  the  time  or  mode  of  sale,  and  the  factor  makes  advances  or  incurs 


PRmCIPAL  AND  AGENT.  16G 

Rights  of  third  Persons  against  Principal. 

principal's  instructions,  he  does  an  act  which,  may  be  either  right  or 
wrong,  but  which  he  is  induced  to  believe  right  by  the  conduct  of 
his  employer,  for,  though  there  can  be  no  indemnity  between  wrong- 
doers, yet  that  rule  applies  only  where  the  party  who  seeks  for  the 
indemnity  must  have  been  conscious  that  in  committing  the  act, 
against  the  consequences  of  which  he  asks  to  be  indemnified,  he 
was  a  wrong-doer.  (^) 


Section'  IV. — Rights  of  third  Persons  against  Principal. 

Next  in  order  are  the  considerations  respecting  the  mutual 
rights  of  the  Principal  and  third  Person. 

{i)  Betts  V.  Gibbins,  2  Ad.  &  Ell.  57.  Humphreys  v.  Pratt,  5  Bligh,  N.  S.  154 
Collins  V.  Evans,  Per  Tindal,  C.  J.,  5  Q.  B.  830.  See  as  to  form  of  proceedings,  Rawl- 
ings  V.  Bell,  1  C.  B.  951. 


liabilities  on  the  footing  of  such  consignment,  there  the  legal  presumption  is,  that 
the  factor  is  intended  to  be  clothed  with  the  ordinary  rights  of  factors  to  sell,  in  the 
exercise  of  a  sound  discretion,  at  such  time  and  in  such  mode  as  the  usage  of  trade 
and  his  general  duty  require,  and  to  reimburse  himself  for  his  advances  and  liabili- 
ties out  of  the  pi'oceeds  of  the  sale;  and  the  consignor  has  no  right,  by  any  subse- 
quent orders,  given  after  advances  have  been  made  or  liabilities  incurred  by  the  fac- 
tor, to  suspend  or  control  this  right  of  sale,  except  so  far  as  respects  the  surplus  of 
the  consignment  not  necessary  for  the  reimbursement  of  such  advances  or  liabilities. 
Of  course,  this  right  of  the  factor  to  sell,  to  reimburse  himself  for  his  advances  and 
liabilities,  applies  with  stronger  force  to  cases  where  the  consignor  is  insolvent,  and 
where,  therefore,  the  consignment  constitutes  the  only  fund  for  indemnity." 

The  Court  of  Common  Bench  in  England,  examined  this  subject  in  the  late  case 
of  Smart  v.  Sanders,  6  Man.  &  Grang.  &  S.  896 ;  and  whilst  manifesting  a  strong  iu- 
clinatiou  to  recognize  the  existence  of  a  general  custom  among  factors  to  sell  on  de- 
fault of  the  principal,  yet  decided  that  the  factor's  authority  to  sell  was  revocable  at 
the  will  of  the  consignor,  although  the  latter  on  request  had  refused  to  refund  ad- 
vances previously  made,  to  the  full  value  of  the  property.  Some  of  the  American 
courts  have  pushed  the  doctrine  of  Brown  v.  McGran  yet  farther,  and  hold  that 
where  a  factor  has  made  advances  upon  goods  in  good  faith,  he  may  sell  upon  de- 
fault of  the  pi'incipal,  on  reasonable  demand,  to  reimburse  him,  although  such  sale 
may  be  inconsistent  with  the  instructions  given  at  the  time  of  the  consignment. 
Blot  V.  Borieau,  1  Sand.  Sup.  Ct.  Rep.  Ill,  S.  C. ;  3  Comst.  78.  Parker  v.  Branker, 
22  Pick.  40.  Marfield  v.  Goodhue,  3  Comst.  62.  Frothingham  v.  Everton,  12  N.  H, 
239.  See  also  Williams  &  Morley  v.  Littlefield,  12  Wend.  362.  Jordan  et  ah.  v. 
James,  5  Hamm.  88. 


170  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


As  far  as  the  agent's  authority  extends,  lie  has  a  right  to  bind 
his  principal  to  third  persons.  Now  his  authority  may,  as  we  have 
seen,  be  either  expressly  given,  or  inferred  from  the  acts  of  his  sup- 
posed principal.  When  it  is  expressly  given,  there  can  be  no  doubt 
as  to  its  extent,  except  from  the  uncertainty  of  words  employed  in 
delegating  it.  (j)  When,  however,  it  is  to  be  inferred  from  the  con- 
duct of  the  principal,  that  conduct  furnishes  the  only  evidence  of 
its  extent  as  well  as  of  its  existence ;  and,  in  solving  all  questions 
on  this  subject,  the  general  rule  is,  that  the  extent  of  the  agent^s  au- 
thority is  {as  between  his  principal  and  third  parties)  to  be  measured  by 
the  extent  of  his  usual  em2:>loyment ;  for  he  who  accredits  another  by 
employing  him,  must  abide  by  the  effects  of  that  credit,  and  will 
be  bound  by  contracts  made  with  innocent  third  persons,  in  the 
seeming  course  of  that  employment,  and  on  the  faith  of  that  credit, 
whether  the  employer  intended  to  authorize  them  or  not;  {k)  since, 
where  one  of  two  innocent  persons  must  suffer  by  the  fraud  of  a 
third,  he  who  enabled  that  third  person  to  commit  the  fraud  should 
be  the  sufferer.  {I)  On  this  principle  it  is,  as  we  have  seen  in  the 
first  chapter,  that  one  partner  can  bind  another  to  contracts  within 
the  scope  of  the  partnership  business ;  the  same  principle  is  well 
illustrated  by  Lord  C.  J,  Holt,  (m)  who  says,  "  If  a  man  send 
his  servant  with  ready  money  to  buy  goods,  and  the  servant  buy 
upon  credit,  the  master  is  not  chargeable.  But  if  the  servant  usu- 
ally buy  for  the  master  upon  tick,  and  the  servant  buy  some  things 
without  the  master's  order,  yet,  if  the  master  were  trusted  by  the 
trader,  he  is  liable."  The  same  principle  is  applied  to  cases  re- 
specting notes  or  bills,  which,  if  drawn,  indorsed  or  accepted  by  a 
clerk  who  has  been  previously  allowed  to  do  so.  bind  the  master, 


(_;■)  See  Esdaile  v.  La  Nause,  1  Y.  &  Coll.  394 ;  whence  it  appears,  that  it  requires 
Tcry  clear  words  to  give  the  agent  a  power  to  make,  accept,  or  indorse  negotiable  in- 
struments.    See  also  Attwood  v.  Munnings,  1  B.  &  C.  278. 

{k)  See  Pickering  v.  Busk,  15  East,  38.  Townsend  v.  Inglis,  Holt,  2'78.  "Wliite- 
head  v.  Tuckett,  15  East,  400.  Barker  v.  Gingell,  3  Esp.  60.  Haughton  v.  Ewbank,  4 
Camp.  88.     Watkins  v.  Vince,  2  Stark.  368.    See  10  Mod.  Ill ;  Moll.  282. 

(l)  ^quum  prcetori  visum  est  sicut  commoda  sentimus  ex  contractu  institorum,  ita 
etiam  oUigari  nos  ex  contractibus  eorum.  Dig.  lib.  14,  tit.  3.  Qui  non  prohibti  pro  se 
intervenire  mandare  creditur.     Dig.  lib.  50,  tit.  17. 

(m)  Shower,  95 ;  Weyland's  case,  3  Salk.  234.     Rusby  v.  Scarlett,  5  Esp.  7b. 


PRINCIPAL  AND  AGENT.  171 

Rights  of  third  Persons  against  Principal. 

though  the  money  never  come  to  his  use ;  (n)  it  is  applied  to  sales 
(o)  and  guarantees,  (jp)  in  a  word,  to  every  species  of  mercantile 
transaction,  and  whether  the  agent  have  or  have  not  been  dismissed 
from  his  employer's  service,  provided  that  the  third  party  had  no 
reason  to  be  aware  of  the  determination  of  his  employment,  (q) 
which  has  occasioned  a  learned  writer  to  suggest  the  propriety  of 
giving  notice  in  the  Gazette,  and  by  circulars,  whenever  a  mercan- 
tile agent's  employment  is  determined,  as  is  the  practice  on  the  dis- 
solution of  a  partnership.  Nor  can  the  principal  relieve  himself 
by  agreeing  with  his  agent  that  the  latter  shall  take  the  liability  on 
his  own  shoulders,  for  strangers  not  cognizant  of  such  agreement 
are  not  bound  by  it.  (r) 

The  nature  of  the  authority  to  be  inferred,  and  the  sufficiency 
of  the  principal's  acts  to  raise  the  inference,  must  of  course  depend 
on  the  special  circumstances  of  each  case,  and  involve  questions  fit 
for  the  consideration  of  a  jury,  (s)  There  is  one  instance  in  which 
the  recognition  of  a  single  purchase  made  by  his  servant  upon 
credit,  was  held  to  bind  the  principal  to  a  succeeding  one.  (t)  How- 
ever, as  the  employment  is  the  measure  of  the  authority  to  be  in- 
ferred, if  there  were  no  previous  employment,  there  can  of  course 


\n)  Frescott  v.  Flinn,  9  Bingh.  21.  Boulton  v.  Arlesden,  Sal.  234.  Barber  v.  Gin- 
gell,  3  Esp.  60.  Houghton  v.  Ewbank,  4  Camp.  88.  See  12  Mod.  346.  Molloy,  107. 
An  authority  to  draw  does  not  import  authority  to  indorse ;  but  evidence  of  such 
authority  to  draw  is  not  to  be  withheld  from  the  jury,  who  are  to  determine  whether 
such  authoi'ity  to  indorse  exists  or  not,  and  who  may  be  justly  satisfied  with  less 
evidence  thereof,  where  it  is  proved  that  the  clerk  is  a  confidential  clerk,  and 
has  undisputed  authority  to  draw  in  the  name  of  his  principal.  Prescott  v.  Flinn,  9 
Bingh.  23.     Vide  Smith  v.  Topping,  5  B  <fe  Ad.  6Y4. 

(o)  Pickering  v.  Busk,  15  East,  38.     Trueman  v.  Loder,  11  A.  <fe  E.  591. 

(p)  Watkins  v.  Vince,  2  Stark.  368. 

(q)  Trueman  v.  Loder,  11  A.  &  E.  591.  10  Mod.  Ill  ;  12  Mod.  346  ;  Molloy,  lOY, 
282. 

(r)  Precious  v.  Abel,  1  Esp.  350.  Rich  v.  Coe,  Cowp.  636.  Waring  v.  Favenck, 
1  Camp.  85. 

(s)  See  Dyer  v.  Pearson,  3  B.  <fe  C.  38.  Hazard  v.  Treadwell,  1  Str.  506.  Todd  v. 
Robinson,  1  R.  <fe  M.  217.  Oilman  v.  Robinson,  ibid  226.  Boulton  v.  Arlesden,  Sal. 
234.  Anderson  v.  Sanderson,  2  Stark.  204.  Stubbing  v.  Heintz,  Peake,  47.  Wey- 
land's  case,  3  Sal.  234.  Rusby  v.  Scarlett,  5  Esp.  76.  See  Smith  v.  Topping,  5  B.  «4 
M.  674.  Davidson  v.  Stanley,  2  M.  &  Gv.  721. 
(t)  Hazard  v.  Treadwell,  1  Str.  506. 


172  JIERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


bd  no  inference  of  authority  :  in  such  a  case,  the  party  who  trusts 
a  servant,  does  it  at  his  peril,  since  the  master  will  only  be  liable 
for  what  comes  to  his  use  ;  and  not  even  for  that,  if  he  gave  his 
servant  money  to  pay  for  it;(M)  and,  as  the  employment  is  the 
measure  of  the  authority,  an  employment  in  one  line  of  business 
affords  no  inference  of  authority  to  act  in  another,  (v)  and  the  au- 
thority must  be  inferred  by  fects  which  have  occurred  during  the 
course  of  such  employment,  not  from  mere  argument  as  to  the 
utility  or  propriety  of  the  agent's  possessing  it.  (iv) 

Thus,  though  a  clerk  or  apprentice  may  have  an  implied  -au- 
thority to  receive  money  for  his  master  in  the  course  of  business, 
yet  that  will  give  him  no  authority  to  receive  it  in  collateral  trans- 
actions out  of  the  ordinary  course  of  business,  (x)  And  thus  also, 
though  a  master  when  abroad,  or  even  at  home,  in  case  of  neces- 
sity, (y)  has  an  implied  authority  to  borrow  money  for  the  purposes 
of  the  ship,  and  may  therefore  bind  his  owner  by  contracting  a 
loan  for  those  purposes,  yet,  if  he  borrow  money  on  his  own  ac- 
count, and  afterwards  apply  it  to  the  purposes  of  the  ship,  that  is 
no  exercise  of  his  authority,  and  his  master  is  not  bound  to  repay 
that  money.  (2) 

It  follows  from  the  above  observations,  that  an  agent  may  be 
tied  down  by  very  strict  directions,  as  between  himself  and  princi- 
pal, wbom  he  may,  notwithstanding,  have  power  to  bind  by  con- 
tracts, unauthorized  by,  and  even  in  defiance  of  them.  Cases  of 
this  sort  occur,  when  a  general  agent^  as  he  is  called,  exceeds  his  in- 
structions. A  general  agent  is  a  person  whom  a  man  puts  in  his 
place  to  transact  all  his  business  of  a  particular  kind :  thus  a  man 
usually  retains  a  factor  to  buy  and  sell  all  goods,  and  a  broker  to 
negotiate  all  contracts  of  a  certain  description,  an  attorney  to  trans- 
act all  his  legal  business,  a  master  (a)  to  perform  all  things  relating 

(m)  See  Pale}-,  P.  &  A.  lG-4.     1  Ld.  Raym.  225.     Kilgour  v.  Finljson,  1  H.  Bl.  155. 
{v)  See  Boucher  v.  Lawson,  Rep.  temp.  Hardwicke,  85. 
{w)  Hawtaj-ne  v.  Bourne,  7  M.  &  W.  598. 
{x)  Sanderson  v.  Bell,  2  Cr.  &  Mee.  SO-i. 

(7/)  Arthur  v.  Barton,  6  M.  &  W.  138.     "Weston  v.  Wright,  7  M.  &  W.  396. 
{z)  Thacker  v.  Moates,  1  M.  &  Rob.  79. 

{a)  The  authority  of  a  master  is  very  extensive.     See  Rinquist  v.  Ditchell,  Abb. 
p  2,  c.  2.     Ellis  V.  Turner,  8  T.  R.  531  ;  Abb.  p.  2,  c.  3.     And  see  particularly  Arthur 


PEINCIPAL  AND  AGEXT.  173 

Rights  of  third  Persons  against  Principal. 

to  the  usual  employment  of  his  ship,  and  so  in  other  instances. 
The  authority  of  such  an  agent  to  perform  all  things  usual  in  the 
line  of  business  in  which  he  is  employed,  cannot  be  limited  by  any 
private  order  or  direction,  not  known  to  the  party  dealing  with 
him.  {b)  But  the  rule  is  directly  the  reverse  concerning  £(.  particular 
agent,  i.  e.  an  agent  employed  specially  in  one  single  transaction, 
for  it  is  the  duty  of  the  party  dealing  with  such  an  one,  to  ascertain 
the  extent  of  his  authority ;  and  if  he  do  not,  he  must  abide  the 
consequences,  (c) 

V.  Barton,  6  Mee.  &  Welsh.  (12,)  where  it  was  held,  that  even  in  an  English  port  the 
master  may,  if  it  be  a  ease  of  necessity,  borrow  money  for  the  use  of  the  ship. 
Accord.  Weston  v.  Wright,  7  M.  &  W.  396.  But  this  is  on  the  supposition  not 
merely  that  the  supply  of  money  is  necessary,  but  that  the  owner  cannot  be  com- 
municated with,  and  the  rule  is  the  same  as  to  goods.  Johns  v.  Simons,  2  Q.  B.  425. 
Stonehouse  v.  Gent,  ibid.  431.  He  may  in  foreign  ■  parts  hypothecate  the  ship  or 
freight,  if  that  be  necessary,  in  order  to  raise  money  for  her  use ;  he  may  for  tho 
same  purpose  hypothecate  the  cargo.  The  Gratitudine,  3  Rob.  A.  R.  240.  Nay,  if 
money  cannot  otherwise  be  obtained  for  repairs,  he  may  sell  part  of  it,  Abbott,  p.  2, 
c.  3,  and  may,  in  some  cases  of  extremity,  dispose  even  of  the  cargo  or  ship  itself,  for 
the  benefit  of  all  concerned.  Hunter  v.  Parker,  7  M.  &  W.  322.  Vlierboom  v.  Chap- 
man, 13  M.  &  W.  230.  He  has,  moreover,  authority  over  all  persons  in  the  ship,  in 
matters  relating  to  her  navigation  and  the  preservation  of  good  order  on  board,  and 
may,  in  case  of  disobedience  or  disorder,  administer  reasonable  correction ;  his  au- 
thority in  this  respect  resembling  that  of  a  parent  over  his  child,  or  a  master  over 
his  apprentice  or  scholar.  But  he  must  take  care  that  there  is  a  sufficient  cause  for 
chastisement,  and  that  the  chastisement  be  reasonable,  otherwise  he  will  be  punish- 
able.    Abbott,  p.  2,  c.  4. 

[The  authority  of  a  master  was  very  much  discussed  in  the  recent  case  of  Grant 
et  als.  V.  Norway  et  als.,  10  C.  B.  665.  (70  E.  C.  L.  R.)  It  was  there  held  that  the 
master  of  a  ship,  signing  a  bill  of  lading  for  goods  which  have  never  been  shipped, 
is  not  to  be  considered  as  the  agent  of  the  owner  in  that  behalf,  so  as  to  make  the 
latter  responsible  to  one  who  has  made  advances  on  the  faith  of  the  bill  of  lading  so 
signed.  The  very  nature  of  a  bill  of  lading  shows  that  it  ought  not  to  be  signed  until 
goods  are  on  board ;  for  it  begins  by  describing  them  as  shipped.  It  being  generally 
known  from  the  usage  of  trade  and  the  general  practice  of  shipmasters,  that  the 
master  derives  no  authority  from  his  position  to  give  a  bill  of  lading  under  such 
circumstances,  the  case  is  the  same  as  if  the  party  taking  the  bill  of  lading  had 
notice  of  an  express  limitation  on  the  master's  authority. — A.  E.] 

{b)  Whitehead  v.  Tuckett,  15  East,  400.  Nicksonw.  Brohan,  10  Mod.  109.  Thorold 
V.  Smith,  11  Mod.  87.  See  Daniells  v.  Adams,  AmbL  498.  Petties  v.  Soame,  13  Vin. 
Abr.  6.     E.  I.  Compy.  v.  Hensle}',  1  Esp   11.. 

(c)  Fenn  v.  Harrison,  4  T.  R.  177.  Waters  v.  Brogden,  1  T.  <k  J.  457.  Daniells 
V.  Adams,  Ambl.  498.  Clinan  v.  Cooke,  1  Sch.  &  Lef.  22.  Seton  v.  S'.ade,  7  Ves.  276. 
E.  I.  Compy.  v.  Hensley,  1  Esp.  111.     Woodiu  v.  Burford,  2  C.  &  M,  391.     Jordan  v 


174  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


We  have  seen  that  a  subsequent  assent  by  tlie  principal  to  his 
agent's  conduct  exonerates  the  latter  from  the  consequences  of  a 
departure  from  his  orders.  In  like  manner  it  will  render  the  prin- 
cipal liable  for  contracts  made  in  violation  of  such  orders,  or  even 
without  any  previous  retainer  or  employment,  for  omnis  ratihiUtio 
retrotmhitur  et  mandato  cequiparatur.  (d)  Such  an  assent  may  be  in- 
ferred from  the  conduct  of  the  principal,  (e)  who  cannot  confirm  a 
transaction  in  part,  and  repudiate  it  as  to  the  rest,  but  must  either 
adopt  all  or  none.  (/) 

The  general  rule,  however,  is  that  the  authoiity,  of  whatever 
description,  must  he  strictly  imrsued ;  otherwise  the  principal,  if  his 
agent  be  a  particular  one,  will  not  be  bound ;  and  if  he  be  a  gen- 
eral agent,  will  not  be  bound,  save  under  the  circumstances  above 
described,  and  not  under  any  circumstances  whatever,  if  the  third 
party,  at  the  time  of  his  contracting,  was,  or  ought  to  have  been, 
aware  of  the  limited  extent  of  the  agent's  authority,  which  is  con- 
strued by  the  courts  with  a  great  deal  of  strictness :  {g)  thus,  if  given 
to  two,  it  cannot  be  executed  -by  one,  though  the  other  should  die 
or  refuse  ;  and  if  given  to  three  jointly  and  severally,  it  cannot  be 
executed  by  two,  though  it  may  either  by  all  three,  or  by  one 
only.  (/<)     However,  the  courts  are  now  disposed  to  relax  from  the 

Norton,  4  M.  &  W.  155.  Sykes  v.  Giles,  5  M.  &  W.  645.  Rotton  v.  Inglis,  2  Q.  B. 
667,  -where  a  bill  drawn  on  Bruce,  Shand  &  Co.,  having  been  transmitted  to  Alexan- 
der &  Co.  by  the  holders,  with  instructions  to  do  the  needful,  and  having  been  dis- 
honored by  non-acceptance,  it  was  held  that  A.  &  Co.  had  no  authority  to  receive 
payment  of  it  after  protest,  and  that  the  money  so  paid  did  not  become  the  holder's. 
{d)  Ward  V.  Evans,  Sal.  442.  Comb.  450 ;  Ld.  Raym.  980.  Maclean  v.  Dunn,  4 
Bingh.  122.  Henderson  v.  Barnwall,  1  Y.  &  J.  SS*?.  Fenn  v.  Harrison,  3  T.  R.  757  ; 
4  T.  R.  177.  Coles  v.  Trecothick,  9  Ves.  236,  251,  252 ;  but  the  assent  must  be  given 
to  the  act  really  done  by  the  agent,  and  not  to  one  which  he  is  falsely  represented 
to  have  done.     Horsefall  v.  Fauntleroy,  10  B.  &  C.  755. 

(e)  Thorold  v.  Smith,  11  Mod.  88.     Howard  v.  Baillie,  2  H.  Bl.  618.     Wilson  v, 
Poulter,  2  Str.  859.     Smith  v.  Hodscn,  4  T.  R.  211  ;  B.  N.  P.  131. 

(/)  Wilson  V.  Poulter,  2  Str.  159.     Billon  v.  Hyde,  1  Atk.  128.     Smith  v.  Hodson, 
4  T.  R.  211.     Hovil  V.  Pack,  7  East,  146, 

(^f)  Gardiner  v.  Baillie,  6  T.  R.  591.  Tobin  v.  Crawford,  5  M.  &  W.  235.  Aeey  u. 
Fernie,  7  M.  &,  W.  151.  Co.  Litt.  258,  b.  It  is  said,  that  if  an  agent  do  more  than 
he  is  authorized,  the  act  is  bad  for  the  excess  only,  provided  that  can  be  distinguished ; 
if  he  do  no  less,  bad  altogether,  except  in  cases  where  his  authority  is  co  apled  with 
an  interest.  See  Co.  Litt.  258,  b.  Alexander  v.  Alexander,  2  Ves.  644. 
Ih)  Co.  Litt.  112,  b;  181,  b;  1  Roll.  Abr.  329;  1  And.  145. 


PRINCIPAL  AND  AGENT.  175 

PJglits  of  third  Persons  against  Principal. 

technical  precision  of  ancient  times  in  construing  tliese  and  tlie  like 
words,  and  will  search  the  whole  instrument  for  the  maker's  inten- 
tion ;  {i)  but,  where  that  is  once  ascertained,  they  will  confine  the 
agent  to  it  with  the  utmost  strictness.  (/)* 

At  the  same  time,  the  courts  are  so  far  liberal  in  construing 
authorities  given  to  agents,  that  they  will  hold  them  to  include  per- 
mission to  use  all  necessary,  or  even  usual  means,  of  carrying  the 
main  intention  of  the  principal  into  effect  in  the  best  manner :  {Ic) 
thus,  an  agent  employed  to  get  a  bill  discounted  may,  perhaps, 
unless  expressly  restricted,  indorse  it  in  the  name  of  his  employ- 
er:  (f)  a  broker  employed  to  effect  a  policy  of  insurance  may  adjust 

(i)  Guthrie  v.  Armstrong,  5  B.  <fe  A.  628. 

(j)  Barron  v.  Fitzgerald,  6  Bingh.  N.  C.  201,  -where  an  authority  to  Barron  and 
Stewart,  to  effect  an  insurance  in  their  own  two  names,  was  lield  not  to  warrant  the 
effecting  one  in  the  names  of  Barron,  Stewai't,  and  Smith,  whom  they  had  taken  into 
partnership.  Attwood  v  Munnings,  7  B.  <fe  C.  278,  an  important  case,  but  which  can- 
not be  satisfactorily  abridged.  Hogg  v.  Snaith,  1  Taunt.  3-47.  Murray  v.  E.  I.  Compy,, 
5  B.  cfe  A.  204.  Esdaile  v.  La  Nauze,  1  Y.  &  Coll.  Fearn  v.  Filica,  7  M,  &  Gr. 
513.  Agent  to  pay  and  receive  cannot  indorse  bills.  Davidson  v.  Stanley,  2  M.  & 
Gr.  721. 

{k)  Richardson  v.  Anderson,  1  Camp.  43,  n.  Goodson  v.  Brooke,  4  Camp.  163. 
Withington  v.  Herring,  5  Bingh.  442.  Ducarry  v.  Gill,  1  M.  &  M.  450.  Alexander  v. 
Gibson,  2  Camp.  555,  et  notan.  Helyar  v.  Hawke,  6  Esp.  72.  Runquist  v.  Ditchell,  3 
Esp.  65.  See  Hicks  v.  Ilankin,  4  Esp.  114.  Whitehead  v.  Tuckett,  15  East,  400. 
Ellis  «.  Turner,  8  T.  R.  531. 

(0  Fenn  v.  Harrison,  4  T.  R.  177  ;  3  T.  R.  757. 

*  Agents  are  either  joint  or  several.  It  is  a  general  rule  of  the  common  law,  that 
when  an  authority  is  given  to  two  or  more  to  do  an  act,  all  the  agents  must  concur 
in  its  execution,  unless  words  are  used  which  manifestly  show  an  intention  to  create 
a  several  authority.  This  rule  is,  however,'  only  applicable  to  agencies  of  a  private 
nature  ;  for  in  the  case  of  public  agencies,  the  execution  of  an  authority  by  a  major- 
ity of  the  agents,  has  been  always  held  to  be  sufficient.  A  departure  from  the  rule 
is  also  admitted  in  commercial  transactions,  in  favor  of  trade :  and  in  the  case  of 
several  agents,  each  is  supposed  to  possess  the  whole  power.  Thus,  on  a  consign- 
ment of  goods  for  sale  to  two  factors  (whether  they  are  partners  or  not),  either  of 
them  may  dispose  of  the  goods,  for  the  purposes  of  the  consignment,  without  the 
concurrence  of  the  other.  See  Story  on  Agency,  56,  47,  48.  Green  v.  Miller,  6 
Johns.  R.  39.  Peter  v.  Beverly,  10  Peters,  532.  Downing  v.  Rugar,  21  Wend.  278. 
Where  there  are  several  joint  agents,  notice  to  any  one  is  notice  to  the  principal. 
Bank  of  the  United  States  v.  Davis,  2  Hill,  463.  So  notice  to  one  partner  is  notice 
ii>  the  firm.     The  Fulton  Bank  v.  New  York  and  Sharon  Canal  Co.,  4  Paige,  137. 


17G  MERCANTILE  PERSOXS. 


Rights  of  third  Persons  against  Principal. 


tlie  loss,  and  do  all  that  is  requisite  towards  sucli  adjustment:  (w) 
an  agent  to  receive  rents  and  let  has  power  to  determine  the  ten- 
ancy :  (n)  an  agent  employed  to  issue  process  may  receive  the  debt 
and  costs, (o)  and  a  warranty  given  by  an  agent  intrusted  to  sell  _prrma 
facie  binds  the  principal,  (p)*  A  master  who  sends  his  servant  to 
buy  goods,  and  gives  him  no  money  to  pay,  doubtless  authorizes 
him  to  pledge  his  credit,  {(pj  But  though  the  agent  has  an  implied 
authority  to  use  those  means,  of  which  the  principal  could  not  but 
have  foreseen  the  necessity,  and  therefore  could  not  but  have  in- 
tended to  authorize ;  yet,  if  an  unusual  contingency  arise,  it  does 
not  follow  that  the  agent  will  have  power,  however  useful  it  might 
be,  to  do  that  which  would  enable  him  to  meet  the  contingency  in 
the  best  manner :  thus,  it  was  decided  in  Hawtayne  v.  Bourne^  7  M. 
&  W.  597,  that  there  is  no  implied  authority  in  an  agent  conduct 

(m)  Richardson  v.  Anderson,  1  Camp.  43,  n. 

(n)  Doe  d  Manvers  v.  Mizen,  2  M.  &  Rob.  5Y. 

(o)  Weary  v.  Alderson,  2  M.  &  Rob.  127. 

(p)  See  the  cases  cited  supra,  note/.  And  see  Woodin  v.  Burford,  2  C.  <fe  Mee. 
391 ;  4  Tyrwh.  164. 

{q)  Per  Tindal,  L.  C.  J.,  delivering  judgment  of  Ex.  Ch.  in  Tobin  v.  Crawford,  9 
M.  &  W.  718. 


*  An  agent  to  sell,  whether  general  or  special,  may  be  presumed,  in  the  absence 
of  all  proof  to  the  contrary,  to  be  clothed  with  authority  to  warrant  the  quality  or 
condition  of  the  thing  sold ;  inasmuch  as  a  warranty  or  representation  is  one  of  the 
usual  modes  of  eSFecting  a  sale.  Fenn  v.  Harrison,  4  T.  R.  177.  Sandford  v.  Handy, 
23  Wend.  260.  Nelson  v.  Cowing,  6  Hill,  336.  Skinner  v.  Gun,  9  Porter,  305. 
Bradford  v.  Bush,  10  Alab.  386.  Hunter  v.  Iremeson,  Iredell's  N.  C.  Rep.  for  June, 
1846.  An  authority  to  sell  does  not,  however,  authorize  a  sale  on  credit,  unless  it  is 
a  known  usage  of  trade  that  the  articles  which  form  the  subject  of  the  authority 
should  be  sold  in  that  manner.  Thus,  the  owner  of  stock  is  not  ordinarily  bound  by 
the  contract  of  his  agent  employed  to  sell,  if  he  has  sold  on  credit.  See  Delafield  v. 
The  State  of  Illinois,  26  "Wend.  223.  When  the  business  which  makes  the  object  of 
the  agency  may,  with  equal  advantage  to  the  principal,  be  performed  in  two  or  more 
different  ways,  the  agent  may,  in  general,  do  it  in  either,  provided  a  particular  mode 
has  not  been  prescribed  to  him.  But  when  his  authority  prescribes  the  mode  of 
doing  the  business,  he  will  not  be  at  liberty  to  pursue  another.  Tlius,  an  authority 
to  sell  by  auction  will  not  support  a  sale  by  private  contract.  1  Liv.  on  Prin.  & 
Agent,  103.     Daniel  v.  Adams,  Amb.  495. 

An  authority  given  by  statute  to  public  agents,  vests  them  by  implication  with  all 
the  ordinary  means  for  carrying  into  effect  the  objects  contemplated  by  the  legisla- 
ture.   The  United  States  v.  Wyngall,  5  Hill,  16. 


PRINCIPAL  AND  AGENT.  177 

Rights  of  third  Persons  against  Principal. 

ing  the  general  business  of  a  mine  to  borrow  money  in  case  of  ne- 
cessity.— "  No  such  power,"  said  Parke,  B.,  "  exists,  except  in  the 
cases  of  the  master  of  a  ship,  and  of  the  acceptor  of  a  bill  for  the 
honor  of  the  drawer.  The  latter  derives  its  existence  from  the  law 
of  merchants,  and,  in  the  former  case,  the  la-w,  which  generally  pro- 
vides for  ordinary  events,  and  not  for  cases  which  are  of  rare  occur- 
rence, considers  how  likely  and  frequent  are  accidents  at  sea,  when 
it  may  be  necessary,  in  order  to  have  the  vessel  repaired  or  to  raise 
the  means  of  continuing  the  voyage,  to  pledge  the  credit  of  her 
owners ;  and  therefore  it  is  that  the  law  invests  the  master  with 
power  to  raise  money,  and  by  an  instrument  of  hypothecation  to 
pledge  the  ship  itself  if  necessary.  If  that  case  be  analogous  to 
this,  it  follows,  that  the  agent  had  power,  not  only  to  borrow  money, 
but,  in  the  event  of  security  being  required,  to  mortgage  the  mine 
itself.  The  authority  of  the  master  of  a  ship  rests  on  the  peculiar 
character  of  his  of&ce,  and  affords  no  analogy  to  the  case  of  an 
agent.  I  am  therefore  of  opinion,  that  thg  agent  of  this  mine  had 
not  the  authority  contended  for." 

Such  being  the  general  rules  concerning  an  agent's  power,  let  us 
now  consider  a  little  more  particularly,  what  course  he  must  pursue, 
in  order  to  bind  his  principal  by  two  or  three  of  the  most  usual 
species  of  engagements. 

In  executing  a  deed,  he  may  either  sign  the  name  of  his  princi- 
pal, (r)  or  state  it  to  be  done  by  himself  as  agent  for  his  principal,  (s) 
or  by  his  principal,  through  him,  the  agent,  {t)  But  if  he  sign 
his  own  name  without  mentioning  his  principal,  the  latter  will  not 
be  bound,  (w)* 

In  like  manner,  an  agent  employed  to  draw,  indorse,  or  accept 


(r)  9  Co.  76,  77 ;  Moor,  pi.  1106 ;  1  Str.  705.     Wilks  v.  Back,  2  East,  142. 
(s)  9  Co.  77.     Parker  v.  Kett,  Sal.  95. 
(<)  Wilks  V.  Back,  2  East,  142,  per  Grose,  J. 

(m)  9  Co.  76,  77.     D'Abridgeeourt  v.  Ashley,  Moor,  818;  see  1  Str.  705.     Wilks  v. 
Back,  2  East,  142.    Bacon  v.  Dubarry,  1  Ld.  Raym.  246;  Sal.  70;  12  Mod.  129. 


*  S.  P.  Lessee  of  Clark  v.  Courtney,  5  Peters,  318.  Martin  v.  Flowers,  8  Leigh. 
158.  Townsend  v.  Corning,  23  Wend.  435.  Townshend  v.  Hubbard,  4  Hill  N.  Y. 
851. 

12 


i78  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


negotiable  instruments,  must  take  care  not  to  do  so  in  his  own  name, 
for,  if  he  do,  he  will  himself  be  liable  to  the  holder,  (v) 

As  to  his  power  to  bind  the  principal  by  a  disposition  of  his 
goods,  the  common  law  rule  was,  as  may  be  collected  from  the  fore- 
going observations,  that  to  acquire  a  good  title  to  the  employer's 
property  by  purchasing  it  from  his  agent,  such  purchase  must  have 
been,  either  in  market  overt  and  without  knowledge  of  the  seller's 
representative  capacity,  or  from  an  agent  acting  according  to  his  in- 
structions, or  from  one  acting  in  the  usual  course  of  his  employment, 
and  whom  the  buyer  did  not  know  to  be  transgressing  his  instruc- 
tions, {w)  The  reason  of  this  is  clear ;  for  unless  the  transaction 
took  place  ho7ia  fide  in  a  market  overt  (in  which  case,  a  peculiar 
rule  of  law  steps  in  for  its  protection),  {x)  an  agent  selling  without 
exjjress  authority  must,  that  his  act  might  be  supported,  have  sold 
under  an  imjjlied  one.  But  we  have  seen  that  an  implied  authority 
always  empowers  the  person  authorized  to  act  in  the  usual  course  of 
his  employment;  consequentl}',  if  he  sold  in  an  unusual  mode,  he 
could  have  no  implied  authority  to  support  his  act ;  and  as  he  had 
no  express  one,  his  sale  of  course  fell  to  the  ground.  For  instance, 
the  usual  employment  of  a  factor  being  to  sell^  it  was  repeatedly 
decided  that  he  could  not  pledge  the  goods  intrusted  to  him.  {y) 

Such  was  the  rule  of  the  common  law ;  but,  being  considered 
prejudicial  to  credit  by  the  greater  number  of  mercantile  men,  it 
was  altered  by  statute  4  Geo,  4,  c.  83,  and  afterwards  by  the  amend- 
ed act  of  6  Geo.  4,  c.  94,  usually  called  "The  Factor's  Act,"  and 
from  which,  taken  in  conjunction  with  the  statute  5  &  6  Vict.  c.  39, 
the  law  on  this  subject  must  new  be  collected. 

iy)  Leadbitter  v.  Farrow,  5  M,  &,  b.  845.  Le  Fever  v.  Llo3'd,  5  Taunt  749. 
Sowerby  v.  Butdier,  2  Cr.  &  Mee.  371;  4  Tyrwh.  325.  Rew  v.  Pettet,  1  Ad.  <fe  E. 
196. 

(io)  Vide  12  Mod.  514.  Wiltshire  v.  Sims,  1  Camp.  258.  Newson  v.  Tliornton, 
6  East,  17.  M'Combie  v.  Davies,  6  East,  538.  De  Bouchot  v.  Goldsmid,  5  Ves  jun. 
211. 

{x)  See  Book  3,  cap.  "CoD'tracts  of  Sale." 

(y)  Patterson  v.  Tash,  2  Str.  1182.  Daubigny  v.  Duval,  5  T.  R.  604.  De  Bouchot 
V.  Goldsmid,  5  Ves.  jun.  211.  See  Pickering  v.  Busk,  15  East,  44.  Martini  v.  Coles, 
1  M.  <fe  S.  140.  Shipley  v.  Keymer,  1  M.  &,  S.  484.  Solly  v.  Rathbone,  2  M.  &  S.  298. 
Cockran  v.  Irlam,  ibid.  301.  Williams  v.  Barton,  3  Bingh.  139.  Duclose  v.  Ryland, 
5  Moore,  418,  n. 


PRINCIPAL  AND  AGENT.  I79 

Rights  of  third  Persons  against  Principal. 

By  tliis  statute,  the  person  (z)  in  whose  name  goods  are  shipped 
is  to  be  deemed  the  true  owner  thereof,  so  far  as  to  entitle  the  con- 
signee to  a  lien  thereon,  in  respect  of  any  money  or  negotiable  se- 
curity advanced  by  him  to  such  person,  or  received  by  such  person 
to  his  use,  if  he  has  not  notice  by  the  bill  of  lading  or  otherioise^  at 
or  before  the  time  of  the  advance  or  receipt,  that  such  person  is  not 
the  actual  and  bona  fide  owner  of  the  goods,  and  such  person  shall 
be  taken,  for  the  purposes  of  this  act,  to  have  been  intrusted  with 
the  goods  for  the  purpose  of  consignment  or  of  sale,  unless  the  con- 
trary be  made  to  appear. 

A  person  (a)  intrusted  tvith^  (h)  and  in  possession  of,  any  bill  of 
lading,  India  warrant,  dock  warrant,  warehouse-keeper's  certificate, 
wharfinger's  certificate,  warrant,  or  order  for  delivery  of  goods, 


{z)  Sect  1. 

(a)  Sect.  2. 

(6)  In  Close  v.  Holmes,  2  M.  &,  Rob.  23,  these  -words  are  said  to  have  been  ruled 
by  Alderson,  B.,  to  give  validity  to  pledges  of  documents  intrusted  to  the  factor  by 
his  principal,  not  to  pledges  of  documents  created  by  the  factor  himself.  It  seems, 
however,  from  Baron  Alderson's  observations  at  page  580  of  Phillips  v.  Huth,  6  Me«. 
<fe  Wels.  5*72,  that  there  was  some  misconception  about  the  point  really  decided  in 
Close  V.  Holmes.  In  Phillips  v.  Huth,  6  Mee.  &  "Wels.  572,  the  Coui't  of  Exchequer 
held  that  it  did  not  follow  that  documents  were  intrusted  to  a  factor  by  his  principal, 
because  the  principal  had  put  into  his  hands  the  means  of  obtaining  possession  of 
them.  In  that  case  factors  were  intrusted  with  the  bills  of  lading  of  two  cargoes  of 
tobacco,  by  means  of  which  bills  they  were  enabled  to  obtain  the  dock  warrants.  It 
■was  proved  that  tobacco  was  sold  sometimes  by  delivery  order,  sometimes  by  war- 
ranty which  latter  is,  however,  not  convenient  unless  an  entire  cargo  be  sold.  The 
factors  having,  before  any  necessity  for  a  sale  arose,  obtained  the  warrants  and 
pledged  them  for  debts  of  their  own,  it  was  held,  that  the  pledges  were  not  protect- 
ed by  this  section.  "It  is  not  enough  (said  the  Court)  to  show  that  the  plaintiffs  em- 
powered the  factors  to  possess  themselves  of  the  warrants  whenever  they  chose;  it 
must  be  shown  that  they  really  intended  the  factors  should  be  possessed  of  them  at 
the  time  they  pledged  them,  or  it  must  be  shown,  that  they  meant  them  not  only  to 
have  the  power  the  possession  of  the  bill  of  lading  would  give — of  getting  the  war- 
rant when  they  liked — but  to  exercise  it  by  obtaining  it  whenever  they  in  their  dis- 
cretion might  think  fit."  In  Hatii.-ld  v.  Phillips,  9  M.  &  "W.  647,  &  14  M.  &  W.  665, 
the  E.\-chequer  Chamber  and  House  of  Lords  were  of  the  same  opinion  on  a  bill  of 
exceptions,  and  the  former  court  tiiouglit  that  the  question  whether  the  factor  was 
intrusted  with  the  particular  document  or  not,  was  one  of  fact  for  the  jury;  and  in 
Bonzi  V.  Stewart,  4  M.  &  Gr,  295,  the  C.  P.  acted  on  the  rule  laid  down  in  those  cases. 
See,  however,  the  statute  of  5  &  6  Vict.  c.  39,  presently  cited,  and  which  appears  to 
have  been  passed  partly  with  a  view  to  the  above  decisions. 


IgO  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


shall  be  deemed  to  be  the  true  owner  of  the  goods  described  in  the 
said  several  documents,  so  far  as  to  give  validity  to  any  contract  or 
agreement  made  by  him  for  the  sale  or  disposition  (c)  of  the  goods, 
or  any  part  thereof,  or  the  deposit  or  pledge  thereof,  or  any  part 
thereof,  as  a  security  for  any  money  or  negotiable  instrument  ad- 
vanced or  given  upon  the  faith  of  such  document,  {d)  if  the  buyer, 
disponee,  or  pawnee,  has  not  notice  by  the  document,  or  otherwise, 
(e)  that  such  person  is  not  the  actual  and  bona  fide  owner  of  the 
goods. 


{c)  A  disposition  must  be  something  in  the  nature  of  a  sale.  Taylor  v.  Kymer,  S 
B.  &  Ad.  337.     Taylor  v.  Trueman,  1  M.  &  M.  457. 

(c^  India  warrants  are  not  negotiable  instruments  within  this  section,  ibid.  See, 
however,  5  <fe  6  Vict.  c.  39.  A  party  seeking  to  avail  himself  of  the  2d  section,  must 
produce  the  contract  or  agreement  to  which  he  wishes  to  give  validity,  if  it  be  in 
writing.  Evans  v.  Trueman,  2  B.  &  Ad.  886;  1  M.  &  Rob.  10.  As  to  the  meaning  of 
advanced,  &c.,  see  Phillips  v.  Iluth,  6  M.  &  "W.  605.  And  Bonzi  v.  Stewart,  4  M.  &  Gr. 
295  where  it  was  decided,  that  when  the  advance  was  made  on  documents,  for  wliich 
others  were  afterwards  substituted,  the  latter  transaction  was  not  protected. 

(e)  This  word  is  said  to  have  been  introduced  by  Lord  Eldon  in  committee.  On 
the  question.  What  is  such  notice?  vide  Evans  v.  Trueman,  1  M.  &  Rob.  10,  ubi  per 
Lord  Tenterden,  "  A  person  may  have  knowledge  of  a  fact  either  by  direct  commu- 
nication, or  by  being  aware  of  circumstances  which  must  lead  a  reasonable  man,  ap- 
plying his  mind  to  them  and  judging  from  them,  to  the  conclusion  that  the  fact  is  so. 
Knowledge  acquired  in  either  of  these  ways  is,  I  think,  enough  to  exclude  a  party 
from  the  benefit  of  the  provisions  of  this  statute ;  slight  suspicion,  I  think,  will 
not."* 


*  The  construction  of  5  &  6  Vict.  c.  39,  came  before  the  Court  of  Chancery,  in 
Navulshaw  v.  Brownrigg,  13  E.  L.  <fe  E.  R.  261.  The  plaintiff  had  consigned  pearls 
to  a  Liverpool  merchant  for  sale,  and  drew  bills  upon  him  to  an  amount  greater  than 
the  value  of  the  pearls,  which  he  accepted.  The  Liverpool  merchant  then  handed 
the  pearls  to  his  London  agent  to  be  sold,  and  drew  bills  upon  him  as  an  advance 
upon  account  of  the  pearls.  The  London  agent  accepted  the  bills,  having  notice 
that  the  pearls  had  been  consigned  by  the  plaintiff  for  sale.  The  Liverpool  merchant 
became  insolvent,  and  the  bills  drawn  upon  him  by  the  plaintiff  were  not  paid.  The 
London  agent  sold  the  goods  to  recoup  himself  the  bills  drawn  upon  him  by  the 
Liverpool  merchant.  Upon  a  bill  filed  by  the  consignor  alleging  fraud  and  collusion, 
and  praying  that  the  London  agent  might  be  decreed  to  pay  him  the  amount  pro- 
duced by  the  sale  of  the  pearls,  the  Lord  Chancellor,  affirming  the  decree  of  the 
Vice  Chancellor,  held  that  the  pledge  was  a  valid  one  within  the  act  of  Victoria; 
that  notice  to  the  pledgee  of  the  fact  that  the  goods  were  transmitted  to  the  con- 
signee with  directionB  to  sell  simply,  would  not  vitiate  the  pledge,  although  it  would 


PRIXCIPAL  AXD  AGENT.  181 

Rights  of  third  Persons  against  Principal. 

But  if  sucli  person  (/)  deposit  or  pledge  the  goods  as  a  security 
for  a  pre-existing  debt  or  demand.,  lie  who  so  takes  the  deposit  or 
pledge,  without  notice,  shall  acquire  such  right,  title,  or  interest,  and 
no  further  or  other  than  was  possessed  by  the  person  making  the 
deposit  or  pledge. 

Any  {g)  person  {li)  may  contract  for  the  purchase  of  goods  with 
any  agent  intrusted  loith  the  goods.,  or  to  whom  they  may  be  con- 
signed, and  receive  and  pay  for  the  same  to  the  agent,  notwithstand- 
ing he  shall  have  notice  that  the  party  with  whom  he  contracts  is  a 
factor  or  agent;  if  such  contract  and  payment  be  made  in  the  ordi- 
nary and  usual  course  of  business,  and  he  has  not,  at  the  time  of 
the  contract  or  payment,  notice  that  the  agent  is  not  authorized  tc 
sell  or  to  receive  the  price. 


(/)  Sect  3. 

(^r)  Sect.  4.     * 

(A)  In  Monk  v.  Whitteubury,  2  B.  &  Ad.  484,  the  Cor:t  said,  "It  is  difficult  to  say 
what  is  meant  in  this  section  by  'an  agent  intrusted  with  goods;'  but  we  are  clearly 
of  opinion  that  a  wharfinger  is  not  such  a  person."  See  as  to  the  meaning  of  intrust- 
ed, in  the  former  section,  page  ante,  179  note  (6). 


have  been  otherwise  if  the  pledgee  had  notice  that  the  consignee  was  prohibited 
from  pledging.  The  Lord  Chancellor  supposed  that  the  language  of  Lord  Tenterden, 
in  Evans  v.  Trueman,  1  Moo.  &  Rob.  10,  on  the  question  of  what  notice  would  bind 
the  person  aecepting  the  pledge,  was  too  general.  "If  you  are  dealing  with  an  agent 
you  must  take  it  for  granted  that  he  has  a  power  to  sell  in  every  case.  The  act  says 
it  has  become  a  usual  course  of  business  to  pledge :  not  that  it  was  legal ;  on  the  con- 
trary, it  says  that  it  was  not  legal,  but  had  become  the  usual  course  of  business,  and 
that  it  meant  to  give  legal  effect  to  that  course  of  business.  "When,  therefore,  you 
are  dealing  for  a  pledge  with  an  agent  who  has  a  consignment,  the  knowledge  that 
he  has  the  power  to  sell,  appears  to  me  to  amount  to  nothing;  for  every  agent  must 
be  supposed  to  have  a  power  to  sell  who  has  the  disposition  of  goods.  Assuming, 
then,  that  (the  London  agents')  knew  expressly,  before  they  accepted  the  bills  and 
took  the  pledge,  that  (the  Liverpool  agent)  had  a  power  o-f  sale  only,  even  that 
would  not  alter  the  right  because  if  they  had  not  been  infoi--med  of  it,  they  would 
have  been  considered  to  have  known  it,  inasmuch  as  they  were  dealing  witli  an 
agent  in  the  possession  of  goods.  But  it  wants  something  more  than  merely  the 
right  positively  to  sell ;  it  wants  a  prohibition  from  the  owner  not  to  pledge."  S.  C. 
"7  E.  L.  &  E.  R.  106.  See  the  following  autliorities  on  Factor's  Act,  in  United  States. 
Covin  V.  Hill  &,  Sandford,  4  Denio,  323.  Jennings  v.  Merrill,  20  Wend.  1.  Stevens  v. 
Wilson,  6  Hill,  512.  S.  C.  3d  Denio,  472.  Zachristie  v.  Ashman,  2  Sand.  Sup.  Ct 
R.  68. 


182  MERCANTILE  PERSONS. 


Riglits  of  third  Persons  against  Principal. 


Anj{i)  person  may  accept  any  goods  or  any  such  document 
as  aforesaid,  on  deposit  or  pledge  (/)  from  any  factor  or  agent,  otot- 
withstanding  he  shall  have  notice  that  the  party  is  a  factor  or  agent; 
but,  in  such  case,  he  shall  acquire  such  right,  title,  or  interest,  and 
no  further  or  other  than  was  possessed  by  the  factor  or  agent  at 
the  time  of  the  deposit  of  pledge,  {k) 

It  is  further  provided  {T)  that  this  act  shall  not  prevent  the  true 
owner  of  the  goods  from  recovering  them  from  his  factor  or  agent, 
before  a  sale,  deposit,  or  pledge,  or  from  the  assignees  of  such  fac- 
tor or  agent  in  the  event  of  his  bankruptcy,  nor  from  the  buyer  the 
price  of  the  goods,  subject  to  any  right  of  set-off  on  the  part  of  the 
buyer  against  the  factor  or  agent ;  nor  from  recovering  the  goods 
deposited  or  pledged  upon  payment  of  the  money,  or  restoration 
of  the  negotiable  instrument,  advanced  on  the  sojurity  thereof  to 
the  factor  or  agent ;  and  upon  payment  of  such  further  money,  or 
restoration  of  such  other  negotiable  instrument  (if  iiny)  as  may 
have  been  advanced  by  the  factor  or  agent  to  the  owner,  or  on 
payment  of  money  equal  to  the  amount  of  such  instrument ;  nor 
from  recovering  from  any  person  any  balance  remaining  in  his  hands 
as  the  produce  of  a  sale  of  the  goods,  after  deducting  the  money  or 
negotiable  instrument  advanced  on  the  security  thereof;  and,  in 
case  of  the  bankruptcy  of  the  factor  or  agent,  the  owner  of  the 
goods  so  pledged  and  redeemed  shall  be  held  to  have  discharged 
pro  tanto  his  debt  to  the  estate  of  the  bankrupt. 

This  act  having  proved  in  some  respects  unsatisfactory,  and 
having  been  much  canvassed  in' the  case  of  Phillips  v.  Huth^  and 
Hatfield  V.  Phillips,  9  M.  &  W.  648,  {m)  by  the  5  &  6  Vict.  c.  89,  re- 
citing the  6  Geo.  4,  c.  94,  and  reciting  that  under  it  advances  could 
not  safely  be  made  on  goods  or  documents  to  persons  known  to 
have  possession  as  agents  only,  and  reciting  that  it  is  necessary  that 


(i)  Sect.  5. 

(j)  The  words  "  as  a  security  for  any  money  or  negotiable  instrument,"  used  in 
sect.  2,  are  not  found  here.  A  fraudulent  sale  cannot  be  upheld  as  a  pledge  within 
the  meaning  of  this  section.    Thomas  v.  Farmer,  1  M.  &  M.  48. 

(A-)  And  therefore,  if  the  agent's  interest  in  the  thing  pledged  be  liable  to  be  de 
feated  by  the  performance  of  a  condition,  so  will  the  pledgee's.  Blandy  v.  Allen 
Dans.  &  Lloyd,  22.     Fletcher  v.  Heath,  7  B.  &  C.  517. 

(Z)  Sect.  6.  (w)  Ante,  note  (6). 


PRINCIPAL  AND  AGENT.  183 

Rights  of  third  Persons  against  Principal. 

the  same  protection  should  be  given  to  advances  on  goods  as  to 
sales,  and  that  owners  who  would  be  bound  by  a  contract  of  sale, 
should  be  bound  by  a  contract  of  lien  ;  and  reciting  that  the  act 
did  not  protect  exchanges  of  securities,  and  had  given  rise  to  much 
litigation,  it  was  enacted,  "  that  from  and  after  the  passing  of  that 
act  any  agent  who  shall  thereafter  be  intrusted  with  the  possession 
of  goods,  or  of  the  documents  of  title  to  goods,  shall  be  deemed 
and  taken  to  be  owner  of  such  goods  and  documents,  so  far  as  to 
give  validity  to  any  contract  or  agreement  by  way  of  pledge,  (n) 
lien,  or  security  bona  fide  made  by  any  person  with  such  agent  so 
intrusted  as  aforesaid,  as  well  for  any  original  loan,  advance,  or 
payment  made  upon  the  security  of  such  goods  or  documents,  as 
also  for  any  further  or  continuing  advance  in  respect  thereof;  and 
such  contract  or  agreement  shall  be  binding  upon  and  good  against 
the  owner  of  such  goods,  and  all  other  persons  interested  therein, 
notwithstanding  the  person  claiming  such  pledge  or  lien  may  have 
had  notice  that  the  person  with  whom  such  contract  or  agreement 
is  made  is  only  an  agent, 

II.  "  That  where  any  such  contract  or  agreement  for  pledge, 
lien,  or  security  shall  be  made  in  consideration  of  the  delivery  or 
transfer  to  such  agent  of  any  other  goods  or  merchandise,  or  docu- 
ment of  title,  or  negotiable  security,  upon  which  the  person  so  de- 
livering up  the  same  had  at  the  time  a  valid  and  available  lien  and 
security  for  or  in  respect  of  a  previous  advance  by  virtue  of  some 
contract  or  agreement  made  with  such  agent,  such  contract  and 
agreement,  if  bona  fide  on  the  part  of  the  person  with  whom  the 
same  may  be  made,  shall  be  deemed  to  be  a  contract  made  in  con- 
sideration of  an  advance  within  the  true  intent  and  meaning  of  this 
Act,  and  shall  be  as  valid  and  effectual,  to  all  intents  and  purposes, 
and  to  the  same  extent,  as  if  the  consideration  for  the  same  had  been 
a  bona  fide  present  advance  of  money  :  Provided  always,  that  the 
lien  acquired  under  such  last-mentioned  contract  or  agreement  upon 
the  goods  or  documents  deposited  in  exchange  shall  not  exceed  the 
value  at  the  time  of  the  goods  and  merchandise  which,  or  the  docu- 
ments of  title  to  which,  or  the  negotiable  security  which  shall  be 
delivered  up  and  exchanged. 

(n)  See  as  to  this  Learoyd  v.  Robinson,  12  M.  cfe  "W.  '745. 


J  84  MERCANTILE  PERSONS, 


Rights  of  third  Persons  against  Principal. 


III.  "  That  that  Act,  and  every  matter  and  thing  therein  con- 
tained, shall  be  deemed  and  construed  to  give  validity  to  such  con- 
tracts and  agreements  only,  and  to  protect  only  such  loans,  advances, 
and  exchanges,  as  shall  be  made  honajide,  and  without  notice  that 
the  agent  making  such  contracts  or  agreements  as  aforesaid  has  not 
authority  to  make  the  same,  or  is  acting  mala  fide  in  respect  thereof 
against  the  owner  of  such  goods  and  merchandise ;  and  nothing 
therein  contained  shall  be  construed  to  extend  to  or  protect  any 
lien  or  pledge  for  or  in  respect  of  any  antecedent  debt  owing  from 
any  agent  to  any  person  with  or  to  whom  such  lien  or  pledge  shall 
be  given,  nor  to  authorize  any  agent  intrusted  as  aforesaid  in  devi- 
atino-  from  any  express  orders  or  authority  received  from  the 
owner  ;  but  that  for  the  purpose  and  to  the  intent  of  protecting  all 
such  bona  fide  loans,  advances,  and  exchanges  as  aforesaid,  (though 
made  with  notice  of  such  agent  not  being  the  owner,  but  without 
any  notice  of  the  agent's  acting  without  authority,)  and  to  no  further 
or  other  intent  or  purpose,  such  contract  or  agreement  as  aforesaid 
shall  be  binding  on  the  owner  and  all  other  persons  interested  in 
such  goods. 

IV.  "  That  any  bill  of  lading,  India  w\arrant,  dock   warrant, 
warehouse-keeper's  certificate,  warrant,  or  order  for  the  delivery  of 
goods,  or  any  other  document  used  in  the  ordinary  course  of  busi- 
ness, as  proof  of  the  possession  or  control  of  goods,  or  authorizing 
or  purporting  to  authorize,  either  by  indorsement  or  by  delivery, 
the  possessor  of  such  document  to  transfer  or  receive  goods  thereby 
represented,  shall  bs  deemed  and  taken  to  be  a  document  of  title 
within  the  meaning  of  that  Act ;  and  any  agent  intrusted  as  afore- 
said, and  possessed  of  any  such  document  of  title,  whether  derived 
immediately  from  the  owner  of  such  goods,  or  obtained  by  reason 
of  such  agent's  having  been  intrusted  with  the  possession  of  the 
goods,  or  of  any  other  document  of  title  thereto,  shall  be  deemed 
and  taken  to  have  been  intrusted  Avith  the  possession  of  the  goods 
represented  by  such  document  of  title  as  aforesaid,  and  all  contracts 
pledging  or  giving  a  lien  upon  such  document  of  title  as  aforesaid 
shall  be  deemed  and  taken  to  be  respectively  pledges  of  and  liens 
upon  the  goods  to  which  the  same  relates ;  and  such  agent  shall  be 
deemed  to  be  possessed  of  such  goods  or  documents,  whether  the 
same  shall  be  in  his  actual  custody,  or  shall  be  held  by  any  other 


PRIiS^CIPAL  AND  AGENT.  185 

Rights  of  third  Persons  against  Principal. 

person  subject  to  his  control,  or  for  him  on  his  behalf;  and  where 
any  loan  or  advance  shall  be  bona  fide  made  to  any  agent  intrusted 
with  and  in  possession  of  any  such  goods  or  documents  of  title  as 
aforesaid,  on  the  faith  of  any  contract  or  agreement  in  writing  to 
consign,  deposit,  transfer,  or  deliver  such  documents  of  title  as  afore- 
said, and  such  goods  or  documents  of  title  shall  actually  be  received 
oy  the  person  making  such  loan  or  advance,  without  notice  that 
such  agent  was  not  authorized  to  make  such  pledge  or  security, 
every  such  loan  or  advance  shall  be  deemed  and  taken  to  be  a  loan 
or  advance  on  the  security  of  such  goods  or  documents  of  title 
within  the  meaning  of  that  Act,  though  such  goods  or  documents 
of  title  shall  not  actually  be  received  by  the  person  making  such 
loan  or  advance  till  the  period  subsequent  thereto ;  and  any  con- 
tract or  agreement,  whether  made  direct  with  such  agent  as  afore- 
said, or  with  any  clerk  or  other  person  on  his  behalf,  shall  be 
deemed  a  contract  or  agreement  with  such  agent ;  and  any  pay- 
ment made,  whether  by  money,  or  bills  of  exchange,  or  negotiable 
security,  shall  be  deemed  and  taken  to  be  an  advance  within  the 
meaning  of  that  Act ;  and  an  agent  in  possession  as  aforesaid  of 
such  goods  or  documents  shall  be  taken,  for  the  purposes  of  that 
Act,  to  have  been  intrusted  therewith  by  the  owner  thereof,  unless 
the  contrary  can  be  shown  in  evidence. 

V.  "  That  nothing  therein  contained  shall  lessen,  vary,  alter,  or 
affect  the  civil  responsibility  of  an  agent  for  any  breach  of  duty  or 
contract,  or  non-fulfilment  of  his  orders  or  authority,  in  respect  of 
any  such  contract,  agreement,  or  pledge  as  aforesaid. 

VI.  "  That  if  any  agent  intrusted  as  aforesaid  shall,  contrary  to 
or  without  the  authority  of  his  principal  in  that  behalf  for  his  own 
benefit  and  in  violation  of  good  faith,  make  any  consignment,  de- 
posit, transfer,  or  delivery  of  any  goods  or  documents  of  title  so  in- 
trusted to  him  as  aforesaid,  as  and  by  way  of  a  pledge,  lien,  or  se- 
curity ;  or  shall,  contrary  to  or  without  such  authority,  for  his  own 
benefit  and  in  violation  of  good  faith,  accept  any  advance  on  the 
faith  of  any  contract  or  agreement  to  consign,  deposit,  transfer,  or 
deliver  such  goods  or  documents  of  title  as  aforesaid ;  every  such 
agent  shall  be  deemed  guilty  of  a  misdemeanor,  and  being  con- 
victed thereof,  shall  be  sentenced  to  transportation  for  any  term  not 
exceeding  fourteen  years,  nor  less  than  seven  years,  or  to  suffer  such 


186  MERCANTILE  PERSONS. 

Rights  of  third  Persons  against  Principal. 

other  punishment  by  fine  or  imprisonment,  or  by  both,  as  the  Court 
shall  award ;  and  every  clerk  or  other  person  who  shall  knowingly 
and  wilfully  act  and  assist  in  making  any  such  consignment,  de- 
posit, transfer,  or  deliver}^,  or  in  accepting  or  procuring  such  ad- 
vance as  aforesaid,  shall  be  deemed  guilty  of  a  misdemeanor,  and 
being  convicted  thereof,  shall  be  liable,  at  the  discretion  of  the 
Court,  to  any  of  the  punishments  which  the  Court  shall  award,  as 
herein  before  last  mentioned :  Provided,  nevertheless,  that  no  such 
agent  shall  be  liable  to  any  prosecution  for  consigning,  depositing, 
transferring,  or  delivering  any  such  goods  or  documents  of  title,  in 
case  the  same  shall  not  be  made  a  security  for  or  subject  to  the  pay- 
ment of  any  greater  sum  of  money  than  the  amount  which  at  the 
time  of  such  consignment,  deposit,  transfer,  or  delivery  was  justly 
due  and  owing  to  such  agent  from  his  principal,  together  with  the 
amount  of  any  bills  of  exchange  drawn  by  or  on  account  of  such 
principal  and  accepted  by  such  agent :  Provided  also,  that  the  con- 
viction of  any  such  agent  so  convicted  as  aforesaid  shall  not  be  re- 
ceived in  evidence  in  any  action  at  law  or  suit  in  equity  against 
him,  and  no  agent  intrusted  as  aforesaid  shall  be  liable  to  be  con- 
victed by  any  evidence  whatsoever  in  respect  of  any  act  done  by 
him,  if  he  shall,  at  any  time  previously  to  his  being  indicted  for 
such  offence,  have  disclosed  such  act,  on  oath,  in  consequence  of 
any  compulsory  process  of  any  Court  of  law  or  equity  in  any  ac- 
tion, suit,  or  proceeding  which  shall  have  been  honafide  instituted 
by  any  party  aggrieved,  or  if  he  shall  have  disclosed  the  same  in 
any  examination  or  deposition  before  any  commissioner  of  bank- 
rupts. 

VII.  "  That  nothing  therein  contained  shall  prevent  such  owner 
as  aforesaid  from  having  the  right  to  redeem  such  goods  or  docu- 
ments of  title  pledged  as  aforesaid,  at  any  time  before  such  goods 
shall  have  been  sold,  upon  repayment  of  the  amount  of  the  lien 
thereon,  or  restoration  of  the  securities  in  respect  of  which  such 
lien  may  exist,  and  upon  payment  or  satisfaction  to  such  agent,  if 
by  him  required,  of  any  sum  of  money  for  or  in  respect  of  which 
such  agent  would  by  law  be  entitled  to  retain  the  same  goods  or 
documents,  or  any  of  them,  by  way  of  lien  as  against  such  owner, 
or  to  prevent  the  said  owner  from  recovering  of  and  from  such 
person  with  whom  any  such  goods  or  documents  may  have  been 


PRINCIPAL  AND  AGENT.  187 

Rights  of  third  Persons  against  Principal. 

pledged,  or  who  shall  have  any  such  lien  thereon  as  aforesaid,  any 
balance  or  sum  of  money  remaining  in  his  hands  as  the  produce  of 
the  sale  of  such  goods,  after  deducting  the  amount  of  the  lien  of 
such  person  under  such  contract  or  agreement  as  aforesaid :  Pro- 
vided always,  that  in  case  of  the  bankruptcy  of  any  such  agent  the 
owner  of  the  goods  which  shall  have  been  so  redeemed  by  such 
owner  as  aforesaid  shall,  in  respect  of  the  sum  paid  by  him  on  ac- 
count of  such  agent  for  such  redemption,  be  held  to  have  paid  such 
sum  for  the  use  of  such  agent  before  his  bankruptcy,  or  in  case  the 
goods  shall  not  be  so  redeemed,  the  owner  shall  be  deemed  a  credi- 
tor of  such  agent  for  the  value  of  the  goods  so  pledged  at  the  time 
of  the  pledge,  and  shall,  if  he  shall  think  fit,  be  entitled  in  either  of 
such  cases  to  prove  for  or  set  off  the  sum  so  paid,  or  the  value  of 
such  goods,  as  the  case  may  be."* 

When  an  agent  having  a  proper  authority  purchases  in  the 
name  of  his  principal,  it  is  clear  from  what  has  been  said,  that  the 
principal  is  bound  to  the  vendor :  if,  however,  the  vendor,  prefer- 
ring the  credit  of  the  agent  to  that  of  the  principal,  agree  with  the 
former  to  accept  him  as  his  debtor  instead  of  the  latter,  he  cannot 
afterwards  alter  his  election,  turn  round  and  charge  the  principal.  (o)f 
But  it  often  happens,  that  a  broker  purchases  in  his  own  name 
without  disclosing  that  he  has  any  j^rincipal  :  v/here  this  takes 
place,  the  broker  is  of  course  the  person  to  whom  the  vendor  o-iyes 
credit;  yet,  if  he  afterAvards  discover  the  j^rincipal,  he  may  elect 
to  abandon  the  responsibility  of  his  broker,  and  charge  him  :  {p) 

(o)  Paterson  v.  Gandasequi,  15  East,  62.  Addison  v.  Gandasequi,  4  Taunt.  5*74 
2  Smith's  L.  C.  205. 

{p)  Railton  v.  Hodgson,  4  Taunt.  5Y6,  n.  "Wilson  v.  Hart,  7  Taunt.  295.  The  law 
of  evidence  opposes  no  obstacle  to  the  exercise  of  this  election  even  where  the  con- 


f 


*  The  English  statute  has  been  retained  in  the  text,  because  it  is  the  basis  of 
Bimilar  provisions  in  most  of  the  States  of  the  Union ;  as  for  example,  in  New  York 
Pennsylvania,  Rhode  Island,  Ohio,  Ac. 

f  In  the  case  of  Raymond  v.  Crown  &  Eagle  Mills,  3  Met.  219,  it  was  held  that 
this  rule  was  confined  to  the  case  of  a  vendor,  who  at  the  time  of  sale  to  the  agent, 
had  actual  knowledge  of  his  principal,  and  did  not  preclude  a  vendor  who  was 
eimply  possessed  of  the  means  of  informing  himself,  and  who  originally  credited  the 
ftgent,  from  subsequently  resorting  to  the  principal.  The  English  authorities  are 
•oUectcd  and  reviewed  by  Mr.  Smith,  in  vol.  2,  page  222,  of  his  Leading  Cases. 


188  MERCANTILE  PERSONS. 

Rights  of  third  Persons  against  Principal. 

and  so  he  may,  if  the  broker,  on  making  the  purchase,  stated  him- 
self to  be  an  agent,  but  omitted  to  state  the  name  of  his  principal, 
which  is  afterwards  discovered :  {q)  unless,  in  either  of  these  cases, 
the  seller  have  suffered  the  time  for  payment  to  elapse,  and  the 
principal  to  alter  the  state  of  his  account  with  the  broker  in  such 
a  manner  that  he  would  be  a  loser  if  called  on  to  pay  to  the  seller,  (r) 
for  then,  indeed,  sooner  than  that  the  principal  should  be  injured, 
the  seller  will  be  taken  to  have  selected  the  agent  for  his  debtor,  (s) 
But  if  the  time  for  payment  have  not  elapsed,  the  principal  cannot, 
by  prematurely  settling  with  his  agent,  deprive  the  seller  of  hia 
election,  {i)  It  seems  also  to  be  a  rule  that  whenever  the  agent 
is  an  English,  and  the  jprincipal  a  foreign  merchant,  ihe  seller  will 
be  considered  as  having  given  credit  to  the  Englishman,  and  that 
he,  and  not  the  foreigner,  is  liable,  {u) 

Though  the  foregoing  observations  chiefly  refer  to  contracts, 
the  principal  will  be  equally  bound  by  any  act  done  by  the  agent 
m  the  course  of  his  employment  and  with  reference  to  the  object 
of  it;  for  a  man  cannot  depute  another  to  transact  his  business  and 
refuse  to  be  responsible  for  his  conduct  in  transacting  it.  There- 
fore, the  representation  of  the  agent  about  the  subject  matter  of  a 
contract,  which  he  is  negotiating  for  his  principal,  will,  if  made  du- 
ring  the  course  of  that  negotiation^  bind  the  latter ;  (y)  but  it  must  be 
made  during^  and  in  the  course  of  the  negotiation,  while  the  agent  is 
actually  representing  his  principal  therein,  for  if  made  at  any  other 
time  it  has  no  more  effect  than  that  of  a  mere  stranger,  {lo)  So  a>so 
the  suppression  or  misrepresentation  by  an  agent  of  a  material  fact 


tract  is  in  writing,  for  if  the  principal  allow  the  agent  to  contract  for  him  in  his  (the 
agent's  name),  that  name  becomes,  for  the  pm-poses  of  the  contract,  his  own.  True- 
man  V.  Loder,  11  A.  &  E.  594. 

{q)  Tliompson  v.  Davenport,  9  B.  &  C.  78.    2  Smith's  L.  C.  212. 

(r)  For  instances  in  which  such  alterations  in  the  accounts  have  been  treated  aa 
material,  see  Robinson  v.  Read,  9  B.  <fc  C.  449.  "Wyatt  v.  Marquis  of  Hertford,  3 
East,  147. 

(s)  See  Th-ompson  v.  Davenport,  Kymer  v.  Suwercropp,  1  Camp.  109. 

{t)  Kj'mcr  V.  Suwercropp,  1  Camp.  109. 

(m)  Paterson  v.  Gandasequi.     Thompson  v.  Davenport 

\v)  Peto  V.  Hague,  5  Esp.  134.     Phill.  on  Ev.  7th  edit.  Vol.  I.  p.  99. 

(w)  Phill.  on  Ev.  ubi  supra.  Dawson  v.  Aiiy,  7  East,  367.  Snowball  v.  Good- 
ricke,  4  B.  &  Ad.  541. 


PEINCIPAL  AND  AGENT.  189 


Rights  of  third  Persons  against  Principal. 


vitiates  an  insurance,  although  that  fact  may  have  been  known 
only  to  him,  not  to  his  principal ;  (x)  for  notice  to  the  agent  is  con- 
sidered in  law  notice  to  the  principal^  who  is  taken  to  know  every 
thing  about  a  transaction  that  his  agent  in  it  knows,  (y)  and  via 
versa,  notice  to  the  principal  is,  where  that  becomes  material,  gener- 
ally speaking  (2)  at  least,  notice  to  the  agent,  (a)  And  as  the  agentV 
representation  binds  the  principal,  so  is  the  former's  admission  ol 
a  fact  evidence  against  the  latter  of  its  truth.  (Z>)  But  the  admis 
sion  must,  like  the  representation,  concern  a  matter  in  which  the 
agent  is  employed  to  act  for  his  principal,  and  must  be  made  du- 
ring, and  in  the  course  of  such  employment ;  (c)  to  use  the  words  of 
Gibbs,  J.,  in  Langhorne  v.  Allnut,  "  where  it  is  proved  that  A.  is  agent 
for  B.,  whatever  A.  does,  or  says,  or  writes  in  the  making  of  a  con- 
tract as  agent  for  B.,  is  admissible  in  evidence,  because  it  is  part 
of  the  contract  which  he  makes  for  B.,  and  therefore  binds  B. ;  but 
it  is  not  admissible  as  his  account  of  what  passes."  In  consequence 
of  the  wording  of  the  9  Geo.  4,  c.  14,  it  has  been  decided  that  an 
acknowledgment  written  and  signed  by  an  agent  will  not  take  a 
debt  out  of  the  Statute  of  Limitations,  as  against  the  principal.  (cZ) 

{x)  Fitzherbert  v.  Mather,  1  T.  R.  12.  See  Soaman  v.  Fonnereau,  Str.  1183. 
Roberts  v.  Fonnereau,  Beawes,  266.  Edwards  v.  Footner,  1  Camp.  530.  Fillis  v.  Bar- 
ton, Park.  182. 

(y)  Willis  V.  Bank  of  England,  4  A.  <fe  E.  21.  Cowen  v.  Simpson,  1  Esp.  290 
Brotherton  v.  Hall,  Vernon,  5*74.  Jennings  v.  Moore,  2  Ves.  G09.  See  also  Ambl.  438. 
Sheldon  v.  Cox,  2  Eden,  224.     Doe  v.  Martin,  4  T.  R.  66.     Toulmin  v.  Steer,  3  Meriv.  210 

{z)  These  words  have  been  added  on  account  of  the  qualificaftion  which  this  doc- 
trine seems  to  have  undergone  from  Cornfoot  v.  Fowke,  6  M.  <fe  Wels.  358 ;  a  case, 
the  authority  of  which  seems  however  to  be  doubtful,  and  has  now  been  denied  in 
Fuller  V.  AVilson,  3  Q.  B.  58.  This  ease  was  reversed  on  error,  but  upon  a  different 
ground ;  3  Q.  B.  79  ;  see  Evans  v.  Collins,  5  Q.  B.  804.     Collins  v.  Evans,  ibid.  820. 

(a)  Willis  V.  Bank  of  England,  4  A.  &  E.  21. 

(6)  Harding  z).  Carrer,  Park.  4.  Palethorp  v.  Furnish,  2  Esp.  511.  Anderson  v. 
Sanderson,  2  Stark.  204.  Gregory  v.  Parker,  1  Camp.  894.  Clifford  v.  Burton,  1 
Bingh.  199.     Jacobs  v.  Humphrey,  4  Tyrwh.  2*72.     2  C.  <fe  M.  413. 

(c)  Fairlie  v.  Hastings,  10  Ves.  jun.  123.  Langhorn  v.  Allnut,  4  Taunt.  511. 
Kalh  V.  Johnson,  ibid.  565.  See  Garth  v.  Howard,  8  Bingh.  451.  Snowball  v.  Good- 
rieke,  4  B.  &  Ad.  541.  It  has  been  held,  that  if  one  man  refer  to  the  evidence  or 
opinion  of  another,  that  evidence  or  opinion  is  given  by  the  other  as  his  agent,  and 
is  receivable  against  him  by  way  of  admission.  Daniel  v.  Pitt,  Peake,  238.  William 
V.  Innes,  1  Camp.  364.     Sybray  v.  White,  1  Mee.  &  Wels.  435. 

((f)  Hyde  v.  Johnson,  2  Bingh.  K  C.  7*76. 


190  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


Payment  or  tender  of  payment  to  an  agent  in  the  course  of  his  em- 
phijment  is  2)a2jment  or  tender  of  j^aijment  to  the  principal,  (e)  but  the 
payment  must  be  in  the  course  of  his  employment,  (/)  for  otherwise  he 
will  liave  no  express  authority,  and  tbere  will  be  nothing  whence 
to  deduce  the  existence  of  an  implied  one;   therefore,  if  a  man 
comes  to  pay  a  mortgage  debt  to  a  merchant  at  his  counting-liouse, 
and  Days  it  to  a  clerk,  or  if  an  executor  pays  a  legacy  left  to  a 
tradesman  to  a  shopman  serving  in  his  shop,  who  has  been  in  the 
habit  of  receiving  liis  weekly  bills,  in  neither  of  these  cases  would 
there  be  a  good  payment  to  the  master,  {g)     It  is  not  in  the  course 
of  a  hroher's  business  to  receive  payment  for  goods,  the  sale  of 
which  he  has  negotiated ;  (A)  unless  he  be  acting  for  an  undisclosed 
principal,  {i)     An  insurance  broker  has  a  right  to  receive  payment 
of  a  loss  ;  but  he  must  not,  in  the  absence  of  any  evidence  of  con- 
sent to  such  a  course  on  the  part  of  the  assured,  set  it  off  against 
his  own  debt  to  the  underwriter ;  (j)  for  "it  is  a  general  rule  of 
law,  that  if  a  creditor  employ  an  agent  to  receive  money  of  a  debtor, 
and  the  agent  receives  it,  the  debtor  is  discharged  as  against  the  princi- 
pal; but  if  the  agent,  instead  of  receiving  money,  write  off  money  due 
from  him  to  the  debtor,  then  the  latter  is  not  discharged^  {IS)"    Where, 


(e)  Favenc  v.  Bennett,  11  East,  38.  See  6  G.  4,  c.  94,  s.  4,  a7ite,  p.  181 ;  and  where 
an  ao-ent  has  a  right  to  receive  payment,  a  tender  thereof  to  him  is  a  tender  to  his 
principal.  Goodland  v.  Blewith,  1  Camp.  477.  Moffat  v.  Parsons,  1  Marsh.  55 ;  6 
Taunt.  307.     Kirton  v.  Braithwaite,  1  M.  &  Wels.  310. 

(/)  Sykes  v.  Giles,  5  M.  &  W.  C45. 

Iff)  Sanderson  v.  Bell,  2  Cr.  &  Mee.  304 ;  4  Tyrwh.  244. 

(/i)  Baring  v.  Corrie,  2  B.  &  A.  137.  Blackburne  v.  Scholes,  2  Camp.  343.  See 
Mynne  v.  Joliffe,  1  M.  &  Rob.  327. 

(«■)  Blackburne  v.  Scholes,  ubi  sup. 

(j)  Todd  V.  Reid,  4  B.  &  A.  210,  (which  is,  however,  incorrectly  reported,  ^er 
Parke,  B.,  in  Stewart  v.  Aberdein,  4  M.  &  TV.  224.)  Russell  v.  Bangley,  ibid.  395. 
Bartlett  v.  Pentland,  10  B.  &  C.  760.  Scott  v.  Irving,  1  B.  &  Ad.  605.  The  principal 
may  of  course  render  such  a  transaction  good  by  adopting  it.  Gibson  v.  "Winter,  5 
B.  &  Ad.  99. 

(A-)  Per  Abbott,  L.  C.  J.,  in  Russell  v.  Bangley,  4  B.  <fe  A.  395.  Young  v.  White, 
7  Beav.  506. 


*  For  a  discussion  and  application  of  this  rule  to  the  case  of  an  attorney,  see 
Wilkinson  v.  HoUoway,  7  Leigh.  277. 


PRINCIPAL  AND  AGENT.  191 

Rights  of  thii'd  Persons  against  Principal. 

however,  tlie  usual  course  of  trade  warrants  the  receipt  of  a  check, 
note,  or  bill,  payment  in  that  way  to  an  agent  will  discharge  the 
debior,  unless  indeed  the  agent  be  a  particular  one,  and  such  a 
course  be  inconsistent  with  his  instructions.  (Z)  And  though  the 
general  rule  is,  as  has  just  been  stated,  in  the  words  of  the  late 
learned  Lord  Chief  Justice  of  the  Queen's  Bench,  yet  it  is  held, 
that  "  where  an  insurance  broker  or  other  mercantile  agent  has 
been  employed  to  receive  money  for  another,  in  the  general  course 
of  his  business,  and  where  the  known  general  course  of  business  is 
for  the  agent  to  keep  a  running  account  with  the  principal,  and  to 
credit  him  with  the  sums  which  he  may  have  received,  by  credits 
in  account  with  the  debtors,  with  whom  he  also  keeps  running  ac- 
counts, and  not  merely  with  moneys  actually  received,  the  above 
rule  cannot  properly  be  applied,  but  it  must  be  understood  that, 
where  an  account  is  bond  fide  settled,  according  to  that  known  usage, 
the  original  debtor  is  discharged,  and  the  agent  becomes  the  debt- 
or, according  to  the  meaning  and  intention,  and  with  the  authority 
of  the  principal."  {m)  Payment  to  an  agent,  moreover,  in  order  to 
be  good,  must  be  specifically  appropriated  to  the  debt  due  to  his 
principal,  not  made  upon  a  general  account,  {n)  A  factor  is,  by  the 
nature  of  his  employment,  authorized  to  receive  payment  for  the 
goods  of  which  he  disposes,  yet  a  payment  even  to  him  will  not 
exonerate  a  debtor  who  has  received  express  notice  from  the  creditor 
not  to  pay  his  factor,  (o)  However,  if  the  creditor  be  indebted  on 
the  balance  of  account  to  the  factor,  the  debtor  will  be  exonerated 
by  a  payment  to  the  latter:  for  a  factor  has,  as  we  shall  see  in  the 
Fourth  Book,  a  lien  for  the  general  balance  of  his  account  upon 
the  price  of  goods  which  he  has  sold,  {p) 

When  money  is  due  upon  a  Avrittcn  security,  such  as  a  bill  or 
bond,  it  is  the  duty  of  the  debtor,  if  he  pay  to  an  agent,  to  see  that 
such  agent  is  in  possession  of  the  security,  for  otherwise  it  is  said 

(/)  Thorold  v.  Smith,  11  Mod.  Tl,  88.  Ward  v.  Evans,  2  Ld.  Raym.  930;  2  Sal. 
442.     See  Partridge  v.  Bank  of  England.  15  L  J.  Q.  B.  395. 

(m)  Per  cur.  Stewart  v.  Aberdein,  4  M.  &  W.  211,  228, 

(«)  See  Bartlett  v.  Pentland,  ubi  sup. 

(o)  Mann  v.  Forrester,  4  Camp.  60.     B.  N.  P.  130. 

{p)  Drinkwater  v.  Goodwin,  Cowp.  251.  Hudson  v.  Granger,  5  B.  &  A.  27.  Se« 
Wainer  v.  M'Kay,  1  M.  &  W.  595. 


192  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


that  he  will  not  be  discharged  unless  the  money  reach  the  princi- 
pal, or  unless  he  can  prove  that  the  agent  really  was  deputed  to 
receive  that  money ;  not  even  though  the  agent  to  whom  he  pays 
may  have  been  usually  employed  to  receive  money,  (q)  for  his  non- 
production  of  the  security  rebuts  the  implication  of  authority  aris- 
ing from  such  his  employment. 

As  payment  to  an  authorized  agent  is  payment  to  his  principal, 
so  a  delivery  to  the  former  is  a  delivery  to  the  latter :  thus,  a  de- 
livery of  goods  to  a  carrier's  servant  is  a  delivery  of  them  to  the 
carrier ;  all  these  instances,  and  many  others,  only  exemplify  that 
general  maxim  upon  which  the  whole  law  of  principal  and  agent 
hinges,  Quifacitj^er  alium  facit  i^er  se. 

Hitherto  we  have  only  considered  the  responsibility  of  the  prin- 
cipal to  third  parties,  in  consequence  of  contracts,  and  acts  connected 
with  such  contracts ;  but  he  is  also  liable,  and  that  to  a  considerable 
extent,  for  lorongs  committed  by  his  agent  while  engaged  in  his 
service.  He  will,  of  course,  be  so  in  every  instance  in  which  he 
has  expressly  commanded  the  wrong  to  be  done,  or  given  orders 
which  could  be  executed  only  by  its  commission ;  (r)  and  there  are 
many  instances  in  which  it  requires  no  express  command  to  make 
.him  answerable. 

Thus  he  is  responsible  for  the  negligence  of  his  agent,  acting  m 
the  prosecution  of  his  business,  though  not  under  his  immediate 
direction ;  as  if  one  of  his  servants  lame  a  customer's  horse  in  shoe- 
ing him,  or  drive  his  master's  carriage  so  unskilfully  that  it  injures 
the  person  or  property  of  a  stranger;*  innumerable  other  cases 

(j)  Hen  V.  Caisby,  1  Cha.  Ca.  93,  n.     Gerard  v.  Baker,  1  Cha.  Ca.  94.     D.  of  Clevo 
land  V.  Dashwood,  2  Eq.  Ca.  Ab.  709.    Wosteuholme  v.  Davies,  2  Freem.  289. 


(r)  Gregory  v.  Piper,  9  B.  &  C.  591. 


*  The  liability  of  a  master  for  the  negligence  of  his  servants,  is  confined  to  stran- 
gers, and  does  not  extend  so  far  as  to  render  him  responsible  to  one  servant  for  an 
injury  arising  from  the  carelessness  of  another  who  is  engaged  in  the  same  general 
business.  This  principle  was  discussed  and  affirmed  in  the  recent  case  of  Farwell  v. 
The  Boston  and  Worcester  Railroad  Corporation,  4  Met.  49,  and  subsequently  recog- 
nized and  approved  in  Brown  v.  Maxwell,  6  Hill,  592.  Albro  v.  Agawam  Canal  Co., 
6  Curt.  Y5.  Hutchinson  v.  York,  Newcastle  and  Berwick  Railway,  5  W.  H.  &  G.  343, 
ib.  354.     The  doctrine,  after  elaborate  discussion,  has  been  denied  in  Ohio,  Stevens 


PRINCIPAL  AND  AGENX  I93 

Rights  of  third  Persons  against  Principal. 

might  be  put  illustrating  the  general  principle,  (s)  which  seems  to 
extend  so  far  as  to  make  the  employer  responsible,  at  least  in  some 
cases,  not  only  for  the  act  of  his  immediate  agent,  but  for  that  of  a 
sub-agent  employed  by  him.  Thus,  where  A.  employed  B.  to  re- 
pair his  house,  B.  contracted  with  C.  to  do  the  work,  and  C.  with 
J),  to  furnish  the  materials,  which  D.'s  servant  carelessly  left  on  the 
road,  and  thereby  caused  an  injury  to  the  plaintiff,  it  was  held  that 
A.  was  answerable  for  the  mischief,  (t) 


(«)  Brucker  v.  Fromont,  6  T.  R.  659.  See  1  Raym.  739.  Hurry  v.  Rickman,  2 
M.  &  R.  126.  Leslie  v.  Pounds,  4  Taunt.  649.  "Weyland  v.  Elkins,  Holt,  227  ;  1  Stark. 
272.     See  Lyons  v.  Martin,  8  A.  &  E.  512. 

(t)  Bush  V.  Steinman,  1  B.  <fe  P.  404.  Matthews  v.  "West  Midd.  W.  W.  Company, 
3  Camp.  403.  Harris  v.  Baker,  4  M.  &  S.  27.  "Weyland  v.  Elkins,  supra.  See  the 
great  case  of  Laugher  v.  Pointer,  5  B.  &  C.  647,  in  which  thfe  Court  of  K  B.  was 
equally  divided,  and  all  the  authorities  and  arguments  pro  and  con  fully  discussed ; 
it  was  a  case  in  which  the  defendant  hired  job-horses  and  a  coachman  from  a  livery 
stable  keeper  to  draw  his  own  carriage,  and  the  coachman,  who  was  selected  and 
paid  by  the  livery  stable  keeper,  drove  the  carriage  against  the  plaintiff's  horse. 
Abbott,  C.  J.,  and  Littledale,  J.,  who  held  the  defendant  not  to  be  liable,  distin- 
guished Bush  V.  Steinman,  on  the  ground  that  the  tort  there  happened  in  the  course 
of  an  operation  on  the  defendant's  real  property,  and  was  therefore  in  the  nature  of 
a  nuisance ;  and  asked  whether  the  employer  of  a  hackney  coachman,  or  a  water 
man,  or  the  hirer  of  post-horses  would  be  liable  for  injuries  done  thereby.  Bayley 
J.,  and  Holroj'd,  J.,  contra,  conceded  that  the  employer  would  in  those  cases  be  irre- 
sponsible, but  distinguished  them  by  founding  such  irresponsibility  on  usage  and  the 
public  nature  of  those  employments.  See  Smith  v.  Lawrence,  2  M.  <fe  R.  1.  Fenton 
V.  C.  of  Dublin  Steam  Packet  Co.,  8  A.  <fe  E.  835.  Goodman  v.  Rennel,  1  M.  &  P.  241. 
Brady  v.  Giles,  1  M.  &  Rob.  494,  where  Lord  Abinger  left  the  question,  "  as  whose 


V.  Miami  Railroad  Co.,  20  Ohio.  Priestly  v.  Fowler,  3  Mees.  &  Welb.  1,  and  Murray 
V.  The  Souih  Carolina  Railroad  Co.,  1  McMullan,  385,  were  referred  to  in  argument 
of  the  case  in  Massachusetts,  as  sanctioning  the  rule,  which  was  there  adopted.  The 
case  being  one  of  recent  impression,  and  some  difficulty,  the  court  threw  out  a 
caution  against  any  hasty  conclusion  as  to  the  application  of  the  rule  to  cases  not 
falling  directly  within  the  principle.  The  general  doctrine  was  recognized  and  ap- 
proved by  the  Supreme  Court  of  Georgia,  in  Scudder  v.  "Woodbridge,  1  Kelly's  Rep. 
195,  but  it  was  held  not  applicable  where  one  servant  was  a  slave, 

*  In  various  American  cases,  the  doctrine  of  Bush  v.  Steinman,  and  Randleson  v. 
Murray,  which  seem  to  have  been  overruled  by  the  later  English  decisions,  has 
been  followed.  Lowell  v.  Boston  and  Lowell  Railroad  Co.,  23  Picker.  24.  Mayor  of 
New  York  v.  Baily,  2  Denio,  433.  See  also  Peachy  v.  Rowland,  16  E.  L.  &  E.  Rep. 
442. 

13 


194  MERCANTILE  PERSONS 


Riglits  of  third  Persons  against  Principal. 


But  though  the  employer  is  answerable  for  the  negligence  of  his 
agent  while  engaged  in  his  service,  yet  he  is  not  so  for  his  wilful 
and  malicious  trespass:  thus,  "if  a  servant  driving  a  carriage,  in 
order  to  effect  some  purpose  of  his  own,  wantonly  strike  the  horses 
of  another  person  and  produce  the  accident,  the  master  is  not  liable, 
though  if,  intending  to  effect  his  master's  orders,  he  strike,  but  in- 
judiciously, and  to  extricate  himself  from  a  difficulty,  that  will  be 
nefflio'ent  and  careless  conduct  for  which  the  master  will  be  liable, 
being  an  act  done  in  pursuance  of  the  servant's  employment."  {uf 


servant  was  the  driver  acting,"  to  the  jury.  In  Randleson  v.  Murray,  8  Ad.  &  Ell. 
113,  a  warehouseman  employed  a  master-porter  to  remove  a  barrel  from  his  ware- 
house, the  master-porter  employed  his  own  ratn  and  tackle,  and  through  the  neglect 
of  the  men  the  tackle  broke  and  the  plaintiff  was  injured.  Held,  that  he  might 
recover  from  the  warehouseman.  In  Quarman  v.  Burnett,  6  M.  &  Wels.  499,  the 
same  point  which  had  been  argued  in  Laugher  v.  Pointer  arose  in  the  Court  of 
Exchequer,  who  decided  in  favor  of  the  view  taken  by  Lord  Tenterden  and  Mr. 
Justice  Littledale.  However,  assuming  that  the  view  taken  by  the  Court  of  Ex- 
chequer in  that  case  be  ultimately  allowed  to  be  correct,  as  in  all  probability  it  will 
be,  care  must  be  taken  to  distinguish  between  the  case  in  which  a  man  is  sued  for 
the  act  of  the  servant  of  another  with  wliom  he  has  contracted,  and  the  case  in 
which  he  is  sued  for  the  act  of  one  whom  he  has  authorized  another  to  retain  as  his 
agent.  "  Upon  the  principle  that  qxd  facit  per  aliumfacit  per  se,  the  master  is  respon- 
eible  for  the  acts  of  his  servant,  and  that  person  is  undoubtedly  liable  who  stood  in 
the  relation  of  master  to  the  wrong-doer — he  who  had  selected  hira  as  his  servant 
fi'om  a  knowledge  of  or  belief  in  his  skill  and  care,  and  who  could  remove  him  for 
misconduct,  and  whose  orders  he  was  bound  to  receive  and  obey.  And  whether 
that  servant  l\<i?  been  appointed  b}'  the  master  directly  or  intermediately  through  the 
intervention  of  an  agent  authorized  by  him  to  appoint  servants  for  him,  can  make  no 
difference."  Per  Parke,  B.,  in  Quarman  v.  Burnett,  uhi  supra.  Quarman  v.  Burnett 
lias  since  been  acted  on  in  Rajison  v.  Cubitt^  9  M.  <fe  W.  710;  and  see  Milligan  v. 
Wedge,  12  Ad.  &  Ell.  737.  The  case  too  of  persons,  who  in  the  prosecution  of  a 
lawful  work  enter  into  a  contract  with  a  third  person  for  its  performance,  seems  to 
be  wholly  distinguishable  from  that  of  the  employment  of  a  mere  servant.  There 
eeems  to  be  no  reason  for  holding  them  responsible  for  acts  which  they  never  autlio 
rized  or  even  contemplated,  and  for  acts  done  by  an  independent  person  against 
whom  they  could  only  have  redress  for  deviations  from  his  engagement  injurious  to 
themselves.  See  Allen  v.  Hayward,  15  L.  J.  Q.  B.  99.  Burgess  v.  Gra}-,  1  C.  B.  578. 
(?i)  Per  curiam  Croft  v.  Alison,  4  B.  <fe  A.  590.  McManus  v.  Crickett,  1  East,  106. 
Lyou3  V.  Martin,  8  A.  &  E.  512.     See  Hurry  v.  Rickman,  1  M.  &  Rob.  126  ;  sed  qucere 


*  The  extent  of  the  master's  liability  for  the  acts  of  hij  ser^apt  jvas  considered  by 
the  Supreme  Court  of  the  United  States,  in  the  case  of  the  Philadelphia  and  Reading 


PRINCIPAL  AND  AGENT.  195 

Rights  of  third  Persons  against  Principal. 

The  principal  has  been  thought  to  be  responsible,  not  merely 
for  the  neo^lio-ence  but  for  the  deliberate  fraud  of  his  agent  com- 
mitted  in  the  execution  of  his  employment,  though  without  the 

whether  the  principal's  responsibility  be  not  too  largely  described  in  that  case. 
Huzzey  v.  Field,  2  C.  M.  &  R.  432.  It  may  be  remarked,  that  there  is  an  exception 
in  the  case  of  some  public  officers,  such  as  the  postmaster-general,  coiTimissioners  of 
customs  and  excise,  auditors  of  the  exchequer,  Ac,  who  are  not  liable  for  the  acta 
of  their  inferior  officers,  nor  is  the  captain  of  a  man-of-war  responsible  for  the  mis- 
conduct of  the  lieutenant,  if  there  is  none  on  his  own  side.  Nicholson  v.  Mounscy, 
15  East,  884.  Lane  v.  Cotton,  1  Ld.  Raym.  646;  Com.  100.  "Whitfield  v.  Lord  Le 
Despencer,  Cowp.  754.  See  St.  de  Scaceario,  51  H.  3,  stat.  5,  ss.  7  &  8,  and  stat.  21 
E.  3,  c.  21,  de  proditionibus ;  but  this  exemption  does  not  extend  to  the  privaie  agents 
of  such  public  officers.  Dj'.  161 ;  3  Mod.  323,  nor  to  sheriffs,  2  Esp.  507;  Roll.  Ab. 
92,  pi.  2  ik  S;  see  Morris  v.  Parkinson,  4  Tyr.  700,  1  C.  M.  &  R.  163,  except  when 
actmg  in  their  judicial  capacity'.  Turner  v.  Morris,  4  Dowl.  225.  For  it  is  a  general 
rule  that  the  law  looks  to  the  sheriff,  and  to  him  alone ;  he  is  responsible  even  for 
tlie  bailiff's  wilful  misconduct  or  deliberate  fraud ;  "lie  is  identified  with  his  officers  in 
every  case,  except  where,  as  in  Crowder  v.  Long,  8  B.  <fe  C.  598,  the  party  opposed 
to  the  sheriff  is  colluding  with  the  officer."  Raphael  v.  Goodman,  8  A.  &  E.  565. 
Smart  v.  Hutton,  ibid.  568.  Owners  and  masters  of  ships  obliged  by  statute  to  em- 
ploj'  licensed  pilots,  are  exonerated  from  responsibilit}'  for  their  conduct.  6  Geo.  4, 
c.  125. 


Railroad  Company  v.  Derby,  14  How.  S.  C.  R.  468.  A  suit  had  been  brought  against 
the  conijiany  by  a  person  injured  by  a  collision.  It  appeaa-ed  that  the  plaintiff  was 
riding  in  a  special  car,  upon  the  invitation  of  the  president  of  the  company,  paying 
no  fare,  and  that  the  engineer  having  the  control  of  the  colliding  locomotive  was 
forbidden  to  run  upon  the  track  at  the  time,  and  had  acted  in  disobedience  to  his 
orders.  The  Court  sustained  the  action.  J.  Grier  delivering  the  opinion  of  the  Court, 
saj's :  "We  find  no  case  which  asserts  the  docti'ine  that  a  master  is  not  liable  for  the 
acts  of  a  servant  in  his  employment,  when  tlie  particular  act  causing  the  injury  was 
done  in  disregard  of  the  general  orders  or  special  command  of  the  master.  Such  a 
qualification  of  the  maxim  respondeat  superior  would  in  a  measure  nullify  it.  A  large 
proportion  of  the  accidents  on  railroads  are  caused  by  the  negligence  of  the  agents 
of  the  company.  Nothing  but  the  most  stringent  enforcement  of  discipline,  and  the 
roost  exact  and  perfect  obedience  to  every  rule  and  order  emanating  from  a  superior, 
can  insure  safety  to  life  and  propert}'.  The  Intrusting  such  a  dangerous  and  power- 
ful engine  as  a  locomotive  to  one  who  will  not  submit  to  control,  and  render  implicit 
obedience  to  orders,  is  itself  an  act  of  negligence,  the  '^  causa  caicsans"  of  the  raia- 
chicf,  wh'.le  the  proximate  cause,  or  the  ipsa  neyligentia  which  produces  it,  may 
trulj'  be  said,  in  most  cases,  to  be  the  disobedience  of  orders  by  the  servant  bo  in- 
trusted. If  such  disobedience  could  be  set  up  by  a  railroad  company  as  a  defence, 
when  charged  with  negligence,  the  remed}'  of  the  injured  party  would  in  most  cases 
be  illusive,  discipline  would  be  relaxed,  and  the  danger  to  the  life  and  limb  of  the 


196  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


principal's  authority;  as,  for  instance,  by  selling  false  jewels  foi 
true  ones :  the  reason  given  for  this  by  Lord  C.  J.  Holt  appears  a 
sensible  one.  "Seeing,"  says  he,  "that  some  one  must  be  a  losei 
by  the  deceit,  it  is  more  reasonable  that  he  who  employs  and  con- 
fides in  the  deceiver,  should  be  the  loser,  tban  a  stranger."  (v)  Such 
certainly  was  the  opinion  of  the  Roman  lawyers,  '^  Procuratoris 
scientiam  et  dolum  nocere  debere  domino^  neque  Fom/ponius  duhitat 
neque  nos  duhitamusy     Dig.  14,  tit.  4,  Ulpian. 

In  general,  the  principal  is  not  criminalhj  responsible  for  the 
act  of  his  agent,  unless  he  expressly  commanded  it.  {w)  However, 
in  a  case  of  indictment  for  libel,  it  was  held,  that  the  person  who 
derived  profit  from,  and  furnished  the  means  of  carrying  on,  a 
newspaper,  intrusting  the  publication  to  one  whom  he  selected,  and 
in  whom  he  confided,  would  be  criminally  answerable  for  what 
appeared  therein,  though  it  could  not  be  shown  that  he  was  con- 
cerned in  the  individual  publication ;  (x)  so  in  informations  for 
breaches  of  the  revenue  laws,  the  employment  of  an  agent  in  the 
defendant's  usual  course  of  business  has  been  held  sufficient  evidence. 


iy)  See  the  observations  of  Bayley,  B.,  in  Att.  Gen.  v.  Siddon,  1  Tjrw.  46,  47.  1 
C.  &  J.  220.  Taylor  v.  Green,  8  C.  &  P.  316.  Willett  v.  Chambers,  Cowp.  814.  Rapp 
t'.  Latham,  2  B.  &  A.  195.  Marsh  v.  Keating,  1  Bing.  K  C.  198.  Hern  v.  Nicholls,  1 
Sal.  289,  cited  by  Baron  Parke,  in  Cornfoot  v.  Fowke,  6  M.  <fe  W.  358.  "It  must  be 
conceded,"  says  his  Lordship,  "  that  if  one  employ  an  agent  to  make  a  contract,  and 
that  agent  in  making  it,  knowingly  commit  a  fraud,  though  the  principal  be  perfectly 
guiltless,  not  only  is  the  contract  void,  but  the  principal  is  liable  to  an  action."  VitU 
etiain  Grammar  v.  Nixon,  1  Str.  653.  Crockford  v.  Winter,  1  Camp.  124,  per  Lord 
Ellenborough.  Southern  v.  How,  Bridgman,  126-Y  ;  2  Moll.  330;  Cro.  Jac.  468.  R, 
V.  Bower,  Cowp.  323.  See,  however,  9  H.  6,  53  b,  cited  in  Bro.  Abr.,  "  Action  sur  le 
Case,"  where  per  curiam,  "  If  ni}'^  servant  sell  false  stuff,  an  action  on  the  case  does 
not  lie  against  me,  unless  he  sold  it  through  my  covin,  or  by  my  command." 

(w)  2  Str.  885 ;  R.  v.  Huggins,  per  Raym.  C.  J.,  Lamb's  Ca.,  9  Co.  59. 

{x)  R.  V.  Gutch,  1  M.  cfe  M.  437.  See  R.  o.  Almon,  2  Burr.  2686.  R.  v.  Dixon,  2 
M.  &  S.  11.     See  Colburn  v.  Patmore,  1  C.  M.  &  R.  73 ;  4  Tyrw.  677. 


traveller  greatly  enhanced."  S.  P.  Southwick  v.  Ertes,  7  Gushing  Rep.  385.  For  the 
general  doctrine,  see  Shaw  v.  Reed,  9  Watts  &  Serg.  72.  Wilson  v.  Peverly,  2  N.  H. 
548.  Foster  v.  Essex  Bank,  17  Mass.  479.  Vanderbilt  v.  Richmond  Turnpike  Co.,  1 
Hill,  480;  2  Comst.  479.  Harris  v.  Nicholas,  5  Munf.  483.  Church  v.  Mansfield,  20 
Conn.  284.  Armstrong  v.  Cooley,  6  Gilm.  512.  Mitchell  v.  Crass weller,  16  E.  L.  A 
E.  R.  448,  and  cases  cited  by  annotator. 


PRINCIPAL  AND  AGENT.  197 

Riglits  of  third  Persons  against  Principal. 

to  be  left  to  a  jury,  who  may,  if  they  think  fit,  thence  presume,  that 
such  an  agent  was  authorized  to  do  the  prohibited  act,  with  which 
it  is  sought  to  charge  his  principal  (i/) 

Our  last  inquiry  under  this  head  is,  how  the  agent's  power  to 
commit  his  principal  to  third  parties  may  be  determined.  It  will 
be  so  of  course  by  the  revocation  of  his  authority,  which  is,  in 
general,  determinable  at  will,  (2)  unless  coupled  with  an  interest, 
or  given  for  valuable  consideration,  as  in  the  case  of  a  power  of 
attorney  given  by  way  of  security  to  a  creditor,  (a)  So  likewise, 
by  his  own  renunciation  of  it,  at  all  events  if  accepted  by  his  prin- 
cipal, {b)  So  by  the  marriage  of  the  principal,  if  a  feme  sole,  (c) 
It  will  be  revoked  also  by  the  death  of  the  principal,  (d)  and  that 
even  though  coupled  with  an  interest ;  "  for  how,"  says  Lord  Ellen 
borough,  "  can  a  valid  act  be  done  in  the  name  of  a  dead  man  ?"  (e)* 


(y)  Att.  Gen.  v.  Siddon,  1  Tjrw.  R.  41.  1  C.  &  J.  220.  Att.  G€.i.  v.  Riddell,  2 
Tyrw.  523.     2  C.  &  J.  498.     See  also  Att.  Gen.  v.  Burges,  Bunb.  223. 

(2)  Farmer  v.  Robinson,  2  Camp.  339,  n.  Warwick  v.  Slade,  3  Camp.  12Y.  Bris- 
tow  V.  Taylor,  2  Stark.  50. 

(a)  Walsh  v.  Whitcombe,  2  Esp.  563.  Bromley  v.  Holland,  7  Ves.  28.  Gaussen  v. 
Morton,  10  B.  &  C.  731.  Walker  v.  Rostron,  9  M.  &  W.  411.  Whether  the  authority 
of  a  stakeholder  be  or  be  not  countermandable,  is  not  quite  settled.  The  better 
opinion,  however,  is,  that  it  is  not  so.  Marryat  v.  Broderick,  2  Mees.  &  W.  371.  See 
Eltham  v.  Kingsman,  1  B.  <fe  A.  682. 

(6)  Generally  speaking,  a  power  cannot  be  released  unless  coupled  with  an  inter- 
est in  the  party  possessing  it.  Trippets  v.  Eyre,  2  Vent.  110.  Digge's  Case,  15  H. 
VII.  fol.  11,  b.  But  this  case  does  not  seem  applicable  to  the  case  of  a  mercantile 
agent,  for  he  may  be  said  to  have  an  interest  in  the  remuneration  he  is  entitled  to, 
and,  besides,  his  power  being  in  its  nature  revocable  by  the  principal,  whom  it  would 
be  unfair  in  many  cases  to  treat  as  free,  while  the  agent  was  bound,  probably  it  may 
be  considered  that  the  creation  of  a  mercantile  agency  contains  an  implied  term, 
that  it  shall  be  revocable  at  the  will  of  either,  if  the  contrary  do  not  appear. 

(c)  Anon.  Salk.  117. 

(J)  Bac.  Abr.  "Authority,"  E.  Co.  Litt.  52,  b.  See  Whitehead  v.  Taylor,  10  A. 
&  E.  211.  Shonian  v.  Allen,  1  M.  &  Gr.  96,  n.  Palmer  v.  Reiffenstein,  ib.  94.  Smout 
V.  Ilberry,  10  M.  &  W.  1. 

(e)  Watson  v.  King,  4  Camp.  272.  See  Lepard  v.  Vernon,  2  V.  &  B.  51.  Har- 
den V.  Forsyth,  1  Q.  B.  177. 


*  It  may  be  doubted  whether  the  text  states  the  general  rule  with  accuracy,  even 
as  it  prevails  in  England.  See  general  discussion  of  the  doctrine  in  the  late  case  of 
Smart  v.  Sandars,  5  C.  B.  895,  917.     Certain  it  is,  that  in  the  United  States  the  autho 


198  ^lERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


or  bj  his  bankruptcy,  (/)  except  in  certain  cases  in  wbicli  the  in- 
terest of  the  creditors  cannot  be  affected  and  the  power  is  one 
which  in  conscience  ought  to  be  exercised,  as  where  the  vendor  of 


(/)  Parker  v.  Smith,  16  East,  382.     Minett  v.  Forester,  4  Taunt.  541.     Pearson  v. 
Graham,  and  Kynaston  v.  Crouch,  post. 

rity  of  an  agent  will  survive  the  death  of  the  principal,  where  it  is  coupled  with  an 
interest  in  the  thing  which  is  the  subject  of  agency.  The  doctrine  was  laid  down  with 
great  fullness  and  precision  by  Chief  Justice  Marshall,  in  the  case  of  Hunt  v.  Rous- 
maniere's  Admrs.,  8  Wheat.  R.  291,  by  Mr.  Justice  Story,  in  the  same  case,  on  Cir- 
cuit, 2  Mason's  Rep.  244,  and  by  Chan.  Kent,  in  Bergen  v.  Bennett,  1  Caines'  Cas.  in 
Error,  1.  S.  P.  Knapp  v.  Alvord,  10  Paige's  Rep.  205.  Cassiday  v,  McKenzie,  4  Watta 
&  Serg.  282.     Smyth  v.  Craig,  3  Watts  &  Serg.  14. 

It  is  declared  by  statute  in  Maryland  and  Georgia,  that  a  power  of  attorney  shall 
continue  in  force,  tuitil  the  agent  has  notice  of  the  death  of  his  principal.  The  same 
equitable  rule  prevails  in  all  those  countries  whose  jurisprudence  is  founded  upon 
the  civil  law,  and  there  has  been  manifested  a  disposition  in  some  modern  cases  to 
ingraft  the  same  just  and  rational  doctrine  upoD  the  common  law.  Cassiday  v.  McKen- 
zie, 4  Watts  &  Serg.  282 ;  Beard  v.  Kirk,  UN.  Hamp.  397.  The  strictness  of  the 
ancient  rule  was  maintained  in  Tennessee,  in  the  recent  case  of  Rigs  et  al.  v.  Cage,  2 
Hump.  350.  A  duly  authorized  agent  had  purchased  goods  in  New  York,  after  the 
death  of  his  principal,  but  in  entire  ignoranoe  of  the  fact.  The  Court  held,  that  the 
death  of  the  principal  constituted  an  instantaneous  and  entire  revocation  of  the 
autliority  of  the  agent,  «\nd  that  his  subsequent  acts,  with  whatever  good  faith  pei'- 
formed,  were  wholly  void.  In  Cassiday  v.  McKenzie,  4  Watts  &  Serg.,  payment  to  an 
ageijt  after  the  death  of  the  principal,  both  parties  being  ignorant  of  the  fact,  was 
held  to  be  good,  and  binding  upon  the  estate  of  the  principal.  Mr.  Justice  Rogei-s, 
in  delivering  the  opinion  of  the  Court,  said:  "But,  finally,  it  is  contended,  that  a 
payment  after  the  death  of  the  principal  is  not  good.  It  is  conceded,  that  the  death 
of  the  principal  is,  ipso  facto,  a  revocation  of  a  letter  of  attorney.  But  does  it  avoid 
all  acts  of  the  attorney  intermediate  between  the  death  of  the  principal  and  notice 
of  it?  In  Salte  v.  Field,  (5  Term  Rep.  214,)  Mr  Justice  Buller  observes,  '  It  has  "been 
questioned,  with  respect  to  an  agent  acting  under  a  power  of  attorney,  whether  acts 
done  by  him  before  he  knows  of  the  revocation  of  his  warrant,  are  good  against  the 
principal ;  and  it  seems  that  the  principal,  in  such  a  case,  could  not  avoid  the  acts 
of  his  agent  done  bond  fide,  if  they  were  to  his  advantage,  though  he  might  consent 
to  avoid  suoh  as  were  for  his  benefit.  And  in  Hazard  v.  Treadwell,  (Str.  506 ;  12 
Mod.  346,)  it  is  ruled  that  the  credit,  arising  from  an  ostensible  employment  con- 
tinues, at  least  with  regard  to  those  who  have  been  accustomed  to  deal  on  the  faith 
of  that  employment,  until  they  have  notice  of  its  being  at  an  end,  or  till  its  termina 
tion  is  notorious.  And  these  are  principles  founded  on  the  most  obvious  justice 
Thus,  if  a  man  is  the  notorious  agent  for  another,  to  collect  debts,  it  is  but  reasona- 
Dle  that  debtors  should  be  protected  in  payments  to  the  agent  until  they  are  informed 
that  the  agency  has  terminated.     But  this,  it  is  said,  is  only  true  of   an  agency 


PRINCIPAL  AND  AGENT.  199 

Rights  of  third  Persons  against  Princioal. 

a  ship  at  sea  executed  a  power  to  indorse  the  transfer  on  her  certi- 
ficate, and  then  became  bankrupt,  the  power  was  held  not  revoked 
by  the  bankruptcy.  ( </)     The  effect  of  insanity  upon  the  relation 

(g)    Dixon  v.  Ewart,  3  Meriv.  322.    Buck.  94. 


terminated  by  express  revocation,  and  does  not  hold  of  an  implied  revocation  by  the 
death  of  the  principal.  It  would  puzzle  the  most  acute  min  to  give  any  reason  wh> 
it  should  be  a  mispayment,  when  revoked  by  death,  and  a  good  payment  when  ex- 
pressly revoked  by  the  party  in  his  lifetime.' — In  Watson  v.  King,  4  Campb.  272, 
however,  it  is  ruled,  'that  a  power  of  attorney,  though  coupled  with  an  interest,  ii 
instantly  revoked  by  the  death  of  the  grantor;  and  an  act  afterwards  bona  fide  done 
under  it  by  the  grantee,  before  notice  of  the  death  of  the  grantor,  is  a  nullity.'  Lord 
EUenborougli  says :  '  A  power  coupled  with  an  interest  cannot  be  revoked  by  the 
person  granting  it ;  but  it  is  necessarily  revoked  by  his  death.  How  can  a  valid  act 
be  done  in  the  name  of  a  dead  man  V  It  will  be  observed  that  the  reason  is  purely 
technical.  How  can  a  valid  act  be  done  in  the  name  of  a  dead  man  ?  And  it  might 
with  as  much  propriety  be  asked,  How  can  a  valid  act  be  done  by  an  agent  whose 
authority  is  revoked  by  his  principal?  But,  notwithstanding  the  opinion  thus  con- 
fidently expressed,  it  is  now  an  admitted  exception,  that,  where  the  power  or  autho- 
rity is  coupled  with  an  interest  in  the  thing  actually  vested  in  the  agent,  then  an 
act  done  by  him  after  the  death  of  his  principal  is  good.  And  the  reason  given  by 
Chief  Justice  Marshall,  in  Hunt  v.  Rousmaniere's  Admrs.,  (8  Wheat.  174,)  is,  that  the 
agent  having  the  legal  title  in  the  property,  is  capable  of  transferring  it  in  his  own 
name,  notwithstanding  the  death  of  the  principal ;  and  the  death  of  the  principal  has 
no  operation  upon  his  act.  The  power  given  by  the  principal  is,  under  sucli  cir- 
cumstances, rather  an  assent  or  agreement  that  the  agent  may  transfer  the  property 
vested  in  him,  free  from  all  equities  of  the  principal,  than  strictly  a  power  to  trans- 
fer. The  whole  reasoning  of  the  Court,  in  Hunt  v.  Rousmaniere's  Admrs.,  shows 
their  anxiety  to  rid  themselves  of  the  absurdity  into  which  a  strict  adherence  to  the 
pi'inciple  that  death  is  a  revocation  of  a  power  would  lead  them.  Why  not  place 
it  on  the  rational  ground,  that,  although  the  conveyance  would  be  bad  at  law,  yet 
it  would  be  good  in  equity,  when  made  bona  fide  without  any  notice  whatever  of  the 
death  of  the  principal? — But,  be  this  as  it  may,  the  principle  does  not  apply  here. 
There  is  no  act  to  be  done.  This  money  has  been  paid  by  the  debtor,  and  received 
by  the  agent,  in  good  faith  ;  and  why  should  it  not  be  good  when  the  authority  is 
revoked  by  death,  as  it  confessedly  is,  when  expressly  revoked  by  the  principal  in 
his  lifetime  ?  Here  the  precise  point  is  whether  a  payment  to  an  agent,  when  the 
parties  are  ignorant  of  the  death,  is  a  good  paj'ment.  In  addition  to  the  case  in 
Campbell,  before  cited,  the  same  Judge,  Lord  EUenborough,  has  decided  in  5  Esp. 
in,  the  general  question,  that  a  payment  after  the  death  of  the  principal  is  not 
good.  Thus,  a  payment  of  sailors'  wages  to  a  person  having  a  power  of  attorney  to 
receive  them,  has  been  held  void,  when  the  principal  was  dead  at  the  time  of  the 
payment.  If  by  this  case,  it  is  meant  merely  to  decide  the  general  proposition,  tliat, 
by  operation  of  law,  the  death  of  the  principal  is  a  revocation  of  the  powers  of  the 


200  MERCANTILE  PERSONS. 


Rights  of  third  Persons  against  Principal. 


of  principal  and  agent  seems  not  yet  well  settled,  {h)  As  to  the 
implied  authority  arising  from  previous  employment,  that  can,  as 
we  have  seen,  be  determined  only  by  rendering  it  notorious  to  the 
world  in  general,  or  to  the  particular  person  who  relies  on  it,  that 

{h)  See  this  question  learnedly  discussed  in  Story  on  Principal  and  Agent,  1st  ed. 
435  ;  and  see  Ex  parte  Bradberry,  4  Deacon,  202. 


attorney,  no  objection  can  be  taken  to  it.    But  if  it  is  intended  to  say,  that  this  prin- 
ciple applies  where  there  was  no  notice  of  death,  or  opportunity  of  notice,  I  must  be 
permitted  to  dissent  from  it.— In  addition,  it  is  contrary  to  the  opinion  of  Lord  Lough- 
borough in  Tate  i».  Hilberts,  (2  Ves.  jun.,)  where  on  a  question,  whether  a  check 
given  by  a  dying  person  to  a  relation,  but  not  presented  in  his  lifetime,  could  be  en- 
forced, as  a  donatio  causa  mortis,  against  the  executor,  he  said,  if  the  donee  had  re- 
ceived the  money  upon  the  check  immediately  after  the  death  of  the  testator,  and 
before  the  cashier  was  apprised  of  it,  he  was  inclined  to  think  no  court  would  have 
taken  it  from  him.     And  what  would  he  have  said  if  the  attempt  had  been  made  to 
subject  the  banker  when  he  was  ignorant  of  the  death  ?    But,  if  tliis  doctrine  applies, 
why  does  it  not  apply  to  the  case  of  factors,  foreign  or  domestic,  to  commission 
merchants,  to  supercargoes  and  masters  of  ships,  and  to  various  other  agencies  which 
the  necessities  of  commerce  may  require  ?     In  the  case  of  a  foreign  factor,  for  exam- 
ple, has  it  been  supposed  that  his  acts,  after  this  implied  revocation  of  authority, 
are  void?     Cases  of  this  kind  must  often  have  occurred;  and  it  would  astonish  the 
mercantile  world  to  be  informed,  that  the  factor  was  liable  on  a  contract,  made  in 
the  name  of  his  principal,  because  he  was  dead,  a  fact  of  which  he  was  ignorant, 
and  of  which  he  could  not  by  any  possibility  be  informed ;  or  that  the  merchant, 
who  was  trusting  his  goods  on  the  credit  of  the  principal,  was  to  be  cast  on  him  who 
may  have  been  of  doubtful  solvency  for  payment.     Can  it  be,  that  a  payment  made 
to  an  agent  from  a  foreign  country,  and  from  one  of  our  cities  to  the  Western  States, 
employed  for  the  special  purpose  of  collecting  debts,  is  void,  because  his  principal 
may  have  died  the  day  before  the  actual  receipt  of  the  money?— that  a  payment 
may  be  good  to-day,  or  bad  to-morrow,  from  the  accidental  circumstance  of  the 
death  of  the  principal,  which  he  did  not  know,  and  which  by  no  possibility  could  he 
know  ?     It  would  be  unjust  to  the  agent,  and  unjust  to  the  debtor.     In  the  civil  law, 
the  acts  of  the  agent,  done  bona  fide  in  ignorance  of  the  death  of  his  principal,  are 
held  valid  and  binding  upon  the  heirs  of  the  latter.     The  same  rule  holds  in  the 
Scottish  law ;  and  I  cannot  believe  the  common  law  is  so  unreasonable,  notwith- 
standing the  doubts  expressed  by  Chancellor  Kent  in  2d  Vol.  of  his  Commentaries, 

p.  466." 

However  the  interesting  point  which  is  here  raised  may  be  finally  adjudicated, 
the  law  seems  now  to  be  settled  in  England,  that  an  agent  contracting  on  behalf  of 
his  principal,  after  the  death  of  the  latter,  in  ignorance  of  the  fact,  and  without 
making  any  representations  as  to  it  to  the  other  party,  will  not  incur  any  personal 
responsibility.    Smout  v.  Ilberry,  10  Mees.  &  Welb.  1. 


PRIN'CIPAL  AND  AGENT.  201 

Rights  of  third  Persons  against  Principal. 

such  employment  has  been  put  an  end  to.  {i)  /SV  Tilium  omnibus 
nogoiiis  meis  prcejjosuero,  deinde  vetuero  eum,  ignorantibus  debitor ibiis, 
administrare  negotia  mea^  debitores  ei  solvendo  liberabuntur.  And,  if 
a  particular  agent  were  to  contract  after  the  revocation  of  his  au- 
thority, but  before  the  revocation  had  been  made  known  to  him, 
there  seems  little  doubt  that  jDcrsons  who  had  dealt  upon  the  faith 
of  it,  would  not  be  permitted  to  suffer,  {j)  except  indeed  in  the  case 
of  a  revocation  by  death,  in  which  it  seems  from  Blades  v.  Free^  9 
B.  and  C.  167,  that  the  representatives  of  the  deceased  principal 
would  not  be  liable,  and  from  Smout  v.  Ilberry^  10  M.  and  W.  1, 
that  the  agent  would  not  be  so.  It  would  seem  also  just,  on  prin- 
ciple, that  an  agent  should  not  be  prejudiced  by  the  revocation  of 
his  power,  without  his  own  knowledge ;  yet,  though  it  would  ap- 
pear that  an  agent  acting  under  a  particular  authority,  after  his 
master's  bankruptcy,  which  was  not  known  to  him,  will  not  be  lia- 
ble to  the  assignees,  it  has  been  held  otherwise  where  his  authority 
was  a  general  one.  {k) 

The  rule  of  the  civil  law  guarded  against  detriment  either  to 
the  agent  or  to  those  contracting  with  him,  by  the  sudden  revoca- 
tion of  his  authority.  Nemo  potest  mutare  consilium,  suum  in  alterius 
injuriain.il)  Si  tibi  mandassem  ut  fandum  eryieres,  p>ostea  scripsissem 
ne  emeres,  tu  antequam  scias  me  vetuisse  emisses,  mandato  tibi  obligatus 
era,  ne  damno  ajfficiatur  is  qui  suscipit  rnandatum.  (rn)  Pothier  goes 
further,  and  lays  it  down  that  an  agent  has,  in  such  cases,  a  right 
faire  ce  qui  est  une  suite  necessaire  de  ce  quil  avait  commence,  (n) 
"When  an  agent  has  completed  his  task,  his  authority  of  course  de- 
termines: thus,  an  auctioneer,  when  he  has  sold,  is  functus  officio, 
and  has  no  right  to  treat  about  the  mode  of  making  out  a  title,  (o) 


(J)  Hazard  v.  Tread  well,  Str.  506.     v.  Harrison,  12  Mod.  346. 

(j)  See  the  remarks  of  Buller,  J.,  in  Salte  v.  Field,  6  T.  R.  215,  and  see  Hodgson 
V.  Anderson,  3  B-  &  C.  842. 

(k)  Pearson  v.  Graham,  6  Ad.  &  Ell.  900.     Kynaston  v.  Crouch,  14  M.  &  W.  266. 

(0  Dig.  50,  tit.  IT. 

(m)  Dig.  17,  tit.  1. 

(n)  Pythier  de  Mandat.  N.  121.  See  the  subject  discussed  and  all  the  authorities 
eoUected.     Story,  p.  424,  et  seq. 

(o)  Seton  V.  Slade,  7  Ves.  276.  See  Dickenson  v.  Lilwall,  4  Camp.  279.  Mynne 
r.  Joliffe.  1  M.  &  Rob.  827.     Sykes  v.  Giles,  5  M.  &  W.  645. 


202  MERCANTILE  PERSONS. 

Rights  of  the  Principal  against  third  Parties. 

So  where  the  prefixed  time  during  whicli  tlie  agency  was  to  con- 
tinue, expires,  {p) 


Section  Y. — Rights  of  the  Princijxd  against  third  Parties.^ 

As  tlie  principal  is  bound  by  the  acts  and  contracts  of  his  au- 
thorized agent,  so  he  may  take  advantage  of  them ;  {q)  and  if  one 
person  contract,  even  without  authority,  in  tlie  name  of  another, 
that  other,  though  he  may  repudiate  the  contract,  may,  if  he  think 
fit,  adopt  and  enforce  it.  (r)  But  then  he  must  adopt  it  altogether : 
he  cannot  ratify  what  is  beneficial  to  himself,  and  reject  the  re- 
mainder, (s)  And  there  is  a  difference  between  his  right  to  adopt 
a  contract,  and  a  bare  act,  the  effect  of  which  would  be  to  raise  a 
duty  towards  him  from  a  third  party,  and  subject  that  third  party 
to  damage  for  its  non-performance.  Such  an  act  can  never,  if  un- 
authorized at  first,  be  confirmed  by  any  recognition  ex  post  facto. 
thus,  a  demand  of  payment,  in  order  to  oust  the  debtor's  plea  of 
tender,  or  a  demand  of  property,  in  order  to  found  an  action  of 


(p)  Dickenson  v.  Lilwall,  iibi  sup. 

Iq)  Seignior  v.  Walmer,  Godb.  3G0. 

(r)  Routh  V.  Thompson,  13  East,  274.  Ilagedorn  v.  Oliverson,  2  M.  &.  S.  485. 
Marsh  v.  Keating,  1  Bingh.  N.  C.  108.  In  Whitehead  v.  Taylor,  10  A.  &  E.  210,  held 
that  an  executor  might  adopt  a  distress  made  imder  the  testator's  direction,  but  after 
his  death. 

(s)  Wilson  V.  Poulter,  2  Str.  859.  Billon  v.  Il3-de,  1  Atk.  128.  Smith  v.  Hodson, 
4T.  R.  211.  B.  N.  P.  131.  Brewer  v.  Sparrow,  7  B.  <fe  C.  310.  Thorpe  y.  Thorpe, 
3  B.  &  Adol.  580.  See  Burn  v.  Morris,  4  Tyrwh.  486,  2  C.  <fe  M.  579,  where  A.  having 
found  a  bank  note  of  the  plaintiff's  gave  it  to  the  defendant,  who  got  it  changed, 
and  handed  A.  the  proceeds  ;  A.  was  taken  up,  and  11.,  part  of  the  proceeds,  found 
on  her,  and  restored  to  the  plaintiff,  wlio  afterwards  sued  the  defendant  in  trover  for 
the  note.  Lord  Lyndhurst,  C.  B.,  said  tliat  "in  Brewer  v.  Sparrow  the  whole  pro- 
ceeds of  the  sale  were  taken,  that  is  an  adoption  of  the  act ;  here  the  receipt  of  the 
7Z.  does  not  ratify  the  act,  it  only  goes  in  diminution  of  damages." 

*  It  is  now  well  settled  by  the  authorities,  that  where  the  property  of  one  is  sold 
by  another,  as  agent,  if  the  principal  gives  notice  to  the  purchaser  before  payment 
to  pay  to  himself,  and  not  to  the  agent,  the  purchaser  is  bound  to  pay  the  principal, 
subject  to  any  equities  of  the  former  against  the  agent.  Huntington  v.  Knox,  7  Gush. 
Rep.  373 


PRINCIPAL  AND  AGENT.  oqs 

Rights  of  the  Principal  against  third  Parties. 

trover,  must  be  made  bj  an  agent  ]ireviously  authorized ;  {()  and  the 
same  doctrine  applies  to  a  notice  to  quit,  (zi)  notwithstanding  the 
cases  of  Roe  v.  Pearce,  {v)  and  Goodiitle  v.  Woodward,  {id)  (which  lat- 
ter may  be  supported  on  another  ground.)  (cc)  Where  a  previous 
authority  is  requisite,  it  seems  that  the  person  whom  it  is  to  affect 
may  require  to  be  properly  satisfied  of  its  existence,  and  is  not 
bound  to  take  the  agent's  bare  assertion,  {y)  In  other  instances, 
where  no  duty  is  to  be  raised  on  the  part  of  a  third  person,  an 
adoption  ex  post  facto  is  generally  sufficient ;  ex.  gr.  of  an  entry  to 
avoid  a  fine.  (2) 

If  an  agent  acting  for  an  undisclosed  principal  have  made  a 
contract  in  his  own  name,  the  principal  may  sue  upon  it,  and  it  fol- 
lows, as  a  branch  of  this  rule,  that  if  a  person  lend  money  nomi- 
nally on  his  own  account,  but  really  on  account  and  as  the  loan  of 
another,  the  real  lender  may  sue  for  the  money ;  but  in  such  a  case, 
the  plaintiff  who  alleges  that  he  was  in  reality  the  lender,  must 
prove  that  fact  clearly  and  distinctly,  (a) 

The  principal's  right  to  enforce  contracts  made  by  his  agent  is 
subject  to  this  rule,  viz.,  that  if  the  agent  have  been  allowed  to  deal 
in  his  own  name,  the  party  dealing  with  him  will  enjoy  the  same 
rights  against  the  employer  as  he  might  have  exercised  against  his 
agent  had  that  agent  really  been  a  principal,  ih)     Thus,  when  a 


{t)  Coore  V.  Callawaj",  1  Esp.  115.  Coles  v.  Boll,  1  Camp.  478.  Solomons  v. 
Dawes,  1  Esp.  83.  See  Bartram  v.  Farebrother,  4  Bingh.  579.  See  this  distinction 
much  discussed  in  "Whitehead  v.  Anderson,  9  M.  <fe  W.  518. 

{n)  Doe  de  Lyster  v.  Goldwin,  2  Q.  B.  143.     Doe  v.  Walters,  10  B.  <fe  C.  626. 

(t>)  2  Camp.  96.  (jc)  3  B.  cfc  A.  689. 

(a*)   Vide  Doe  v.  Summersett,  1  B.  <k  Ad.  135. 

{y)  Solomons  v.  Dawes,  1  Esp.  83.  See  Roe  v.  Davies,  7  East,  363.  Charrinton  v, 
Johnson,  13  M.  &  W.  856. 

(z)  Co.  Litt.  258,  a.  So  the  recognition  of  an  act  professedly  done  by  A.  as  the 
agent,  and  for  the  benefit  of  B.,  may  be  ratified  by  the  latter,  and  will  protect  A. 
Walker  v.  Hunter,  2  C.  B.  324;  but  if  it  were  done  professedly  as  the  agent,  and  for 
the  benefit  of  some  other  person,  B.'s  ratification  would  be  wholly  unavailing.  Wil- 
eon  V.  Tumman,  6  M.  &  G.  236. 

(a)  See  Sims  v.  Bond,  5  B.  <fe  Ad.  393.  Alexander  v.  Barker,  2  Tyrwh.  146.  2  C 
&  J.  133.  Sims  V.  Brittain,  4  B.  &  Ad.  375.  See  Bastable  v.  Poole,  5  Tyrwh.  Ill,  J 
C.  M.  &  R.  410.     Humphj  jy  v.  Lucas,  2  Car.  &,  K.  152. 

{b)  Coates  v.  Lewis,  1  Camp.  444.  See  this  doctrine  clearly  stated  in  Sims  v 
Bond,  5  B.  &  Adol.  393,  and  see  Bastable  v.  Poole,  5  Tyrwh.  111.     1  C.  M.  &  R.  410- 


204  MERCAXTILE  PERSONS.  "j^  ^ 

Eights  of  the  Principal  against  third  Parties.  *      ^Jl     f*'''^' 

factor  dealing  for  a  principal,  but  concealing  that  principal,  delivers 
•  goods  in  his  own  name,  the  person  contracting  with  him  has  a  right 
to  consider  him  to  all  intents  and  purposes  the  principal,  and, 
though  the  real  principal  may  appear  and  bring  an  action  on  that 
contract  against  the  purchaser  of  the  goods,  yet  that  purchaser  may 
set  off  any  claim  he  may  have  against  the  factor,  in  answer  to  the 
demand  of  the  principal,  (c)  This  rule  is  to  prevent  the  hardship 
under  which  a  purchaser  would  labor,  if,  after  having  been  induced 
by  peculiar  considerations,  such  for  instance,  as  the  consciousness  of 
possessing  a  set-off,  to  deal  with  one  man,  he  could  be  turned  over 
and  made  liable  to  another,  to  whom  those  considerations  would 
not  apply,  and  with  whom  he  would  not  willingly  have  contracted. 
But  if,  at  any  time  in  the  course  of  the  transaction,  he  have  means 
of  knowing  that  the  person  with  whom  he  deals  is  not  a  principal, 
the  above  reason  does  not  apply,  and  then  cessante  ratione  cessat 
ipsa  lex.  {d)  Thus,  though,  if  o,  factor  sell  goods  in  his  own  name, 
the  buyer  may  avail  himself  of  a  right  of  set-off  against  the  factor ; 
yet  if  a  hroker  do  so,  the  rule  will,  except  under  extraordinary  cir- 
cumstances, be  different ;  for  "  o,  factor  who  has  the  possession  of 
goods,  differs  materially  from  a  hroker :  the  factor  is  a  person  to 
whom  goods  are  consigned,  and,  when  he  sells  in  his  own  name,  it 
is  within  the  scope  of  his  authority,  and  it  is  right,  therefore,  that 
his  principal  should  be  bound  by  the  consequences  of  such  sale, 
one  of  which  is  the  right  of  setting  off  a  debt  due  from  the /actor, 
but  the  case  of  a  hroker  is  different,  he  has  not  the  possession  of  the 
goods,  and  so  the  vendee  cannot  be  deceived  by  that  circumstance, 
and  besides,  the  employing  a  person  to  sell  goods  as  a  hroker  does 
not  auth';rize  him  to  sell  in  his  own  name :  if,  therefore,  he  sell  in 
his  own  name,  he  acts  beyond  the  scope  of  his  authorit}^,  and  his 
principal  will  not  be  bound :  if  it  be  said,  that  by  these  means  the 
hroker  would  be  enabled  by  his  principal  to  deceive  innocent  per- 


(f)  Straey  v.  Decy,  T  T.  R.  361.  George  v.  Claggett,  7  T.  R.  359,  et  ULtns.  Black- 
burne  v.  Scholes,  2  Camp.  343.  Carr  v.  Hinchcliff,  4  B.  <fe  C.  551.  Taylor  v.  Kymer, 
3  B.  tfe  Ad.  334.  See  Warner  v.  M'Kay,  1  M.  &  Wels.  595,  which  goes  further  per 
haps  than  any  previous  case. 

(d)  Maans  v.  Henderson,  1  East,  335.  Moore  v.  Clementson,  2  Camp.  24.  Escott 
».  Milward,  7  T.  R.  361. 


PRINCIPAL  AND  AGENT.  OQS 

Rights  of  the  Principal  against  third  Parties. 

sons,  the  answer  is  obvious  :  that  cannot  be  so,  unless  the  principaJ 
deliver  to  him  the  possession  and  indicia  of  jDroperty."  (e) 

We  have  seen  that  payment  or  delivery  to  an  agent,  is  payment 
or  delivery  to  his  principal :  this  holds  good  vice  versa^  (/)  and  there- 
fore where  the  agent  has  paid  away  or  delivered  over  his  master's 
property  on  a  consideration  which  fails,  or  otherwise  under  circum- 
stances which  would  entitle  him  to  recover  it,  the  master  may,  if  he 
please,  maintain  an  action  in  his  own  name  to  be  reimbursed,  {g) 
which  it  will  often  be  advisable  to  do,  in  order  not  to  lose  the  agent's 
evidence ;  and  in  some  cases  the  master  may  sue  for  this  purpose 
where  the  agent  could  not ;  for  instance,  if  the  agent  and  a  third 
person  have  joined  in  applying  his  property  to  an  illegal  purpose, 
as  to  the  insurance  of  lottery  tickets ;  for  though  the  agent,  being 
pariiceps  crirrmiis,  (Ji)  might  not  be  able  to  recover,  on  account  of  the 
rule  pari  delicto  potior  est  conditio  defendentis  ;  yet  that  rule  does  not 
affect  the  master  who  is  guilty  of  no  criminality.  (^)  And  where 
the  agent  disposes  of  the  master's  property,  without  either  an  ex- 
press or  an  implied  authority,  as  if  he  sell  his  master's  goods  on 
credit  in  a  trade  the  usual  course  of  which  is  to  sell  for  cash  only, 
the  master,  though  he  may  affirm  the  transaction,  may,  if  he  please, 
rejDudiate  it,  and  recover  the  property  thus  tortiously  disposed  of 
from  the  disponee.  (y) 

There  is  another  case  in  which  it  has  been  lately  thought  that 
a  principal  may  be  in  a  better  situation  in  consequence  of  his  hav- 
ing contracted  through  an  agent,  than  he  would  have  been  if  he 


((?)  Baring  v  Osriie,  2  B.  <fc  A.  137,  judgment  of  Holroyd,  J. 

(/)  Coare  v.  Giblett,  4  East,  85. 

{g)  Duke  of  Norfolk  v.  "Worsley,  1  Camp.  337.  Ancher  v.  Bank  of  England, 
Dougl.  63Y.     Stevenson  v.  Mortimer,  Cowp.  805. 

(K)  There  is  no  doubt  of  this  position,  if  the  agent  can  be  looked  upon  as  a  'parti- 
ceps  criminis,  and  he  was  considered  such  in  Clarke  v.  Shee;  but  see  Jaques  v, 
Golightly,  2  Bl.  10*73.  It  is,  generally  speaking,  safer  to  sue  in  the  name  of  the 
principal  than  in  that  of  the  agent,  for  if  the  agent  be  made  plaintiff,  any  thing 
■which  would  be  a  good  defence  against  him  will  be  an  answer  to  the  action.  Gibson 
V.  Winter,  5  B.  &  Ad.  101,  where  all  the  authorities  are  collected.  "Wilkinson  v. 
Lindo,  7  M.  &  "W.  83. 

{i)  Clark  v.  Shee,  Cowp.  19Y. 

{j)  12  Mod.  514.  Wiltshire  v  Sims,  1  Camp.  258.  Guerriero  v.  Peile,  3  B.  &  A 
616. 


200  MERCAISTILE  PERSONS. 


Rights  of  the  Principal  against  third  Parties. 


had  contracted  personally.     It  arose  in  Cornfoot  v.  Foivhe,  6  M.  & 
W.  358,  in  which  an  agent  who  had  been  employed  to  let  a  house, 
being  asked  whether  there  was  any  thing  objectionable  about  it, 
answered  in  the  negative.     It  turned  out  that  there  was  an  objec- 
tion, of  which  the  principal  was  aware,  though  the  agent  was  not. 
It  was  contended,  that  the  contract  was  invalid,  on  the  ground  of 
fraud,  for  that  the  knowledge  of  the  pri'ncipal  was  that  of  the  agent, 
whose  statement,  therefore,  would  amount  to  such  a  misrepresen- 
tation as  would  entitle  the  contractee  to  repudiate  the  agreement ; 
or  that,  at  least,  the  agent's  assertion,  being  made  about  a  matter 
of  which  he  knew  nothing,  and  turning  out  afterwards  to  be  false, 
amounted  to  a  fraud  in  law,  and  might  be  taken  adviintage  of 
against  the  principal.     On  the  other  hand,  it  was  said,  that  there 
was  no  fraud  in  the  principal,  for  he  did  not  make  the  represen- 
tation, nor  any  fraud  in  the  agent,  for  he  did  not  know  that  the 
representation  was  false.     Lord  Abinger,  C.  B.,  was  of  the  former 
opinion,  but  Parke,  Alderson,  and  Rolfe,  B.,  being  of  the  latter,  the 
contract  was  held  valid.     The  authority  of  this  decision  has,  how- 
ever, been  questioned,  and  the  Court  of  Queen's  Bench  repudiated 
it  in  a  recent  case,  (^)  in  which,  however,  the  judgment  was  re- 
versed on  another  point  in  Cam.  Scacc.  (?)     The  same  principle  was 
discussed  in  a  later  case  (m)  in  the  Court  of  Exchequer,  in  which 
Lord  Abinger  adhered  to  his  former  opinion  and  differed  from  the 
other  judges.     The  true  expression  of  the  question  seems  to  be :  Is 
legal  fraud  actionable,  and  does  it  invalidate  a  contract,  though  not 
coupled  with  moral  fraud  ?     This  question  underwent  discussion  in 
the  more  recent  case  of  Evans  v.  Collins,  (?z)  in  which  the  Court  of  • 
Queen's  Bench  adhered  to  the  opinion  they  had  expressed  in  Fuller 
V.  Wilson.     Lord  Denman,  C.  J.,  observed  there,  "One  of  two  per- 
sons has  suffered  by  the  conduct  of  the  other.     The  sufferer  is 
wholly  free  from  blame ;  but  the  party  who  caused  his  loss,  though 
charged  neither  with  fraud  nor  with  negligence,  must  have  been 
guilty  of  some  fault  when  he  made  a  false  representation.     He  was 


(it)  Fuller  V.  Wilson,  3  Q,  B.  58. 

{I)  Wilson  V.  Fuller,  3  Q.  B.  68.     See  also  Stone  v.  Compton,  5  Bingh.  N.  C.  I.ifi 

(?»)  Moens  v.  Hey  worth,  10  M.  &  W.  147. 

(w)  5  Q.  B.  804.     See  also  Ormrod  v.  Huth,  14  M.  &  W.  651. 


PEINCIPAL  AND  AGENT.  207 

Rights  of  the  Principal  against  third  Parties. 

not  bound  to  make  any  statement,  nor  justified  in  making  any 
which  he  did  not  know  to  be  true;  and  it  is  just  that  he,  not  the 
party  whom  he  has  misled,  should  abide  the  consequences  of  his 
misconduct.  The  allegation  that  the  defendant  knew  his  represen- 
tation to  be  false  is  therefore  immaterial."  This  judgment  was 
overruled  by  the  Court  of  Error,  (o)  which  held  that  a  plea,  alleging 
that  the  defendant  had  reason  to  believe,  and  with  good  faith  be- 
lieved, his  representation  to  be  true,  was  a  good  answer  to  an  action 
on  the  case  for  a  misrepresentation ;  that  falsehood  in  a  statement 
without  fraud  would  not  sustain  it ;  and  that  "  a  representation 
which  is  false  in  fact,  but  not  known  to  be  so  by  the  party  making 
it,  but,  on  the  contrary,  made  honestly  and  in  the  full  belief  that  it 
is  true,  affords  no  ground  of  action."  This,  it  is  to  be  observed, 
was  an  instance  of  an  action  founded  upon  the  misrepresentation, 
and  it  was  clear  that  no  party  was  cognizant  of  the  mistake  ;  it  may, 
however,  be  a  different  question  whether  the  circumstance  of  the 
principal  being  cognizant  of  the  real  state  of  facts  might  not  afford 
a  good  defence  to  an  action  founded  on  a  contract,  which  a  party 
has  been  induced  to  enter  into  through  the  erroneous  representation 
of  an  agent,  though  innocently  made  by  him.  It  is  an  important 
question  whether,  at  all  events  in  equity,  a  principal  can  enforce  a 
contract  so  obtained,  or  whether  the  employment  of  an  agent  igno- 
rant of  the  facts,  and  an  intentional  omission  to  mention  them  to 
him,  may  not  be  fraudulent,  and  constitute  a  ground  either  of  action 
or  of  defence,  {pf      ^<^-A^jh^^^s>^-S^^^^  ^  '"r ^  ''^. 

The  establishment  of  the  principal's  rights  against  third  parties      '' 
is  facilitated  by  that  rule  of  evidence  which  renders  the  agent  a 
competent  witness  in  his  favor :  {q)  this  was  long  since  established, 


(o)  Collins  V.  Evans,  Cam.  Scacc,  5  Q.  B.  820. 

(p)  See  Rawlings  v.  Bell,  1  C.  B.  951. 

{q)  Mason  v.  Hogsden,  11  Mod.  226,  262.  Dixon  v.  Cooper,  Wils.  40.  Benjamin 
i;.  Porteus,  2  II.  Bi.  591.  Buckmaster  v.  Ilarrop,  4  Ves.  474.  Martin  v.  Horrell  Str. 
64Y.     Barker  v.   McCrea,  Camp.  144.     B.  N.  P.  289^     See,  however,  respecting  the 


*  The  opinion  of  Lord  Abinger  in  Cornfoot  v.  Fowke,  is  sustained  by  the  case  of 
Fitzsimmons  v.  Joslin,  21  Verm.  Rep.  129,  and  the  opinion  of  Chancellor  Kent,  2 
Kent's  Coram.  621,  note  a.  See  on  the  general  doctrine,  Lord  et  als.  v.  Goddard,  13 
How.  S.  C.  R.  198,  and  Crmnp  v.  U.  S.  Mining  Co.,  7  Gratt.  352. 


208  MERCANTILE  PERSONS. 

Rights  of  Agents  against  third  Parties. 

as  an  exception,  ex  necessitate^  to  the  general  canon,  that  a  witness 
having  any  interest  in  the  event  of  the  cause  was  incompetent, 
qualified  now  in  other  cases,  by  stat.  3  &  4  W.  4,  c.  42,  s.  26,  and 
removed  by  stat.  6  &  7  Vict.  c.  85. 

Section  YI. — Rights  of  Agents  against  third  Parties. 

A  factor  or  other  agent,  who  has  made  a  contract,  in  the  subject 
matter  of  ivhich  he  has  a  sipecial  'property^  may  maintain  an  action 
thereon  in  his  own  name,  and  that  lohether  he  'professed  to  contract  for 
himself  or  not:{r)  thus,  an  auctioneer  may  sue  in  his  own  name  for 
the  price  of  goods  sold  by  him  on  the  owner's  premises,  and  known 
to  be  his  property,  (s)  So,  if  an  agent  have  transferred  his  master's 
property,  under  circumstances  which  give  a  right  to  recover  it  back, 
he  may  do  so  in  his  own  name ;  though  we  have  seen  that  it  may 
also  be  recovered  in  that  of  his  principal,  {t)  So  he  may  maintain 
actions  of  tort  for  injuries  done  to  it  while  in  his  possession,  {u)  In 
the  above  instances,  he  sues  as  a  trustee  for  his  principal ;  but  there 
are  others  in  which  he  may  proceed  for  his  own  benefit ;  thus  a 
factor  who  has  a  lien  for  his  balance  on  the  price  of  goods  sold  by 
him,  may  maintain  an  action  for  that  price  against  the  buyer ;  and, 
if  he  have  previously  given  him  notice  not  to  pay  to  his  principal, 
it  has  been  thought  that  payment  to  the  principal  would  not  be  a 
defence  to  such  an  action,  {v)  though  without  notice  it  would  be 
so ;  {w)  and  in  such  a  case  Eyre,  L.  C.  J.,  refused  to  allow  the  defend- 
ant to  set  off  money  due  to  him  from  the  principal,  {x)     There  are, 

limits  of  this  rule,  which  does  not  include  agents  acting  out  of  their  usual  employ- 
ment, or  agents  for  one  particular  transaction,  McBrain  v.  Fortune,  3  Camp.  317. 
Green  v.  New  River  Company,  4  T.  R.  589.     Edmonds  v.  Lowe,  8  B.  <fe  C.  408. 

(r)  1  Atk.  248,  2  Esp.  493,  B.  N.  P.  130.  Williams  v.  Millington,  1  H.  Bl,  81. 
Sadler  v.  Leigh,  4  Camp.  195. 

(s)  Williams  v.  Millington ;  see  Sykes  v.  Giles,  5  M.  &  "W.  645. 

{t)  Per  Lord  Mansfield,  Stevenson  v.  Mortimer,  Cowp.  805. 

(w)  1  H.  Bl.  81.     Joseph  v.  Knox,  3  Camp.  320. 

{v)  Drinkwater  v.  Goodwin,  Cowp.  255. 

(tfi)  Coppin  V.  Walker,  7  Taunt.  237. 

{x)  Atkyns  v.  Amber,  2  Esp.  493.  See  Lord  Mansfield's  judgment  in  Drinkwater 
«.  Goodwin,  Cowp.  256. 


PRINCIPAL  AND  AGENT.  209 


Rights  of  third  Parties  against  the  Agent. 


however,  cases  in  whicli  great  hardships  might  result,  if  such  a  set- 
off were  not  allowed ;  (?/)  and,  generally  speaking,  where  an  agent 
sues  in  right  of  his  principal,  whatever  would  be  a  defence  against 
the  principal,  will  be  so  against  him.  And  the  declarations  and 
admissions  of  the  principal  will  be  evidence  against  him.  (2) 

An  agent  may  also  sue  upon  any  contract  made  with  him,  in 
his  own  name^  for  an  undisclosed  principal,  (a)  And,  if  such  a  con- 
tract be  made  by  deed,  he  is  the  only  person  who  can  sue  on  it,  for 
it  is  an  invariable  rule  of  law,  that  no  person  can  sue  upon  a  deed, 
who  is  neither  party  to  nor  mentioned  in  it. 

Another  state  of  facts  also  may  occur,  viz.,  ivhere  a  person  has 
entered  into  a  contract  as  agent^  ivhen  in  fact  he  ivas  the  principal.  It 
would  appear  that  in  such  a  case  the  party  making  the  contract 
could  not  sue  upon  it,  if  it  were  a  contract  involving  the  consider- 
ation of  personal  skill  or  knowledge,  or  if  it  were  wholly  executory, 
or  had  been  partially  executed,  the  other  contracting  party  remain- 
ing in  ignorance  of  the  real  principal.  But  if  it  were  of  a  descrip 
tion  not  involving  such  a  consideration,  but  being  of  such  a  nature 
that  partial  execution  would  render  the  contract  obligatory,  as  if, 
for  instance,  it  were  for  the  sale  of  goods,  and  part  of  them  had 
been  accepted  with  a  knowledge  that  the  person  delivering  was  the 
real  principal,  and  not  a  mere  agent  as  he  professed  to  be,  then  he 
could  maintain  an  action  for  its  non-fulfilment.  (6) 

Section  VII. — Rights  of  third  Parties  against  the  Agent, 

An  agent  contracting  as  such  for  a  known  and  responsible  em- 
ployer, incurs  no  personal  liability  to  third  parties,  (c)     If  the  iii- 

{y)  See  the  observations  of  Eyre,  C.  J.,  in  Atkyns  v.  Amber,  and  see  Coppin  v. 
Craig,  n  Taunt.  243. 

(3)  Welstead  v.  Levy,  1  M.  <fe  Rob.  138.  Megginson  v.  Harper,  4  Tyrwh.  94.  2 
C.  <fe  M.  322.  R.  V.  Hardwick,  11  East,  578.  Harrison  v.  Vallance,  1  Bingh.  45. 
Smith  V.  Lyon,  3  Camp.  465. 

(a)  Per  Denman,  C.  J.,  delivering  the  judgment  of  the  court  in  Sims  v.  Bond,  5  B. 
&  Ad.  393. 

(6)  Raynor  v.  Grote,  15  M.  &  W.  359.  See  also  Bickerton  v.  Burrell,  5  M.  &  S. 
383. 

(c)  Ex  parte  Hartop,  12  Ves.  352.     Owen  v.  Gooch,  2  Esp.  567.     Graham  v.  Stam 
per,  2  Vern.  146. 
14 


210  MERCANTILE  PERSONS. 


Rights  of  third  Parties  against  the  Agent. 


dividual  with  whom  he  contracted  knew  him  to  be  an  agent,  knew 
his  principal,  and  knew  that  he  intended  to  bind  that  principal,  he 
will  be  taken  to  have  trusted  to  the  credit  of  the  principal,  and  the 
agent  will  not  be  bound.     There  is  one  exception  to  this  rule,  viz., 

/  the  case  of  masters  of  ships,  who  are  responsible  as  well  as  their 
owners,  on  contracts  for  repairs,  or  stores,  or  loans  of  money  for 
those  purposes ;  {d)  yet,  even  in  that  case,  if  there  be  circumstances 
which  show  that  the  owners  alone  Avere  trusted,  they  alone  will  be 
responsible,  (e)  An  agent  may,  however,  bind  himself  by  an  ex- 
press undertaking.  (/)     If  he  contract  without  naming  any  princi- 

1/  pal  he  is  himself  the  person  j^nma  facie  responsible ;  and  though 
the  other  party  may,  in  most  cases,  elect  to  charge  the  employer 
on  discovering  him,  yet  he  need  not  do  so,  but  may,  if  he  please, 
continue  to  look  to  the  agent ;  {g)  and  the  rule  is  the  same,  at  least 
as  far  as  the  agent's  liability  is  concerned,  where,  at  the  time  of 
contracting,  he  states  himself  to  be  an  agent,  but  does  not  disclose 
his  principal,  {h)  As  this  subject  has  been  discussed  in  a  previous 
section,  it  is  better  to  refer  to  it  for  further  detail,  than  to  fatigue 
the  reader  with  a  repetition  of  the  authorities  there  cited,  (i)  It 
has  also  been  mentioned,  {j)  that  where  a  British  agent  contracts 
for  a  foreign  principal,  the  British  agent  is  responsible :  (/c)  this  is 
said  to  be  for  the  benefit  of  trade,  or  is  perhaps  a  branch  of  the 
following  general  rule,  viz.,  that  where  there  is  no  responsible  em- 
ployer, the  agent  shall  be  held  personally  liable ;  thus  where  A. 


{d)  Rich  V.  Coe,  Cowp.  636.  See  Morse  v.  Sluice,  1  Vent.  190,  238,  1  Mod.  85,  2 
Lev.  69. 

(e)  Hoslcins  v.  Slayton,  Ca.  temp.  Hardw.  876. 

(/)  See  Appleton  v.  Binks,  5  East,  148.  Cass  v.  Rudell,  2  Vern.  280.  Benson  v. 
Hippins,  4  Bingh.  455.  Readhead  v.  Cator,  1  Stark.  14.  Morris  v.  Stacey,  Holt,  153. 
Talbot  V.  Godbolt,  Yelv.  137.  Haines  v.  French,  Aleyn,  6.  Kennedy  v.  Gouveia,  3 
D.  &  R.  503.  Scrace  v.  Whittington,  2  B.  &  C.  11.  Kendray  v.  Hodson,  5  Esp.  228. 
Higgins  V.  Senior,  8  M.  &  ^Y.  834. 

{g)  See  Morgan  v.  Corder,  Paley,  372.     Higgins  v.  Senior,  8  M.  &  "W.  834. 

(h)  Hanson  v.  Roberdeau,  Peake,  120.    Thomson  v.  Davenport,  9  B.  &  C.  78. 

(i)  Ante,  sect.  4.  Paterson  v.  Gandasequi,  15  East,  62.  Thomson  v.  Davenport^ 
P  B.  «fe  C.  78,  and  Lord  Kenyon's  judgment  in  Owen  v.  Gooch,  2  Esp.  567. 

U)  Ibid. 

{k)  De  Gaillon  v.  L'Aigle,  1  B.  <fe  P.  368.  Paterson  v.  Gandasequi,  15  East,  62. 
Thompson  v.  Davenport,  9  B.  &  C.  78.     Houghton  v.  Matthews,  3  B.  &  P.  490.     B.  N. 

r  130. 


PRINCIPAL  AND  AGENT.  211 

Rights  of  third  Parties  against  the  Agent. 

agreed  with  B.  and  C.  to  pave  the  streets  of  Putney,  and  thej  on 
behalf  of  the  parish  agreed  to  pa_y  him,  they  were  held  personally 
responsible.  (?)*  There  is  an  exception  to  this  rule  in  favor  of 
government  officers  acting  for  the  public;  (m)  and  possibly  this  ex* 


(l)  Myriel  v.  Hymensold,  Hard.  205.  See  Horsley  v.  Bell,  Ambl.  7Y0,  1  Bro.  Cha. 
Ca.  101.  Eaton  v.  Bell,  5  B.  &  A.  34.  Anon.  12  Mod.  559.  Burls  v.  Smith,  7  BingK 
705.     See  the  judgment  in  Rew  v.  Pettet,  1  Ad.  &  E.  196, 

(m)  M'Beath  v.  Haldimand,  1  T.  R.  172.  Unwin  v.  Wolseley,  ibid.  764.  Myrtle 
V.  Beaver,  1  East,  134. 


*  This  rule  received  a  learned  examination  in  the  case  of  Ivirkpatriek  v.  Stainer, 
22  Wend.  244,  Chancellor  Walworth  and  Senator  Verplanck  delivering  elaborate  but 
conflicting  opinions.  It  was  admitted  on  all  sides  to  be  inapplicable  to  the  ease  of  a 
principal  and  agent  domiciled  in  different  States  of  the  Union.  "The  presumption 
tliat  credit  was  given  exclusively  to  the  agent,  is  not  one,"  says  Mr.  Verplanck,  "  raised 
by  legal  reason  to  be  taken  notice  oi^  as  of  course,  and  applied  to  such  contracts  wher- 
ever made,  but  one  of  special  usage,  or  of  local  understanding.  If  the  course  of  trade 
and  of  credit  is  now  so  fixed  and  so  imiversally  recognized  in  England,  as  to  have 
become  a  rule  of  presumptive  evidence — a  legal  inference  from  known  public  usage 
to  be  applied  without  special  proof  of  its  existence — still  I  cannot  regard  it  as  being 
necessarily  a  part  of  our  own  commercial  law.  It  forms  no  part  of  the  old  common 
law  of  England,  nor  is  deduced  from  any  settled  doctrine  or  principle  of  that  law, 
otherwise  than  as  a  rule  of  presimiptive  evidence  of  intention,  growing  out  of  posi- 
tive and  unvarying  local  commercial  usage.  If  this  presumption  be  now  the  law  of 
the  English  courts,  without  requiring  evidence  of  usage  in  every  case,  it  is  founded 
upon  admitted  general  usage  and  understanding;  but  it  is  not  law  deduced  from  the 
doctrines  of  the  old  common  law,  or  resting  upon  reasons  of  natural  equity,  or  uni 
versal  public  policy  extrinsic  to  the  local  usage  of  trade,  and  applicable  alike  at 
London  or  in  New  York.  No  usage  or  course  of  business  analogous  to  that  preva- 
lent in  England,  being  notorious  or  well  established  by  former  evidence  as  existing 
here,  and  no  proof  having  been  offered  of  anj?  special  or  local  usage,  or  common  un- 
derstanding, charging  the  agent  alone,  and  not  his  foreign  principal,  for  purchases  oi 
contracts  made  avowedly  for  such  known  principal,  the  case  must  be  governed  by 
the  general  law,  as  to  the  contracts  of  a  private  agent  clothed  with  full  authority, 
and  acting  openly  on  behalf  of  his  principal."  Judge  Story,  in  the  last  edition  of 
his  Commentaries  on  Agency,  noticing  this  case,  still  adheres  to  his  original  state- 
ment, the  accuracy  of  which  had  been  questioned  by  I\Ir.  Verplanck,  in  the  course 
of  his  opinion,  that  where  the  principal  lives  abroad,  the  law  raises  the  presumption 
of  an  exclusive  credit  having  been  given  to  the  agent,  liable,  indeed,  to  be  rebutted, 
but  which  must  prevail  in  the  absence  of  any  usage  or  contiact  to  the  contrary;  and 
the  rule,  as  it  is  stated  by  this  eminent  jurist,  has  been  followed  by  the  Supreme 
Court  of  Louisiana.  The  Newcastle  Manufacturing  Co.  v.  Red  River  Railroad  Co.,  1 
Robin.  Louis.  Rep.  145. 


212  MERCANTILE  PERSONS. 


Rights  of  third  Parties  against  the  Agent. 


ception  may  extend  to  all  2^uUiG  officers  acting  as  such,  (?i)*  The 
rule  itself  seems  to  be  one  of  evidence,  and  all  cases  falling  under 
it  to  be  reducible  to  the  question,  To  ivhom  was  credit  given  ?  For 
it  seems,  on  the  one  hand,  that,  if  a  party  choose  to  give  credit  to 
irresponsible  persons  of  any  description  acting  by  their  agent,  and 
it  be  manifestly  intended  that  the  agent's  credit  shall  not  be 
pledged,  in  such  a  case  the  agent  will  not  be  responsible  ;  (o)  while, 
on  the  other  hand,  it  is  clear,  that  if  the  agent  contract  for  an  irre- 
sponsible employer,  a  strong  presumption  will  arise  that  he  meant 
to  pledge  his  own  credit,  and  that  the  party  dealing  with  him  meant 
to  accept  it,  unless  indeed  he  be  a  government  or  public  officer 
acting  in  his  public  capacity.  There  is  another  possible  case,  viz., 
that  of  a  man  contracting  as  agent  for  a  person  from  whom  he  has 
in  reality  no  authority.  In  such  a  case  the  person  so  contracting 
as  agent  would  be  liable  to  an  action  on  the  case  for  his  misrepre- 
sentation, or  he  might,  at  least  in  many  cases,  be  charged  himself 
as  principal ;  {p)  unless,  indeed,  as  in  the  case  of  SmoutY.  llherry^  10 

(w)  See  1  T.  R.  182,  per  Buller,  J.     Bowen  v.  Morris,  2  Taunt.  374. 

(o)  See  Hoskins  v.  Slayton,  Ca.  tempt.  Hardwieke.  376.  This  view  is  supported 
by  Parrott  v.  Eyre,  10  Bing.  283,  where  Tindal,  C.  J.,  left  it  to  the  jury  to  say  whether 
trustees  of  a  road,  who  had  contracted  in  a  mode  different  from  that  in  which  the 
funds  of  the  road  were  by  statute  capable  of  being  bound,  had  contracted  on  the 
credit  of  the  road,  or  on  their  own  credit ;  and  the  same  question  was  left  to  the 
jury  in  Eaton  v.  Bell. 

(p)  Thomas  v.  Edwards,  2  M.  <fe  W.  215.  Jones  v.  Dowman,  4  Q.  B.  235,  n.  Down- 
man  V.  Williams,  7  Q.  B.  103.  See  Story  on  Agency,  118,  c.  7,  s.  147,  also  230,  c.  10, 
•   269. 


*  The  liabilities  of  public  and  private  agents  are  not  co-extensive.  If  the  former 
makes  a  contract  on  behalf  of  the  government,  and  describes  himself  as  a  public 
agent,  he  will  not  be  rendered  responsible  by  the  use  of  language  which  would  in- 
volve a  private  agent  in  a  personal  liability.  The  reason  of  the  distinction  is,  that 
no  private  person  can  be  presumed  to  have  assumed  any  responsibility  for  the  con- 
tracts of  the  government,  because  it  must  be  supposed  to  be  unnecessary.  Every 
man  dealing  with  a  public  agent  in  that  capacity,  has  a  right  to  place  implicit  con- 
fidence in  the  good  faith  and  ability  of  the  government.  The  rule  which  we  have 
stated  applies  not  only  to  simple  contracts,  but  to  specialties  executed  by  public 
agents  in  their  own  naflaes.  As,  however,  a  public  agent  may  assume  a  personal  re- 
sponsibility, the  inquiry  in  every  case  is  a  question  of  evidence  as  to  the  intention 
of  the  parties.  Hodgson  v.  Dexter,  1  Cranch's  Rep.  345.  Walker  v.  Swartwout,  12 
J.  R.  444.     Tutt  V.  Lewis,  3  Call.  Rep.  233.     Perry  v.  Hide,  10  Conn.  Rep.  329. 


PRINCIPAL  AND  AGENT.  213 

Rights  of  third  Parties  against  the  Agent. 

M.  &  W.  1,  lie  had  once  had  an  authority,  the  determination  of 
which  could  not  be  known  to  him. 

We  have  seen  that  the  agent  will  be  personally  liable,  where  he 
has  expressly  undertaken  to  be  so.  It  is  sometimes  difficult  to  de- 
termine whether,  upon  the  true  construction  of  an  agreement,  the 
agent  making  it  intended  to  bind  himself  or  his  principal.*  The 
nature  of  these  difficulties  will  be  best  illustrated  by  two  examples. 
In  Appleton  v.  Binks,  (q)  a  man  covenanted  for  himself,  his  heirs, 
&c.,  for  and  on  the  part  and  behalf  of  J.  S.  to  do  a  certain  act ;  and 
it  was  held  that  he,  and  not  J.  S.,  was  answerable  for  its  non-per- 
formance. On  the  other  hand,  in  Spittle  v.  Lavender^  (r)  Laven- 
der entered  into  an  agreement,  as  agent  for,  and  on  the  part  and 
behalf  of  S.  R.,  and  signed  it,  at  the  foot  of  which  agreement  were 
these  words :  "  I  hereby  sanction  this  agreement,  and  approve  of 
Charles  Lavender  having  entered  into  it  on  my  behalf,"  and  it  was 
held  that  Lavender  was  not  responsible. 

If  the  agent  exceed  his  authority,  so  that  his  principal  is  not 
bound,  he  will  himself  be  liable  for  the  damage  thus  occasioned  to 
the  other  contracting  party,  althoug-h  he  may  have  been  innocent 
of  any  intention  to  defraud.  (s)f 

{q)  5  East,  148.  See  Cass  v.  Rudell,  2  Yern.  280.  Kennedy  v.  Gouveia,  3  D.  <fe 
R.  503.  Talbot  v.  Godbolt,  Yelv.  137.  Haines  v.  French,  Alejm,  6.  Clajliill  v. 
Fitzgerald,  1  Wils.  28,  68.  Bacon  v.  Dubarrj^  1  Ld.  Raym.  246,  1  Sal.  70.  Norton 
V.  Herron,  Ry.  &  M.  229.  Burrell  v.  Jones,  3  B.  <fe  A.  4Y.  Iveson  v.  Conington,  1  B. 
&  C.  IGO.  Hall  V.  Ashhurst,  1  Cr.  &,  Mee.  714.  Magee  v.  Atkinson,  2  Mee.  &  Welsh. 
440,  whore  it  was  held  that  a  person  who  signed  the  contract  in  his  own  name  is  li- 
able, though  known  to  be  a  broker.     Ace.     Higgins  v.  Senior,  8  M.  &  W.  834. 

(r)  2  B.  <fe  B.  452.  Jones  v.  Downman,  4  Q.  B.  235,  n.  Downman  v.  Williams,  7 
Q.B.  103.  See  Hartop  v.  Juckes,  2  M.  &  S.  438.  Hart  v.  White,  Holt,  76.  See 
Evans  v.  Evans,  3  Ad.  &  El.  132. 

(s)  Polhill  V.  Walter,  3  B.  <fe  Ad.  114.  See  1  Esp.  Ill,  per  Ld.  Kenyon.  3  T.  R. 
661,  3  P.  Wms.  279,  1  Eq.  Ab.  308,  2  Vern.  127. 


*  The  student  will  find  an  elaborate  review  of  the  various  classes  of  cases  in  which 
an  agent  incurs  a  personal  responsibilit}',  while  contracting  for  his  principal,  in 
Roberts  v.  Button  et  al.,  14  Verm.  195. 

f  The  exemption  of  the  principal  from  all  responsibility,  either  in  law  or  equity, 
does  not  extend  to  the  agent.  Thus,  although  a  state  cannot  be  sued,  it  is  different 
with  its  officers  or  agents.  Bank  of  the  United  States  v.  Osborn,  9  Wheat.  743  1 
Bald.  217.     Elliott  v.  Swartwout,  10  Peters,  137. 


214  MERCANTILE  PERS02TS.    ' 

Rights  of  third  Parties  against  the  Agent. 

The  question,  -whether  an  agent  is  personally  liable  for  money 
paid  to  him  for  the  use  of  his  principal,  under  circumstances  which 
would  entitle  some  person  to  recover  it  from. that  principal,  involves 
much  difiiculty.  In  the  first  place,  it  is  clear  that  if  the  agent  have, 
without  notice  to  act  otherwise,  paid  over  the  money  to  his  princi- 
pal, he  never  can  be  called  on  to  refund  it.  (t)  But  in  Cox  v, 
.Prentice,  {u)  it  was  laid  down  by  the  Court,  on  the  authority  of 
BuUer  V.  Harrison,  that  an  agent  who  receives  money  for  his 
principal,  is  liable  as  a  principal,  so  long  as  he  stands  in  his  original 
situation,  and  until  there  has  been  a  change  in  circumstances  by 
his  having  paid  over  the  money  to  his  principal,  or  done  what  is 
equivalent  to  it.  (y)  In  that  case  the  defendant  received  a  bar  of 
silver  from  his  principal,  and  sold  it  to  the  plaintiff,  at  a  price  cal- 
culated with  reference  to  the  number  of  ounces  which,  on  assay, 
it  was  thouoht  to  contain ;  it  turned  out  afterwards,  that  it  con- 
tained  fewer  ounces  than  had  been  supposed,  and  the  plaintiff  was 
held  entitled  to  recover  the  money  overpaid  from  the  defendant, 
who  had  not  yet  handed  it  to  his  principal,  although  he  had  for- 
warded an  account  to  him,  in  which  he  was  credited  with  the  full 
sum,  but  which  was  still  unsettled.  In  Buller  v.  Harrison,  the  de 
fendant  was  an  insurance  broker,  and  the  money  sought  to  be  recov- 
ered, was  paid  by  the  plaintiff,  an  underwriter,  in  discharge  of  a  loss 
which  turned  out  to  be  foul.  It  will  be  observed,  that  in  neither 
of  these  cases  could  the  principal  himself,  ever  by  possibility,  hav6 
claimed  to  retain  the  money  for  a  single  instant  had  it  reached  his 
hands,  the  payment  having  been  made  by  the  plaintiff  under  pure 
mistake  of  facts,  and  being  void,  ah  initio,  as  soon  as  that  mistake 
was  discovered,  so  that  the  agent  would  not  have  been  estopped 
from  denying  his  principal's  title  to  the  money,  any  more  than  the 
factor  of  J.  S.  of  Jamaica,  who  has  received  money  paid  to  him 
under  the  supposition  of  his  employer  being  J,  S.  of  Trinidad, 
would  be  estopped  from  retaining  that  money  against  his  employer, 
in  order  to  return  it  to  the  person  who  paid  it  to  him.  Besides 
which,  in  Buller  v.  Harrison,  had  the  agent  paid  the  money  he 

{t)  Buller  V.  Harrison,  Cowp.  565.     Horsefall  v.  Handley,  8  Taunt.  136.     Green- 
Vvay  V.  Hurd,  4  T.  R.  553,  Vernon,  136,  208. 

(m)  3  M.  &  S.  344.     See  Calland  v.  Lloyd,  5  Mee.  &  Welsh.  27. 

(w)  See  Gary  v.  Webster,  1  gtr.  480.     M'Carthy  v.  Galvin,  9  A.  «fe  E.  612. 


PRINCIPAL  AND  AGENT.  015 

Rights  of  third  Parties  against  the  Agent. 

received  from  the  underwriter,  in  discharge  of  the  foul  loss,  over 
to  his  principal,  he  would  have  rendered  himself  an  instrument  of 
fraud,  which,  as  we  have  already  seen,  no  agent  can  be  obliged  to 
do.  Except  in  such  cases  as  these,  the  maxim  respondeat  superior 
has  been  applied,  and  the  agent  held  responsible  to  no  one  but  his 
principal,  (iv)  Thus,  in  Stephens  v.  BadcocJc,  (x)  the  defendant,  an 
attornej^'s  clerk,  having  received,  by  his  master's  orders,  rents  for 
the  plaintiff,  a  client;  it  was  held,  that  he  was  not  responsible  to 
the  plaintiff,  though  his  employer,  the  attorney,  had  since  become 
a  bankrupt :  so  it  was  held,  that  an  attorney  who  had  received 
cash  for  his  principal  upon  a  sale  which  went  off,  could  not  be  sued 
by  the  intended  vendee  for  it.  (?/)  Nor  can  an  action  for  money 
had  and  received  be  brought  against  the  agent  who  has  received 
it  on  behalf  of  his  principal  for  the  purpose  of  trying  the  existence 
of  a  right  in  that  principal ;  thus,  the  right  of  a  lord  of  the  manor 
cannot  be  tried  in  an  action  against  his  steward  for  quit-rent 
voluntarily  paid :  (2)  and  these  decisions  are  but  just,  since,  as  the 
agent  is  estopped  from  questioning  the  title  of  his  principal,  he 
would,  but  for  this  rule  of  respondeat  superior,  be  frequently  ex- 
posed, without  any  defence,  to  two  different  suits,  in  respect  of  the 
same  subject  matter,  (a)'-^ 


(w)  Cobb  V.  Becke,  6  Q.  B.  930. 

(x)  3  B.  &  Ad.  354.    And  see  Baird  v.  Robertson,  1  M.  &  Gr.  981. 
(y)  Bamford  v.  Shuttleworth,  11  A.  <fc  E.  926. 

(z)  Saddler  v.  Evans,  4  Burr.  1984.  Staplefield  v.  Yewd,  cited  ibid.  B.  N.  P.  138. 
See  Alexander  v.  Southey,  5  B.  &  A.  24Y.     Wilson  v.  Anderton,  1  B.  &  Ad.  450. 

(«")  See  White  v.  Bartlett^  9  Bingh.  378:  sed  vide  Hardacre  v.  Stewart,  5  Esp.  103. 

*  The  general  doctrine  stated  in  the  text  was  discussed  and  approved  in  Elliot  v. 
Swartwout,  10  Peters,  137.  It  was  held  in  that  case,  that  a  collector  of  the  revenue 
was  personally  responsible  in  an  action  to  recover  back  an  excess  of  duties  paid  to 
him  as  collector,  and  by  hina  paid  over  to  the  Treasury  of  the  United  States,  in  good 
faith,  and  under  instructions  from  the  department,  if  at  the  time  of  payment,  notice 
was  given  to  him  that  the  duties  were  charged  too  high,  and  that  the  party  paid  for 
the  purpose  of  getting  possession  of  his  goods,  and  intended  to  sue  to  recover  back 
the  amount,  and  that  he  should  not  pay  over  the  excess  into  the  Treasury,  but  that 
the  collector  would  incur  no  personal  responsibility,  unless  protest  was  made  at  the 
time  of  payment,  and  such  notice  given.  "No  instructions,"  the  Court  says,  "from 
the  Treasury  Department,  could  impair  the  rights  of  the  plaintiff,  or  qualify  the  re- 
eponsibility  of  the  defendant."    S.  P.  Bend  v.  Hoyt,  13  Peters,  263.     But  in  Gary  a' 


216  MERCANTILE  PERSOXS. 


Rights  of  third  Parties  against  the  Agent. 


But  an  agent  cannot  defend  himself,  even  on  the  ground  of  pay- 
ment over  to  his  principal,  if  he  receive  money  illegally  from  a 
party  who  is  not  prevented  from  suing  him  by  the  rule  pari  delicto 
potior  est  conditio  defendentis.  {b)  This  was  decided  in  Miller  v. 
Aris,  (c)  where  the  money  was  received  by  a  jailer  from  a  prisoner 
for  rent  of  a  room  illegally  let  to  him,  and  paid  over  by  the  jailer 
to  his  employers,  (d)  Neither  do  the  foregoing  remarks  extend  to 
cases  in  which  the  money  gets  into  the  agent's  hands  in  conse- 
quence of  a  tort  committed  by  him  under  the  directions  of  or 
jointly  with  his  principal ;  for  in  .thai  case  the  party  aggrieved 
might  have  sued  Him  in  tort,  and  may  npon  the  ordinary  principle 
waive  his  right  to  proceed  in  that  form  and  adopt  assumpsit,  (e) 
Of  course,  if  an  agent  pay  money  to  his  principal,  which  was  not 
intrusted  to  him  for  that  purpose,  he  will  not  be  discharged,  (/) 
ex.  gr.,  if  a  stakeholder  pay  over  the  deposit  before  the  condition  on 
which  it  was  to  become  due  is  performed. 

Although  there  must  be  special  circumstances  to  render  an 
agent  liable  on  contracts  made  for  his  employer,  yet  it  is  otherwise 
if  he  commit  torts  while  acting  in  his  master's  service.  In  such 
a  case,  the  principal  will,  it  is  true,  often  be  liable,  but  then  the 
agent  will  invariably  be  so.  {g)     However,  an  agent  is  not  answer- 


ed) See  Smith  v.  Bromley,  Dougl.  696.    Sharland  v.  Mildon,  15  L.  J.  C.  C.  434- 

(c)  Selw.  K  P.  8th  ed.  93. 

(J)  Accord.  Townson  v.  "Wilson,  1  Camp.  396.  Wakefield  v.  Newbon,  6  Q.  B 
276. 

(e)  Tugman  v.  Hopkins,  4  M.  «fe  Gr.  389. 

(/)  Saddler  v.  Evans,  ante.  Snowden  v.  Davis,  1  Taunt.  359.  Edwards  v.  Hod- 
ding,  5  Taunt.  815. 

{g)  12  Mod.  488,  1  Leon.  146,  Roll.  Ab.  94,  pi.  5.  Craneh.  v.  White,  1  Bingh.  N 
C.  414.  Davies  v.  Vernon,  6  Q.  B.  443.  Perkins  v.  Smith,  Sayer,  41,  1  Wils.  328. 
Barker  v.  Braham,  2  Bl.  867.  Goodwin  v.  Gibbins,  4  Burr.  2108.  Bates  v.  Pilling,  6 
B.  &  C.  38.  Stephens  v.  Elwall,  4  M.  &  S.  259.  Michael  v.  Alestree,  2  Lev.  172.  Wil- 
son V.  Anderton,  1  B.  &  Ad.  450.    Sharland  v.  Mildon,  15  L.  J.  C.  C.  434.     But  see 


Curtis,  3  How.  236,  it  was  held  by  a  majority  of  the  Court,  that  this  doctrine,  as  ap- 
plicable to  collectors  of  the  revenue,  had  been  abrogated  by  the  Act  of  Congress  of 
Marc-h  3d,  1839,  chap.  82,  sect.  2;  and  that  whether  any  means  or  not  were  left  to 
the  claimant,  of  bringing  his  case  before  a  court  of  justice,  the  collector  was  not  per- 
sonally responsible.  See  also  Hurley  v.  Baker,  16  Mees.  &  Wels.  26.  Wharton  v 
Hudson,  3d  Rawle,  390.     Colvin  v.  Holbrook,  2  Comst.  126. 


PRINCIPAL  AND  AGENT.  217 


Plights  of  third  Parties  against  the  Agent. 


able  to  third  parties  for  mere  nonfeasance,  that  is,  for  neglectin.<'- 
to  do,  as  his  master's  agent,  that  which  his  master  is  bound,  and 
has  deputed  him,  to  do.  Thus,  if  the  servant  of  a  common  carrier 
were  to  refuse  to  receive  A.'s  goods  to  be  carried,  on  tender  of  the 
proper  hire,  he  would  not  be  liable  to  an  action  at  the  suit  of  A., 
although  the  carrier,  his  master,  would,  and  although  the  servant 
would  himself  be  liable  to  his  master  for  a  breach  of  duty  as  his 
agent,  (h)* 

We  have  thus  gone  through  the  chief  rules  which  affect  the 
relation  of  Principal  and  Agent.  The  subject  of  this  chaper  will 
be,  however,  further  illustrated  by  some  of  those  contained  in  Booh 
the  Third,  in  which  it  is  proposed  to  treat  Mercantile  Contracts. 
For  instance,  it  is  obvious,  that  in  the  description  of  contracts  of 
affreightment,  of  insurance,  or  of  sale,  light  must  be  cast  upon  the 
duties  of  the  agents,  who  are  employed  in  the  negotiation  or  exe- 
cution of  those  contracts,  and  who  are,  of  course,  bound  to  know 
and  act  upon  the  rules  which  govern  them.  The  duty  of  the  ao-ent 
thus  depends,  in  great  measure,  upon  that  of  his  principal,  and,  con- 
sequently, upon  the  nature  of  those  compacts  from  which  the  latter 
takes  its  ori";in. 


Alexander  v.  Southey,  5  B.  (fe  A.  247.  Miles  v.  Solesby,  2  Mod.  242.  In  Roll.  Abr.  95, 
it  is  laid  down,  that  if  the  servant  of  a  taverner  sell  wine  that  is  corrupted,  know- 
ing it  to  be  so,  no  action  of  deceit  lies  against  the  servant,  for  he  did  it  but  as  a  ser- 
vant ;  whence  it  has  been  inferred,  that  a  servant  is  not  liable  for  fraud  committed 
in  his  master's  business  ;  but  surely  this  is  difficult  to  be  supported. 

(/i)  As  to  the  liability  of  public  officers  for  acts  of  omission,  see  Barry  v.  Ai'naud 
10  Ad.  &  E.  646. 


*  The  well-settled  doctrine,  that  an  agent  is  not  liable  to  third  persons  for  an 
omission  or  neglect  of  duty  in  the  matter  of  his  agency,  but  that  the  principal  alone 
is  responsible,  was  recognized  in  New  York,  in  the  recent  cases  of  Drury  v.  Manhat.- 
tan  Co.,  2  Denio,  118.     Colvin  v  Holbrook,  2  Comst.  126. 


BOOK  THE   SECOND. 

OF    MERCANTILE    PROPERTY 


OF    MERCANTILE    PROPERTY. 


"We  now  come  to  our  second  grand  head,  that  videlicet^  of  Mercan- 
tile Property.  And  here  it  must  be  premised,  that  it  is  not  intend- 
ed to  consider  the  nature  of  the  various  possessions  of  which  a 
merchant's  property,  as  well  as  that  of  any  other  individual,  may 
be  composed :  for  that  would  be  to  write  a  treatise  upon  property 
in  general.  The  objects  of  this  Book  will  be,  1st,  to  point  out  those 
peculiar  incidents  which  property  acquires,  by  passing  into  the 
custody  of  a  merchant,  and  becoming  part  of  his  stock ;  and,  2dly, 
to  give  some  brief  account  of  that  description  of  property  which, 
being  seldom  or  never  found  in  the  hands  of  any  one  except  a  mer- 
chant, has  more  than  ordinary  claims  to  be  included  in  a  treatise 
devoted  to  Mercantile  Law.  There  is,  however,  one  circumstance 
connected  with  the  general  law  of  property  which  it  is  fit  here  to 
remark,  viz.,  that  the  law  will  not  permit  it  to  be  rendered  inalien- 
able by  any  device  whatever,  (a)  for  to  permit  this  would,  to  use 
the  words  of  Lord  Coke,  militate  '■^against  trade  and  traffic,  and 
against  baraaining  and  contracting  between  man  and  man." 


CHAPTER  I. 

INCrDENTS   PECULLIK   TO   3IEKCAXTILE   PROPERTY. 

First^  then,  with  regard  to  the  incidents  which  property  acquires 
in  the  hands  of  a  merchant,  it  is  to  be  observed,  that  all  such  pro- 
perty becomes  transferable  by,  and  subject  to  the  operation  of,  the 

(<i)  Litt  S60,  and  the  Commentary.  An  exception  to  this  rule  is  aUowed  in  the 
case  of  property  given  or  settled  to  the  \ise  of  a  married  woman.  TuUett  v.  Arm 
<itr»ng,  4:  M.  it  Cr.  877.     Baggett  r.  Meux,  1  Phill.  627. 


222  MERCANTILE  PROPERTY, 


Incidents  peculiat  to  Mercantile  Property. 


ba,nkrupt  laws :  as  we  have  appropriated  a  chapter  in  the  last  part 
of  this  treatise  to  the  consideration  of  Bankruptcy,  we  will  make 
no  further  observation  upon  it  at  present. 

Secondly.  It  is  known  to  be  the  ordinary  rule  of  law,  that  where 
two  or  more  persons  are  jointly  possessed  of  property,  the  entire 
right  to  it,  on  the  decease  of  any  of  them,  remains  to  his  survivors, 
and,  at  length,  to  the  last  survivor,  who  thus  becomes  entitled  to 
the  whole,  which  incident  to  joint  tenancy  is  called  by  our  ancient 
writers  the  jus  accrescendi.  {h)  To  this  rule  there  is  an  exception  in 
the  case  of  partners  in  trade,  of  whom  Lord  Coke  says,  that  "  the 
rv^ares,  merchandises,  debts,  or  duties,  which  they  have  as  joint 
merchants  or  partners  shall  not  survive,  but  shall  go  to  the  execu- 
tors of  him  that  deceaseth,  and  this  is  per"  legem  mercatoriam,  which 
is  part  of  the  laws  of  this  realm,  for  the  advancement  and  continu- 
ance of  commerce  and  trade."  (c)  Of  the  existence  of  this  excep- 
tion there  is  no  doubt ;  but  it  has  been  questioned  whether  it  can 
be  enforced  in  courts  of  common  law.  It  seems  to  be  admitted 
upon  all  hands,  that  if  real  property  be  held  in  joint  tenancy  for  the 
purposes  of  trade,  its  exemption  from  the  common  rule  relating  to 
survivorship  can  be  enforced  only  through  the  medium  of  equity ; 
the  question  above  stated  must  therefore  be  confined  to  cases  of 
joint-tenancy  of  chattels.  In  Lord  Tenterden's  admirable  treatise 
on  the  Law  of  Merchant  Ships  and  Seamen,  8th  edit.  p.  97,  his 
lordship,  after  remarking  that  ships  are  usually  purchased  by  several 
persons  in  distinct  shares,  so  as  to  create  a  tenancy  in  common 
amono-  them,  goes  on  to  observe,  that  "  if  the  interests  are  not  sev- 
ered and  distinguished  in  this  way,  but  the  entire  ship  is  granted  to 
a  number  of  persons  generally,  it  is  apprehended  that  they  become 
joint  tenants  at  law,  and  that  the  rule  jus  accrescendi  inter  mercatores 
locum  non  habet,  which  is  applicable  to  a  ship,  is  to  be  enforced  only 
in  equity."  No  authority  is  cited  for  this  position,  which,  however, 
besides  the  weight  which  it  derives  from  the  high  character  of  its 
distinguished  author,  seems  to  be  countenanced  by  the  expressions 
of  the  Master  of  the  Kolis,  in  LuJce  v.  Gibson,  (d)  where  it  is  laid 


(6)  Litt.  280,  281,  2  Black.  Com.  184 

(d)  Co.  Litt.  182,  a.     Comyn's  Dig.  Merchant  D. 

(d)  1  Abr.  Eq.  290. 


ITS  PECULIAR  INCIDENTS.  223 


Incidents  peculiar  to  Mercantile  Property. 


down,  that  "in  all  cases  of  a  joint  undertaking  or  partnership, 
either  in  trade  or  any  other  dealing,  they  are  to  be  considered  as 
tenants  in  common,  or  the  survivors  as  trustees  for  those  who  are  dead." 
Jeffreys  v.  Small,  (e)  which  is  usually  cited  as  proving  the  exception 
turns  out,  upon  examination,  to  refer  solely  to  the  rule  in  equity. 
On  the  other  hand,  in  the  passage  above  cited  from  the  first  Insti- 
tute, the  proposition  is  laid  down  generally  by  Lord  Coke,  who  in 
all  probability  did  not  mean  to  refer  to  any  rule  in  courts  of 
equit}^,  (/)  and  his  opinion  is  supported  by  the  authorities  and  prece 
dents  collected  in  the  margin,  (gr)* 

This  maxim,  "  Jus  accrescendi  inter  mercatores  locum  non  hahei,^ 
applies,  as  we  have  seen,  to  real  property  held  in  partnership  foi 
the  purposes  of  trade.  Its  application  can,  however,  only  be  en- 
forced by  courts  of  equity,  and  incident  to  its  enforcement  is  the 
question  which  sometimes  arises,  whether  the  separate  share  of  each 
partner  is  to  be  considered  as  real,  or  as  chattel  property ;  such  share 


(e)  1  Vern.  217,  3  P.  Wms.  158. 

(/)  It  is  observable,  that  the  doctrine  of  Lord  Coke,  in  the  above  passage,  ex 
tends  to  "Debts  and  Duties,"  the  remedy  for  which  survives,  as  it  is  apprehended, 
notwithstanding  some  contrary  dicta  in  2  Lev.  188,  228,  Lutw.  1493,  Noy.  55,  Sal. 
444,  Com.  Dig.  Merch.  D. 

(ff)  K"oy.  55,  Brownl.  &  Gold.  99.  Kempe  v.  Andrews,  Holt,  145.  S.  C.  3  Lev. 
290.  S.  C.  Sal.  1  Smythe  ct  al.  v.  Milward,  Lutw.  1493.  Hall  v.  HufFam,  2  Lev.  88, 
228.  Martin  v.  Crompe,  1  Ld.  Raym.  340.  R.  v.  Collector  of  Customs,  2  M.  &,  S.  223 ; 
this  case  is  omitted  in  Abbot  on  Shipping. 


*  This  question  was  discussed  in  the  recent  case  of  Buckley  v.  Barber,  before  the 
Court  of  Exchequer,  reported  in  1  Eng.  L.  &,  E.  R.  506.  It  appears  from  the  autho- 
rities cited  in  that  case,  that  no  trace  of  doctrine  of  survivorship  in  chattels,  inter 
mercatores,  is  to  be  found  in  the  earlier  books,  but  very  respectable  authorities  (and 
amongst  them  Lord  Coke)  opposed  to  the  now  conceded  doctrine  of  survivorship  as 
to  remedies  or  choses  in  action.  The  coirt  determined  that  there  was  no  satisfactory 
evidence  that  the  former  branch  of  the  ancient  rule  had  ever  been  altered,  and  that 
the  notion  advanced  by  Lord  Tenterden  that  the  title  to  partnership  chattels  sur- 
vived at  law,  and  that  the  rights  of  the  deceased  partner  could  only  be  protected  in 
equitj',  was  inaccurate.  This  exception  from  the  general  law  of  joint-tenancy  extend- 
ed not  only  to  the  goods  of  merchants  but  to  those  of  manufacturers  and  to  trade 
fixtures.  The  Court  also  expressed  a  doubt  whether  any  such  Jms  disponendi  belonged 
to  the  surviviilg  partner,  by  virtue  of  his  implied  authority  to  wind  up  the  partnership 
affairs,  as  would  enable  him  to  transfer  to  third  persons  a  good  legal  title  to  the  share 
Belonging  to  the  executors  of  the  deceased,  even  in  payment  of  partnership  debts. 


224  MERCANTILE  PROPERTY. 


Incidents  peculiar  to  Mercantile  Property. 


having  been  always  personal  in  its  enjoyment,  tliougli  freehold  in 
its  nature,  and  having  usually  been  acquired,  not  as  a  matter  of 
choice  but  of  necessity,  by  the  sacrifice  of  part  of  the  chattel  pro- 
perty of  the  firm,  which  its  owners  would,  had  it  been  possible, 
have  desired  to  continue  in  its  original  state  of  personalty. 

In  the  earlier  cases  on  this  subject,  it  appears  to  have  been 
thought,  that  freehold  lands  bought  with  the  money,  and  used  for 
the  purposes  of  the  firm,  ought  not  to  be  considered  in  equity  as 
converted  into  personal  property ;  and  therefore,  that,  at  the  death 
of  one  of  the  partners,  as  equity  allows  no  jus  accrescendi  among 
merchants,  even  in  lands,  the  share  of  the  deceased  would  descend 
to  his  heir,  whose  right  thereto  might  be  enforced  in  equity,  (h) 
This  doctrine,  however,  is  overturned,  {i)  and  the  rule  now  is  that 
all  property  of  what  nature  soever,  bought  with  the  cash  and  for 
the  purposes  of  a  trading  partnership  concern,  must  in  equity  be 
looked  upon  as  personal,  and  that,  as  there  can  be  no  survivorship 
4  in  it,  a  partner's  share  will  on  his  death  pass  to  his  personal  repre- 
sentative, {j)  for  whose  benefit  the  surviving  partners,  or  their  trus- 
tees, will  hold  it ;  since,  in  this  case,  the  jits  accrescendi  takes  place 
at  law.  If,  indeed,  the  i3artners  have  stipulated  that  freehold  lands 
purchased  by  them  shall  not  be  subject  to  the  application  of  this 
equitable  doctrine,  but  shall  follow  the  ordinary  rules  respecting 
property  of  that  description,  or  if  they  act  so  that  such  a  stipulation 
may  be  reasonably  inferred  from  their  conduct,  in  such  a  case  the 
rule  of  equity  yields  to  the  ordinary  course  of  law  coupled  with  the 
intention  of  the  parties,  for  quilihet  potest  renunciare  juri pro  se  intro- 
ducto.  ik) 

This  seems  the  proper  place  in  which  to  notice  a  peculiar  rule 
of  law,  established  in  order  to  favor  trade,  and  concerning  certain 
property  in  which  traders  are  temporarily  interested,  viz.,  that  goods 


(/()  Tliornton  v.  Dixon,  3  Bro.  199.     Bell  v.  Pliyn,  7  Ves.  435,  2  Hov.  Suppl.  61. 

(«)  Phillips  V.  Phillips,  1  Mylne  &  K.  663.  Broom  v.  Broom,  3  M.  &  K.  444. 
Morris  v.  Barrett,  3  Y.  &  J.  384.     Houghton  v.  Houghton,  11  Sim.  491. 

{j)  See  Lord  Eldon's  observations  in  Solkrig  v.  Davies,  2  Dow.  242.  Ripley  v. 
"Waterworth,  7  Ves.  425.     Townshend  v.  Devaynes,  Mont,  on  Part.     Appendix,  96. 

{k)  Balmain  v.  Sliore,  9  Ves.  500,  2  Hov.  Supp.  187.  Rowley  v.  Adams,  7  Beav. 
548.  See  Smith  v.  Smith,  5  Ves.  189,  1  Hov.  Supp.  502.  Thornton  v.  Dixon,  above 
cited,  seems  to  fall  within  this  class  of  cases. 


ITS  PECULIAR  INCIDENTS.  225 

Incidents  peculiar  to  Mercantile  Property. 

delivered  to  a  person  exercising  a  trade,  to  be  carried,  wrought,  or  \/ 
managed  in  the  way  of  his  trade  or  employ,  are  for  that  time  privi- 
leged from  a  distress  for  rent,  (l)  Thus,  goods  in  the  hands  of  an 
agent,  wharfinger,  auctioneer,  or  commission  agent,  (in)  or  the  car- 
cass of  a  beast  left  at  a  butcher's  to  be  slaughtered,  {n)  are  exempted 
from  the  liability  to  distress.  It  has,  however,  been  decided,  that 
machinery  bailed  to  the  trader  to  work  the  material  with  is  not  so 
privileged,  (o)  The  exemption  just  described  is  absolute.  The 
necessary  implements  of  a  man's  trade  are  also  privileged  against 
distress  for  rent,  but  only  when  there  is  sufficient  of  other  distrain- 
able  goods  to  meet  the  landlord's  claim,  (p)  They  are  not  exempt 
if  there  be  no  other  sufficient  distress  except  of  growing  crops,  for 
to  seize  those  might  delay  the  landlord  and  put  him  to  inconveni- 
ence, {q)  and  they  are  liable  equally  with  other  goods  to  a  distress 
for  poor  rates,  that  being  in  the  nature  of  an  execution,  (r) 

There  is  another  privilege  which  will  be  most  appropriately  '■-^ 
noticed  along  with  that  against  distress  afforded  to  the  chattels 
above  mentioned.  It  is  conferred  on  certain  fixtures  which,  if  set 
up  for  ordinary  purposes,  would  not  be  severable  from  the  freehold 
by  the  owner  of  a  particular  estate  or  by  his  representative,  but 
which,  in  order  to  encourage  commerce,  are  removable  when  set  up 
for  commercial  purposes.  Such  is  the  greater  part  of  the  machinery 
set  up  by  manufacturers,  and  which  is  now  of  a  description  so  ex- 
pensive, that  to  prohibit  its  removal  from  their  landlord's  premises 
would  be  a  serious  discouragement  to  persons  exercising  the  trade 
in  which  it  is  used.  Upon  the  nature  and  extent  of  this  privilege 
the  reader  may  consult  the  valuable  work  of  Mr.  Amos,  and  the 


{I)  1  Inst.  4Y,  a.     Gisbourn  v.  Hurst,  1  Sal.  249. 

{m)  Gillman  v.  Elton,  3  B.  &  B.  75.  Tliompson  v.  Mashiter,  1  Bingli.  283.  Adams 
V.  Grane,  1  Cr.  &  Mee.  380,  4  Tyrwh.  328.  Gibson  v.  Ireson,  3  Q.  B.  39.  Findon  v- 
McLaren,  6  Q.  B.  891. 

(w)  Brown  v.  Shevill,  2  Ad.  &,  E.  140.  See  Musprat  v.  Gregory,  1  M.  &  "W. 
633. 

(o)  Wood  V.  Clark,  1  C.  &  J.  497,  1  Tyrwh.  327 ;  and  see  Muspratt  v.  Gregory,  1 
M.  &  W.  633.    Joule  v.  Jackson,  7  M.  <fe  "W.  450. 

(p)  See  Simpson  v.  Hartopp,  Willes,  512,  1  Inst.  47,  a.  b.  Fenton  v.  Logan,  9 
Bingh.  675. 

(?)  Piggot  V.  Birtles,  1  M.  &  W.  441, 

(r)  Hutchins  v.  Chaabers,  1  Burr.  579. 
15 


22Q  MERCANTILE  PROPERTY. 


Incidents  peculiar  to  Mercantile  Property. 


authorities  below  cited,   particularly  the  great  case  of  Elwes  v. 
Mawe.  (s)* 

(s)  3  East,  38.  2  Smith's  Leading  Cases,  99,  2d  ed.  Poole's  case,  1  Salk.  368. 
Lawton  v.  Lawton,  3  Atk.  13.  Lawton  v.  Salmon,  1  H.  Bl.  259,  a.  Penton  v.  Robart^ 
2  East,  90.  Dean  v.  Allaly,  3  Esp.  IL  Trappes  v.  Harter,  4  Tyrwh.  624,  2  C.  &  M. 
153.  As  to  the  construction  of  covenants  in  leases  respecting  such  fixtures,  see  Foley 
V.  Addenbrooke,  13  M.  &  W.  174. 


*  This  doctrine  was  considered  at  some  length,  in  the  case  of  Van  Ness  v.  Pacard,  2 
Peters,  137.  "This  exception,"  says  Judge  Story,  delivering  the  opinion  of  the  Court, 
"  of  buildings  and  other  fixtures,  for  the  purpose  of  carrying  on  a  trade  or  manu- 
facture, is  of  very  ancient  date,  and  was  recognized  almost  as  early  as  the  rule  itself 
The  very  point  was  decided  in  20th  Henry  7th,  13,  a  and  b,  where  it  was  laid  down, 
that  if  a  lessee  for  years  made  a  furnace  for  his  advantage,  or  a  dyer  made  his  vats 
or  vessels  to  occupy  his  occupation  during  the  term,  he  may  remove  them  afterwards. 
That  doctrine  was  recognized  by  Lord  Holt,  in  Poole's  case,  Salk.  368,  in  favor  of  a 
soap-boiler  who  was  a  tenant  for  years.  He  held  that  the  party  might  well  remove 
the  vats  he  set  up  in  relation  to  trade ;  and  that  he  might  do  it  by  the  common  law, 
(and  not  by  virtue  of  any  custom,)  in  favor  of  trade,  and  to  encourage  industry.  In 
Lawton  v.  Lawton,  3  Atk.  Rep.  13,  the  same  doctrine  was  held  in  the  case  of  a  fire 
engine,  set  up  to  work  a  colliery  by  a  tenant  for  life.  Lord  Harwicke  there  said, 
that  since  the  time  of  Henry  the  7th,  the  general  ground  the  courts  have  gone  upon 
of  relaxing  the  strict  construction  of  law  is,  that  it  is  for  the  benefit  of  the  public  to 
encourage  tenants  for  life,  to  do  what  is  advantageous  to  the  estate  during  the  term 
He  added,  '  One  reason  whicii  weighs  with  me  is,  its  being  a  mixed  case,  between 
enjoying  the  profits  of  the  land,  and  carrying  on  a  species  of  trade ;  and  in  consider- 
ing it  in  this  light,  it  comes  very  near  the  instances  in  brew-houses  and  of  furnaces 
and  coppers.'  The  case  too,  of  a  cider-mill  between  the  executor  and  heir,  is  ex- 
tremely strong,  for  though  cider  is  a  part  of  the  profits  of  the  real  estate,  yet  it  was 
held  by  Lord  Chief  Baron  Comyns,  a  very  able  common  lawyer,  that  the  cider-mill 
was  personal  estate,  notwithstanding,  and  that  it  should  go  to  the  executor.  'It 
does  not  differ,  in  my  opinion,  whether  the  shed  be  made  of  brick  or  wood,  for  it  is 
only  intended  to  cover  it  from  the  weather  and  other  inconveniences.'  In  Penton  v. 
Robart,  2  East,  88,  it  was  further  decided  that  a  tenant  might  remove  his  fixtures  for 
trade,  even  after  the  expiration  of  his  term,  if  he  yet  remained  in  possession ;  and 
Lord  Kenyon  recognized  the  doctrine  in  its  most  liberal  extent. 

"  It  has  been  suggested  that  this  exception  in  favor  of  trade,  has  never  been  ap- 
plied to  a  case,  like  that  before  the  Court,  where  a  large  house  has  been  built  and 
used  in  part  as  a  family  residence.  But  the  question  whether  removable  or  not, 
does  not  depend  upon  the  form  or  size  of  the  building,  whether  it  has  a  brick  foun- 
dation or  not,  or  is  one  or  two  stories  high,  or  has  a  brick  or  other  chimney.  77ie 
sole  question  is,  whether  it  is  desiffned  for  purposes  of  trade  or  not.  A  tenant  may  erect 
a  large  as  well  as  a  small  messuage,  or  a  soap-boilery  of  one  or  two  stories  high,  and 
on  whatever  foun  lation  he  may  choose.     The  only  point,  according  to  all  the  cases, 


ITS  PECULIAR  INCIDENTS.  227 

Incidents  peculiar  to  Mercantile  Property. 

is,  ■whether  it  is  accessory  to  carrj-ing  on  the  trade  or  not.     If  bond  fide  intended  for 
this  purpose,  it  falls  within  the  exception  in  favor  of  trade. 

"Then  as  to  the  residence  of  the  family  within  the  house,  this  resolves  itself  into 
the  same  consideration.  If  the  house  was  built  principally  for  the  purpose  of  a 
dwelling  house  for  the  family,  independently  of  carrying  on  the  trade,  then  it  would 
doubtless  be  deemed  a  fixture,  falling  under  the  general  rule,  and  immovable.  But 
if  the  residence  of  the  family  were  merely  an  accessory  for  the  more  beneficial  carry- 
ing on  of  the  trade,  and  with  a  view  to  superior  accommodation  in  this  particular, 
then  it  is  within  the  exception.  There  are  many  trades  which  cannot  be  carried  on 
well,  without  the  presence  of  many  persons,  by  night  as  well  as  by  da}''.  It  is  so  in 
some  valuable  manufactories."  The  same  general  principles  ai'e  recognized  and  dis- 
cussed in  the  following  American  cases.  Holmes  v.  Tremper,  20  Johns.  29.  Cresson, 
V.  Stout,  17  Johns.  116.  Swift  v.  Thompson,  9  Conn.  63.  Lemar  v.  Miles,  4  Watts. 
330.    Gale  v.  Ward,  14  Mass.  352. 


CHAPTER  II. 


HIPPING." 


Sect.  1.  Privileges  of  a  British  sMp. 

2.  Wltat  ships  are  British. 

3.  Title  to  thenij  how  acquired  and  transmitted. 

4.  Rights  of  part  owners. 

There  is  one  species  of  property,  I  mean  that  in  shipping,  (a)  to 
which  (because  it  is  almost  exclusively  mercantile,  and  subject  to 
very  peculiar  regulations)  it  will  be  right  to  devote  some  attention : 
with  this  view  we  will  consider — 

1.  What  are  the  privileges  of  a  British  ship. 

2.  What  ships  are,  properly  speaking,  British. 

8.  How  title  to  them  may  be  acquired  and  transmitted. 
4.  The  rights  of  part  owners. 


Section  I. — The  privileges  of  a  British  Ship. 

These  are  now  comprised  in  stat.  8  &  9  Vict.  c.  88,  {b)  which, 
prohibits  the  importation  into  the  United  Kingdom  for  use,  of  a 

(a)  This  subject  is  mainly  regulated  by  two  excellent  statutes,  the  Ship  Registry 
and  Navigation  Acts. 

(6)  Superseding  3  &  4  Wm.  4,  c.  54. 


*  The  Acts  of  Congress  of  the  31st  of  December,  1792,  and  the  18th  of  Feb.  1T92, 
and  the  Ist  of  March,  181Y,  constitute  the  bases  of  our  regulations  upon  the  subject 
of  shipping.  They  confer  peculiar  privileges  upon  American  ships,  and  follow  very 
closely  the  provisions  of  the  British  statutes  upon  the  same  subject.  The  student  may 
find  them  in  Gordon's  Digest  of  tlie  Laws  of  the  United  States,  the  United  States  Sta- 
tutes at  large,  or  in  the  appendix  to  the  last  Boston  edition  of  Abbott  on  Shipping. 


SHIPPING.  229 


Privileges  of  a  British  Ship. 


number  of  European  goods  therein  enumerated  (c)  except  in  British 
ships,  ships  of  the  country  of  which  they  are  the  produce,  or  from 
which  they  are  imported,  (c?)  and,  with  some  few  exceptions,  of  all 
goods  the  produce  of  Asia,  Africa,  or  America,  in  foreign  ships, 
unless  they  be  ships  of  the  country  in  Asia,  Africa,  or  America,  of 
which  the  goods  are  the  produce,  and  from  which  they  are  import- 
ed, (e) 

All  trade  between  the  United  Kingdom  and  Guernsey,  Jersey, 
Alderney,  Sark,  or  Man,  (/)  all  trade  between  those  islands,  or  be- 
tween different  parts  of  any  one  of  them  {g)  or  of  the  United  King- 
dom, (/i)  all  exportation  from  the  United  Kingdom  to  any  British 
possession  in  Asia,  Africa,  or  America,  {i)  all  commerce  between 
such  possessions,  or  between  different  parts  of  the  same  posses- 
sion, (y)  except  in  British  vessels,  is  prohibited ;  nor  can  any  goods 
be  imported  into  any  such  possession  in  foreign  ships,  unless  they 
be  ships  of  the  country  of  which  the  goods  are  the  produce,  and 
from  which  they  are  imported,  (JS)  The  Queen,  however,  may,  by 
an  order  in  Council,  permit  the  importation  of  foreign  goods  into 
Hong  Kong  in  foreign  vessels.  (Z) 

All  manufactured  goods  are  deemed  the  produce  of  the  country 
of  which  they  are  the  manufacture,  {rnf 

(c)  See  Thompson  v.  Irving,  7  M.  »fe  "W.  367. 

((i)  Sect  2.  (e)  Sects.  3  and  4.         (/)  Sects.  6,  1  and  8. 

\g)  Sect.  9.  {h)  Sect.  8.  {i)  Sect.  7.  ( j)  Sect.  10. 

(^•)  Sect.  11. — N.  B.  No  ship  is  admitted  to  be  of  a  particular  country,  unless 
wholly  owned  by  subjects  of  that  country  usually  residing  therein,  or  by  a  corpo- 
ration established  in  it,  sect.  15;  though  a  foreign-built  ship  may  be  legally  owned 
by  a  British  subject,  Long  v.  Duff,  2  B.  &  P.  209,  yet  she  will  not  fall  within  this  or 
the  preceding  exception. 

(/)  Sect.  12.  ,  (»«)  Sect.  5. 


*  By  an  act  passed  June  26th,  184:9,  the  British  Navigation  laws,  so  long  a  favor- 
ite policy  of  her  statesmen,  were  substantially  repealed.  "Tlie  onl}'  remains  of  the 
system  are  the  following,  viz.,  1st.  The  coasting  trade  between  the  United  Kingdom 
and  the  adjacent  British  islands  continues  restricted  to  British  ships.  2d.  No  goods 
or  passengers  can  be  carried  from  one  port  of  any  British  possession  in  Asia,  Africa, 
or  America,  to  another  port  of  the  same  possession,  except  in  British  ships.  The 
Queen  in  council  is  authorized,  on  the  address  of  the  legislature  of  any  British  pos- 
session, to  admit  other  than  British  sliips  to  cojivey  goods  or  passengers  from  one 
part  of  such  possession  to  another  part.     In  consequence  of  this  alteration  of  tlie 


230  MERCANTILE  PROPERTY. 


What  Ships  are,  properly  speaking,  British. 


Section  II.— What  Ships  are,  properly  speaking,  British. 

In  order  that  a  ship  may  be  entitled  to  the  name  and  privileges 
of  a  British  vessel,  she  must  be,  1st,  navigated,  and  2d,  registered,  as 
one.  (n) 

A  ship  is  navigated  as  a  British  vessel  when  the  master  and 
three-fourths  of  the  crew  are  British,  and  if  employed  in  coasting 
between  different  parts  of  the  United  Kingdom,  or  in  a  voyage  be- 
tween the  United  Kingdom  and  Jersey,  Guernsey,  Alderney,  Sark, 
or  Man,  or  between  any  of  them,  or  in  coasting  between  different 
parts  of  those  islands,  or  in  fishing  od  the  coast  of  the  United  King- 
dom, or  of  any  of  those  islands,  the  entire  crew  must  be  British,  (o) 
In  all  cases,  however,  except  those  in  which  the  whole  crew  is  to 
be  British,  the  ship  is  daly  navigated  if  she  have  one  British  sea- 
man for  every  twentv  tons,  though  the  other  seamen  may  exceed 
in  number  one-fourih  of  the  crew,  (p) 

The  master  or  seamen  are  considered  British,  if  natural-born 
subjects  of  her  Majesty,  or  subjects  by  naturalization  or  denization, 
or  having  iecome  so  by  conquest  or  cession,  and  having  taken  the 
oath  of  allegiance  or  fidelity,  or  persons  who  have  served  on  board 
a  Qncen's  ship  of  war,  in  war  time,  for  three  years ;  but  natives 
of  places  within  the  East  India  Company's  charter,  though  under 
British  dominion,  are  not  therefore  British,  {q)  The  Queen  may, 
by  proclamation,  in  war  time,  declare  two  years'  service  on  board 
a  ship  of  war  sufficient  for  this  purpose,  (r)  and  may  at  any  time 
lessen  the  requisite  proportion  of  British  men.  (5)  Ships  trading 
between  places  in  America  may  be  navigated  by  British  negroes, 
and  ships  trading  eastward  of  the  Cape  of  Good  Hope,  and  within 


{n)  Sect.  13,  stat.  8  &  9  Vict.  c.  88.     See  as  to  Indian  shipping,  3  &  4  Yict.  c.  66 
(o)  8  &  9  Vict.  c.  88,  sect.  13.  (p)  Ibid.  sect.  17.  {q)  Ibid, 

(r)  Ibid.  sect.  18.  (s)  Ibid.  sect.  21. 


British  laws,  British  vessels,  after  the  1st  of  January,  1849,  -were  admitted  into  porta 
of  the  United  States,  -with  cargoes  of  the  growth  or  production  of  any  part  of  the 
world,  on  the  same  terms  as  to  duties,  imposts  and  charges,  as  vessels  ot  United 
States  and  their  cargoes."     3  Kent's  Comm.  note  p.  186. 


SHIPPIXG.  231 


What  Ships  are,  pi-operly  speaking,  British. 


the  East  India  Company's  charter,  by  Lascars  and  other  natives 
of  the  countries  within  those  limits,  (t) 

If  the  due  proportion  of  British  seamen  cannot  be  procured  at 
any  foreign  port,  or  any  place  within  the  limits  of  the  Company's 
charter,  or  have  been  unavoidably  destroyed,  the  master  will  be 
excused,  on  producing  a  certificate  thereof  from  the  British  consul, 
or  two  known  British  merchants,  if  there  be  no  consul,  or  the 
British  governor  of  any  place  within  the  limits  of  the  Company's 
charter,  or  on  making  proof  thereof  to  the  satisfaction  of  the  collec- 
tor and  comptroller  of  customs  of  any  British  port,  or  of  some  other 
person  authorized  to  make  inquiry,  (w) 

For  every  excess  of  foreign  seamen,  the  master  or  owners  for- 
feit £10  per  man ;  {v)  for  goods  illegally  imported,  exported,  or 
carried  coastwise,  the  goods  themselves,  and  the  master  forfeits 
£100 ;  {lo)  nor  is  any  registered  ship  to  be  allowed  to  depart  from 
any  port  in  the  British  dominions  unless  duly  navigated,  (x) 

In  order  to  entitle  a  vessel  to  the  privileges  of  a  British  ship, 
it  is  (save  in  a  few  cases  mentioned  at  the  end  of  this  section)  fur- 
ther necessary  that  she  should  be  registered  as  one,  and  a  certifi- 
cate of  registry  obtained ;  {y)  for  otherwise  she  will,  by  exercising 
any  of  those  privileges,  become  forfeited,  with  her  tackle,  &c.,  and 
may  be  seized  by  any  ofi&cer  of  customs,  (z)  On  this  subject  it  may 
be  proper  to  consider,  first,  what  vessels  are  entitled  to  be  regis- 
tered ;  secondly,  where,  how,  and  by  whom  they  must  be  registered ; 
thirdly,  when  registry  de  novo  is  required ;  and,  lastly,  when  registry 
is  dispensed  with. 

First,  then,  no  ship  is  entitled  to  be  registered,  which  is  not,  (a) 
1st,  wholly  of  the  build  of  the  United  Kingdom,  or  of  the  Isle  of 
Man,  or  Guernsey,  or  Jersey,  or  some  of  the  colonies,  plantations, 
islands,  or  territories  in  Asia,  Africa,  or  America,  or  of  Malta, 
Gibraltar,  or  Heligoland,  which  belong  to  Her  Majesty  at  the  time 
of  building ;  or,  2dly,  condemned  by  a  Court  of  Admiralty ;  or, 

{€)  Ibid.  sect.  19,  sect.  13. 

(w)  Ibid.  sect.  20.     See  on  the  construction  of  the  corresponding  enactment,  Suart 
p.  Powell,  1  B.  <k  Ad.  266. 

(^)  8  <fe  9  Vict.  c.  88,  sect.  20.  (w)  Ibid.  sect.  2-i.  {x)  Ibid.  sect.  19. 

iy)  Ibid.  sect.  13 ;  8  <fe  9  Vict.  c.  89,  sect.  2. 

(2)  8  &  9  Vict.  c.  82,  sect.  4.  {a)  Ibid.  sect.  5 


232  MERCANTILE  PROPERTY. 


"What  Ships  are,  properly  speaking,  British. 


8dly,  condemned  by  some  competent  court  for  a  breach  of  the  re- 
gulations relating  to  the  slave  trade. 

Nor  can  any  ship  be  registered,  unless  all  the  owners  are  British 
subjects :  (b)  and  even  a  British  subject  cannot  be  such  owner  if  he 
usually  (c)  reside  in  any  foreign  country,  unless  he  be  a  partner  in^ 
or  agent  for,  some  British  factory,  or  house  carrying  on  trade  in 
Great  Britain  or  Ireland  :  neither  can  any  person  who  has  sworn 
allegiance  to  a  foreign  state,  except  under  the  terms  of  some  capitu- 
lation, unless  he  afterwards  become  naturalized,  or  a  denizen,  (d) 

Such  ship  as  the  above,  nevertheless,  loses  her  privileges,  and 
ceases  to  be  considered  British,  or  entitled  to  registry — 

1st.  If  repaired  in  a  foreign  country,  to  the  value  of  twenty 
shillings  per  ton,  unless  by  some  extraordinary  damage  sustained 
abroad,  such  repairs  are  rendered  necessary  to  enable  her  to  per- 
form her  voyage,  and  return  to  some  port  in  the  king's  dominions, 
and  those  circumstances  be  proved  before  the  persons  and  in  the 
manner  specified  by  stat.  8  &  9  Vict.  c.  89,  s.  7,  and  a  note  thereof 
made  on  the  ship's  certificate  of  registry,  (e) 

2dly,  If  declared  stranded  or  unseaworthy,  and  therefore  or- 
dered by  the  decree  of  a  competent  court  to  be  sold  for  the  benefit 
of  the  owpers.  (/) 

3dlj.  If  captured  by  and  become  prize  to  an  enemy,  (g) 

4thly.  Or  sold  to  foreigners.  (Ii) 

Secondly y  with  respect  to  the  mode  of  registry.  In  general  every 
ship  must  be  registered  at  the  port  to  which  she  belongs,  {i)  A 
ship  is  said  to  belong  to  some  port,  at  or  near  which  some  or  one 
of  the  owners,  who  shall  make  and  subscribe  the  declaration  re- 
quired previous  to  registry,  the  nature  of  which  will  presently  be 
specified,  resides,  {j)  But  no  ship  can  be  registered  at  Heligoland, 
unless  wholly  built  there ;   nor  can  any  ship  registered  at  Malta, 


(h)  Sect.  5.  This  does  not  apply  to  a  corporation :  it  is  sufficient  if  that  be  a  body 
established  by  the  law  of  this  country,  though  some  of  the  members  composing  it 
may  be  foreigners.     See  Regina  v.  Arnaud,  16  L.  J.  Q.  B.  50. 

(o)  For  the  construction  put  upon  this  word,  see  case  of  the  Eleanor,  1  Edwards, 
148. 

(d)  8  &  9  Vict.  c.  89,  sect.  12. 

(e)  8  <fc  9  Vict.  c.  89,  sect.  7.  (/)  Sect  8.  {g)  Sect.  9.  (A)  Ibid, 
(t)  Sect.  10.                                        U)  Sect.  11. 


SHIPPING.  233 

What  Sliips  are,  properly  speaking,  British. 

Gibralta,  or  Heligoland,  be  afterwards  registered  elsewhere,  or  be 
entitled  to  the  privileges  of  British  vessels  in  trading  between  the 
United  Kingdom  and  our  American  colonies,  {k)  Ships  taken 
and  condemned  as  prize,  are  to  be  registered  at  Southampton, 
"Weymouth,  Exeter,  Plymouth,  Falmouth,  Liverpool,  or  White- 
haven. (Z) 

The  persons  by  whom  registry  is  to  be  made  are,  at  ports  in 
Great  Britain,  Ireland,  or  Isle  of  Man,  the  collectors  and  comptrol- 
lers of  custorhs ;  in  any  port  of  the  British  possessions  in  Asia,  Af- 
rica, or  America,  the  collector  and  comptroller,  or  collector  if  there 
be  no  comptroller ;  in  Guernsey  or  Jersey,  the  principal  officers  of 
customs,  together  with  the  governor,  lieutenant-governor,  or  com- 
mander-in-chief; in  ports  within  the  limits  of  the  East  India  Com- 
pany's charter,  and  under  its  government,  the  collector  of  duties, 
or  any  other  person  of  the  rank  of  senior  merchant,  or  of  six  years' 
standing  in  the  Company's  service,  appointed  to  act  by  any  of  its 
governments  in  India ;  in  any  British  possession  within  the  same 
limits  and  not  under  the  Company's  government,  the  collector  of 
duties,  together  with  the  governor,  lieutenant-governor,  or  com- 
mander-in-chief of  such  possessions ;  at  Malta,  Gibraltar,  and  Heli- 
goland, the  governor,  lieutenant-governor,  or  commander-in-chief: 
the  powers  and  duties  of  these  persons  in  the  execution  of  the  Ee- 
gistry  Act  are  identical,  {m) 

The  functions  which  (as  will  be  seen)  are  vested  in  the  com- 
missioners of  customs,  may  be  performed  by  the  governor,  lieuten- 
ant-governor, or  commander-in-chief  of  any  place  where  sliips  are 
registered,  (n) 

In  order  to  obtain  registry,  a  declaration  must  be  made,  and 
subscribed  by  tne  owner,  if  only  one ;  if  two,  both  resident  within 
twenty  miles  of  the  place  of  registry,  by  both  of  them  ;  if  either  at 
a  greater  distance,  by  one  only  ;  if  more  than  two,  by  the  greater 
part  (not  exceeding  three),  if  resident  within  twenty  miles,  unless 
a  larger  number  wish  to  join ;  if  all,  or  all  but  one,  reside  at  a 
greater  distance,  then  by  one  only.  If  the  required  numbers  do 
not  attend,  declaration  must  be  made  by  such  as  do  that  the  absent 

(k)  Sect.  3.  (1)  Sect.  33. 

(wi)  8  <fe  9  Vict.  c.  89,  sect.  8.  (n)  Sect.  3. 


234  MERCANTILE  PROPERTY. 

What  Ships  are,  properly  speaking,  British. 

do  not  reside  within  twenty  miles,  and  have  not  wilfully  absented 
themselves,  or  are  prevented  by  illness  from  attending,  (o) 

The  declaration  contains  the  ship's  name  (which  must  not  after- 
wards be  changed),  and  must  be  painted  on  her  stern,  together  with 
the  port  to  which  she  belongs,  in  white  or  yellow  letters  four  inches 
long,  on  a  black  ground,  and  not  afterwards  obliterated  or  con- 
cealed, unless  in  square-rigged  vessels  during  war ;  nor  must  she  be 
described  by  any  other  name  in  print  or  writing,  or  even  verbally, 
to  a  revenue  officer  on  duty,  (disobedience  to  these  regulations  sub- 
jecting to  a  penalty  of  100/.) ;  (|:>)  her  port,  master,  and  description ; 
the  names,  description,  and  residences  of  the  owners,  with  other 
circumstances  tending  to  prove  them  subjects  of  her  Majesty,  and 
denies  that  any  foreigner  is  interested  in  the  ship,  {q) 

If  the  ship  belong  to  a  corporation,  the  declaration  is  made  by 
the  secretary  or  other  proper  of&cer,  and  the  corporate  name  sub- 
stituted for  the  names  of  the  owners,  (r) 

The  attending  owner  and  the  master  must  also  jointly,  or  in 
case  of  the  master's  absence  with  the  ship,  severally  (by  which, 
however,  they  are  jointly  and  separately  bound),  execute  a  bond 
as  a  security,  that  the  certificate  shall  be  used  for  the  ship's  service 
only,  and  for  its  return,  in  case  the  ship  be  lost,  captured,  destroyed, 
prevented  from  returning  to  her  port,  forfeit  her  privileges,  be  con- 
demned for  illicit  trading,  sold  in  execution,  sold  to  the  crown,  or 
to  a  foreigner  either  in  part  or  whole,  or  registered  de  novo,  (s) 

The  applicant  for  registry  must  also  produce  an  account  under 
the  builder's  hand,  and  which  the  builder  is  required  to  give,  of  the 
ship's  time  and  place  of  building,  denomination,  and  tonnage,  to- 
gether with  the  name  of  the  first  pTirchaser ;  he  must  also  make 
declaration  of  her  identity ;  but  where  by  reason  of  the  death  of 
the  builder  or  other  unavoidable  cause,  the  builder's  certificate  can- 
not be  produced,  it  may  be  dispensed  with,  (i) 

The  mode  in  which  the  tonnage  of  British  merchant  {u)  shipping 

(o)  Sects.  13,  14.  (p)  Sect  27. 

{q)  Sect.  13,  ubi  vide  form  of  declaration. 

(r)  Sect.  13.  See  Regina  v.  Arnaud,  16  L.  J.  Q.  B.  50,  in  which  it  was  held  that 
a  corporate  company  established  in  England,  was  entitled  to  register,  though  some 
of  the  members  were  aliens  and  resided  abroad. 

(s)  Sect.  23.  (t)  Sect.  28.  (m)  Sects.  16  to  20. 


SHIPPING.  235 

What  Ships  are,  properly  speaking,  British. 

is  to  be  ascertained,  is  regulated  by  the  same  statute,  wbicli  requires 
tbat  the  amount  of  tonnage  shall  be  carved  on  the  main  beam  be- 
fore the  vessel  is  registered,  (y) 

In  the  case  of  a  prize  or  condemned  ship,  the  owner  must  pro* 
duce  a  certificate  of  her  condemnation  under  the  judge's  hand  and 
seal,  and  an  account  of  the  particulars  to  be  set  forth  in  a  certificate 
of  registry  subscribed  by  one  or  more  skilful  persons  appointed  by 
the  court  to  survey  her,  and  must  make  declaration  of  her  iden- 
tity, (iv) 

The  above  requisites  being  complied  with,  the  ship  is  registered, 
and  a  certificate  of  registry  deliyered  to  the  applicant:  this  certificate 
contains (x)  the  name,  occupation,  and  residence  of  every  owner; 
the  name  of  the  ship  ;  the  place  to  which  she  belongs ;  her  tonnage ; 
the  name  of  the  master  ;  the  time  and  place  of  the  build  or  of  con 
demnation ;  the  name  of  the  surveying  ofi&cer ;  the  number  of  decks 
and  masts ;  the  height,  breadth,  and  depth  between  decks,  if  more 
than  one,  or  depth  of  the  hold  if  only  one  deck ;  whether  rigged 
with  a  standing  or  running  bowsprit ;  the  description  of  her  stern ; 
her  build,  whether  carvel  or  clinker  built ;  and  gallery,  and  kind 
of  head,  if  any ;  and  on  the  back  are  indorsed  the  names  of  the 
owners,  who  cannot  be  more  than  thirty-two,  with  the  number  of 
sixty -four  shares  held  by  each ;  the  property  of  everj  vessel  being, 
as  we  shall  hereafter  see,  divided  into  sixty -four  equal  shares,  (y) 

All  the  above  particulars  are  entered  in  a  book,  which  the 
registering  of&cers  are  required  to  keep ;  every  registry  is  num- 
bered in  progression,  beginning  from  the  commencement  of  each 
year,  and  an  exact  copy  thereof  tr3,nsmitted,  within  a  month,  to  the 
commissioners  of  customs.  (2) 

If  at  any  period  the  master  be  changed,  the  certificate  must  be 
delivered  to  the  person  authorized  to  register  at  the  port  where  the 
change  takes  place,  who  are  to  indorse  the  change  on  the  certificate, 
and  transmit  notice  of  it  to  the  proper  officer  at  the  ship's  port,  who 
transmits  it  to  the  commissioners  of  customs  :  the  new  master  is  to 
give  a  bond,  such  as  was  given  by  the  old  one  at  the  time  of  the 
registry,  (a) 


(v)  Sect.  20.  (w)  Sect.  32.  (x)  Sect.  2. 

(2/)  8  &  9  Yict.  c.  89,  sect  36.  {z)  Sect.  10.  (a)  Sect.  2L 


236  MERCANTILE  PROPERTY. 


What  Ships  are,  properly  speaking,  British. 


Thirdhj,  with  regard  to  registry  de  novo  ;  that  ceremony  must 
be  gone  through  in  five  cases.  1st.  Whenever  the  owner  or  owners 
who  subscribed  the  declaration  shall  have  transferred  all  his  or 
their  shares  in  the  ship,  she  must  be  registered  de  novo,  before  de- 
parture from  the  port  to  which  she  belongs,  or  from  any  port  in  the 
same  part  of  the  United  Kingdom,  or  the  same  colony,  plantation, 
island  or  territory.  But  the  collector  and  comptroller  may  certify 
on  the  back  of  the  certificate  that  it  is  to  remain  in  force  during 
another  voyage,  if  there  be  not  time  for  registry  de  novo,  before  her 
departure  thereon,  (5) 

2dly.  If  the  certificate  be  lost  or  mislaid,  the  commissioners  of 
customs  are  to  permit  a  registry  and  certificate  de  novo,  the  master 
and  owners  giving  a  bond,  conditioned  that  the  old  certificate,  if 
found,  shall  be  delivered  up,  and  has  not  been,  nor  shall  be  ille- 
gally used  with  their  knowledge.  Or  the  commissioners  may  grant 
a  license,  which  will,  pro  tempore,  serve  as  a  certificate ;  the  master 
in  such  case  declaring  that  the  ship  was  registered,  naming  the  port, 
time,  and  particulars  of  the  certificate,  to  the  best  of  his  belief,  and 
giving  a  bond  such  as  is  last  mentioned ;  the  ship  too  must  be  sur- 
veyed, as  if  for  registry  de  novo,  and  the  certificate  of  survey  pre- 
served by  the  collector  and  comptroller  at  the  ship's  port,  in  virtue 
whereof  the  commissioners  will  permit  the  ship  to  be  registered 
after  her  departure,  whenever  the  owners  attend  to  make  the  de- 
claration and  comply  with  the  other  requisites  of  the  act,  except  so 
far  as  relates  to  the  bond  to  be  given  by  the  master,  and  will  trans- 
mit the  new  certificate  to  the  collector  and  comptroller  of  any  port, 
to  be  handed  to  the  master  on  his  executing  the  bond,  and  giving 
up  the  license,  (c) 

3dly.  If  any  person  be  convicted  of  illegally  detaining  the  cer- 
tificate, (which  is  punishable  summarily  by  sect.  30,)  {d)  the  persons 
who  made  the  first  registry  will,  on  certificate  of  the  conviction,  be 
entitled  to  make  registry  de  novo ;  and  if  the  detaining  party  have 
absconded,  the  commissioners  will,  on  proof  thereof,  permit  registry 
ie  novo,  as  in  case  of  a  certificate  lost  or  mislaid,  (e) 


(6)  Sect.  11.  (c)  8  <fe  9  Vict.  c.  89,  sect  29. 

(d)  As  to  the  form  of  conviction  under  the  corrfsponding  section  of  the  former 
act,  see  Rex  v.  Walsh,  1  Ad.  &  Ell.  481.  [e)  Sect.  30. 


!5HIPPING.  237 


What  Ships  are,  properly  speaking,  British. 


4tblj.  If  the  ship  have  been  altered,  so  as  not  to  correspond 
with  the  particulars  in  her  certificate,  she  must  be  registered  de  novo 
on  her  return  to  her  port,  or  to  any  other  port  in  the  same  part  of 
the  United  Kingdom,  or  the  same  colony,  plantation,  island,  or 
territory,  (/) 

5thly.  On  any  change  of  property  in  a  ship,  the  owners  may^  if 
they  thiok  fit,  have  her  registered  de  novo,  {g) 

Lastly.  It  remains  to  enumerate  the  cases  in  ivhich  registry  is  dis- 
pensed with,  viz. : 

1st.  That  of  British  built  boats  and  vessels,  not  exceeding  fif- 
teen tons  burthen,  wholly  owned  and  navigated  by  British  subjects, 
and  employed  in  the  rivers  and  on  the  coasts  of  the  United  King- 
dom, or  of  the  British  possessions  abroad,  and  not  proceeding  over 
sea,  except  within  the  limits  of  the  respective  colonial  governments, 
wdthin  which  their  managing  owners  reside.  (A) 

2dly.  British  built  boats  or  vessels,  wholly  owned  and  navigated 
Dy  British  subjects,  not  exceeding  thirty  tons,  and  not  having  a 
whole  or  fixed  deck,  employed  solely  in  fishing  on  the  banks  and 
shores  of  Newfoundland,  and  the  parts  adjacent,  Canada,  Nova 
Scotia,  New  Brunswick,  adjacent  to  the  Gulf  of  St.  Lawrence,  or 
the  North  of  Cape  Canso,  or  of  the  islands  within  the  same,  or  in 
trading  coastwise  within  the  same  limits,  (i) 

8dly.  Ships  built  in  the  British  settlements  at  Honduras,  and 
owned  and  navigated  as  British  ships,  which  are  entitled  to  the 
privileges  of  British  ships,  in  all  direct  trade  between  the  United 
Kingdom  or  the  British  possessions  in  America,  and  the  said  settle- 
ments, on  production  of  a  certificate  from  the  superintendent  of  the 
settlement,  that  the  ship  is  so  built  and  owned,  and  with  the  time 
of  her  clearance  for  the  voyage  indorsed  by  him  upon  it.  (j) 

4thly.  There  is  one  case  in  which  the  registry  of  a  ship  is  tem- 
porarily dispensed  with,  viz.,  if  a  ship  be  built  in  any  of  the  colo- 
nies, plantations,  islands,  or  territories,  in  Asia,  Africa,  or  America, 
for  owners  in  the  United  Kingdom,  and  the  master  or  agent  for  the 
owner  produce  to  the  collector  and  comptroller  of  the  port  at  or 
near  which  she  was  built,  the  builder's  certificate  required  by  the 


(/)  Sect.  31.  {</)  Sect.  42.  (A)  8  &  9  Vict.  c.  88,  sect.  14. 

(i)  8  A  9  Vict.  c.  88,  sect.  14.  (j)  Sect.  15. 


238  MERCANTILE  PROPERTY. 

How  title  to  British  Ships  may  be  acquired  and  transmitted. 

Eegistry  Act,  and  make  declaration  of  lier  identity,  the  principal 
owners'  names  and  descriptions,  and  that  no  foreigner,  to  his  belief, 
is  interested  therein ;  the  collector  and  comptroller  shall  cause  her 
to  be  surveyed  and  measured,  and  give  the  master  a  certificate, 
which  has  for  two  years,  if  the  ship  arrive  not  sooner  in  the  United 
Kingdom,  the  force  of  a  certificate  of  registry,  {k) 

Lastly.  It  is  to  be  observed,  that  no  ship  is  absolutely  required 
to  be  registered,  registry  being  only  necessary  to  confer  the  privi- 
leges of  a  British  ship.* 


Section  III. — Sow  title  to  British  /Ships  may  he  acquired  and 
transmitted. 

We  have  now  shown  what  are  the  privileges  of  a  British  ship, 
and  what  ships  have  a  right  to  be  called  British.  We  proceed  to 
consider  how  title  to  such  ships  may  be  acquired,  and  how  trans- 
mitted. 

A  ship  is  a  personal  chattel,  and  therefore,  generally  speaking, 
subject  to  the  rules  which  govern  that  description  of  property.  It 
may  be  originally  acquired — 

1.  By  building  it. 

2.  By  capture  from  an  enemy  in  time  of  war,  sanctioned  by 
condemnation  by  a  competent  court  of  the  capturing  power,  con- 
stituted according  to  the  law  of  nations. 

Although  such  capture  and  condemnation  suppose  a  pre-exist- 
ing right  in  some  one  to  the  vessel  captured,  yet  this  is  enumerated 
as  a  mode  whereby  property  in  it  may  be  originally  acquired,  be- 
cause we  are,  as  must  be  recollected,  treating  only  of  British  ships, 
and  its  right  to  be  registered,  and  consequently  to  be  called  British, 
does  not  accrue  till  sentence  of  condemnation,  (l)     Respecting  the 

{Jc)  8  &  9  Vict.  c.  89,  se^t.  11.  (/)  8  &  9  Vict.  c.  89,  sect.  5. 


*  It  is  not  essential  to  the  validity  of  a  bill  of  sale,  that  it  should  be  enrolled  in 
the  custom  house.  The  enrollment  is  only  necessary  to  secure  the  character  and 
privileges  of  an  American  vessel.  Wendover  'i.  Hogeboom,  7  Johns.  308.  Hozey  v 
Buchanan,  16  Peters,  215. 


SHIPPING.  239 


How  title  to  British  Ships  may  be  acquired  and  transmitted. 

court  ia  which  this  sentence  is  passed,  there  is  the  following  rule, 
viz.,  That  a  legal  sentence  of  condemnation  cannot,  according  to 
the  law  of  nations,  (which  regulates  all  cases  of  prize,)  be  passed  by 
the  consul  or  minister  of  the  belligerent  power  in  the  country  of  a 
neutral  power  to  which  the  prize  has  been  taken,  (m)  But  states 
in  alliance  with  the  captors,  and  at  war  with  the  country  to  which 
the  prize  belongs,  are  considered  as  forming  one  community  with 
the  captors,  and  a  prize  carried  into  such  a  state  may  be  condemned, 
either  there  by  a  consul  belonging  to  the  nation  of  the  captors,  (?z) 
or  in  the  country  of  the  captors,  (o) 

2dly.  Title  to  a  ship  may  be  transmitted  by  the  operation  of 
the  bankrupt  or  insolvent  law,  or  it  may  be  taken  and  sold  in  execu- 
tion, being,  as  we  have  seen,  a  chattel  personal,  in  which  case  it 
must  be  registered  de  novo. 

But  the  ordinary  mode  of  acquiring  property  in  shipping  is  by 
conveyance  from  a  person  authorized  to  dispose  of  it.  Such  a  per- 
son may  be — 

1st.  The  Master. 

It  is  said,  that  in  case  of  extreme  necessity,  the  master  may  sell 
the  ship  for  the  benefit  of  the  owners,  though  nothing  but  extreme 
necessity  will  justify  such  a  step.  (^)*     "  Suppose,  for  instance," 

(m)  Tlie  Flad  Oyen,  1  Rob.  Ad.  Rep.  135.  The  Kierlighett,  3  Rob.  Ad.  Rep.  96. 
Havelock  v.  Rockwood,  8  T.  R.  268. 

(n)  The  Betsey,  2  Rob.  Ad.  Rep.  210,  n.     Oddy  v.  Bovil,  2  East,  4*73. 

(o)  The  Christopher,  2  Rob.  Ad.  Rep.  209. 

(p)  See  on  this  subject  Abbott  on  Shipping,  pt.  1,  c.  1. 


*  The  authority  of  the  master  to  sell  the  ship  or  cargo,  in  case  of  necessity,  seems 
to  be  well  settled  ;  and  the  same  principles  apply  to  the  sale  of  both.  Abbott,  pt.  1, 
eh.  1,  p.  11.  But  as  to  the  degree  of  necessity  which  will  authorize  a  sale,  there  ap- 
pears to  be  a  conflict  in  the  authorities.  Some  require  a  very  high  degree  of  neces- 
sity, and  use  the  strongest  language  to  express  it,  such  as  "imperious  uncontrollable 
necessity,"  Pierce  v.  Ocean  Ins.  Co.,  18  Pick.  88  ;  "  an  overwhelming  or  extreme  ne- 
cessity," Robinson  v.  Commonweal  ;h  Ins.  Co.,  3  Sumn.  249  ;  "a  necessity  which  leaves 
no  alternative — which  prescribes  the  law  for  itself,  and  puts  the  party  in  a  positive 
state  of  compulsion  to  act,"  Hall  v.  Franklin  Ins.  Co.,  9  Pick.  477  ;  Bryant  v.  Com- 
monwealth Ins.  Co.,  13  Pick.  543.     Other  and  later  authorities  take  a  more  moderate 


240  MERCANTILE  PROPERTY. 


How  title  to  British  Ships  may  be  acquired  and  transmitted. 


said  the  learned  judge,  in  the  case  of  the  Fannij  and  Mmira,  {q)  "a 
ship  in,  a  foreign  country,  where  there  is  no  correspondent  of  the 
owners,  and  no  money  to  be  had  on  hypothecation  to  put  her  into 
repair  ;  under  these  circumstances,  what  is  to  be  done  ?  The  ship 
may  rot  before  the  master  can  hear  from  his  owners ;  and,  there- 
fore, if  the  necessity  were  clearly  shown,  with  full  proof  that  every 


{g)  Edw.  Ad.  Rep.  111. 


ground.  From  them  it  may  be  gathered,  that  the  master  is  required  to  act,  as  under 
like  circumstances,  a  considerate  owner,  who  was  uninsured,  would  act  for  his  own 
true  interest,  and  that  of  all  concerned  in  the  voyage.  It  is  not  sufficient,  however, 
to  show  that  the  master  has  acted  fairly  in  the  exercise  of  his  discretion,  but  it  must 
appear  that  he  acted  with  competent  skill  and  judgment,  with  due  care,  diligence 
and  attention,  and  with  strict  fidelity.  New  England  Ins.  Co.  v.  Brig  Sarah  Ann,  13 
Pet.  38*7 ;  S.  C.  2  Sumn.  215.  Patapsco  Ins.  Co.  v.  Southgate,  5  Pet.  604.  Robinson 
V.  Commonwealth  Ins.  Co.,  3  Sumn.  220.  Jordan  v.  "Warren  Ins.  Co.,  1  Story  R.  342. 
Lawrence  i'.  New  Bedford  Com.  Ins.  Co.,  2  Story  R.  411.  In  this  last  ease.  Judge 
Story  uses  the  expression  that  "the  sale  must  be  justified  by  necessity  or  by  a  high 
degree  of  expediency."  See  also  on  this  subject  Fontaine  v.  Phoenix  Ins.  Co.,  11  John. 
293.  American  Ins.  Co.  v.  Center,  1  Cowen,  564;  S.  C.  4  Wend.  45.  American  Ins. 
Co.  V.  Ogden,  15  Wend.  532.  Fontaine  v.  Columbian  Ins.  Co.,  9  John.  20.  Salters  v. 
Ocean  Ins.  Co.,  12  John.  107.  Gordon  v.  Mass.  F.  &  M.  Ins.  Co.,  2  Pick.  249.  Winn 
V.  Columbian  Ins.  Co.,  12  Pick.  279.  Smith  v.  Martin,  6  Binney,  262.  Arthur  v. 
Schooner  Cassius,  2  Story  R.  81. 

It  cannot  be  laid  down  as  a  universal  rule,  that  the  master's  authority  to  sell  is 
limited  to  cases  of  necessity  in  a  foreign  port,  or  in  a  port  of  another  state.  The 
true  criterion  is,  whether  the  owners  or  insurers,  when  they  are  not  distant  from  the 
place  where  the  necessity  occurs,  can,  by  the  earliest  use  of  the  ordinary  means  to 
convey  intelligence,  be  informed  of  the  situation  of  the  vessel  or  cargo,  in  time  to 
direct  the  master  before  a  loss  will  probably  occur.  If  there  be  a  probability  of 
loss  and  it  is  made  more  hazardous  by  every  day's  delay,  the  master  may  then  act 
promptly,  to  save  something  for  the  benefit  of  all  concerned.  New  England  Ins. 
Co.  V.  Brig  Sarah  Ann,  13  Pet.  387  ;  S.  C.  2  Sumn.  215,  qualifying  Scull  v.  Briddle,  2 
Wash.  C.  C.  R.  150. 

The  fact  that  the  vessel  is  got  off,  delivered  of  her  peril,  and  repaired  by  the  pur- 
chasers, after  the  sale,  does  not  disprove  the  necessity  of  the  sale :  for  cases  of  this 
sort  are  not  to  be  judged  of  by  the  event.  13  Pet.  387.  Fontaine  v.  Phoenix  Ins.  Co., 
11  John.  293. 

A  purchaser  from  the  master,  or  a  party  affirming  such  a  sale,  is  required  to  show 
the  necessity  for  the  same,  by  proving  the  facts  and  circumstances  attending  it. 
Some  weirfit  may  be  given  to  the  presumption  that  the  master  did  his  duty  in  mak- 
ing the  sale,  but  that  presumption  ought  not  to  prevail  in  the  absence  of  all  other 
proofs  of  the  necessity  of  the  course.  Robinson  v.  Commonwealth  Ins.  Co.,  3  Sumn. 
220,  227. 


SHIPPING.  241 


How  title  to  British  Ships  may  be  acquired  and  transmitted. 

thing  was  done  optima  fide,  for  the  real  benefit  of  tlie  owners,  the 
Court  might  be  disposed  to  sustain  a  purchase  so  made.  But  there 
must  be  the  clearest  proof  of  necessity ;  it  must  be  shown  not  only 
that  the  vessel  was  in  want  of  repair,  but  lil^ewise  that  it  was  im- 
possible to  procure  the  money  for  that  purpose." 

"The  Court,"  said  Baron  Parke,  in  Parker  v.  Hunter,  (r)  "do 
not  mean  to  intimate  that  the  master  has  not  such  a  power,  in  case 
of  actual  necessity,  notwithstanding  the  case  of  Reid  v.  Darby,  (s)  in 
which  the  point  was  judicially  decided,  for  it  appears  from  subse- 
quent authorities,  that  the  master  has  not  merely  those  powers  that 
are  necessary  for  the  navigation  of  the  ship,  and  the  conduct  of  the 
adventure  to  a  safe  termination,  but  also  a  power,  when  such  ter- 
mination becomes  hopeless,  and  no  prospect  remains  of  bringing 
the  vessel  home,  to  do  the  best  for  all  concerned,  and,  therefore,  to 
dispose  of  her  for  their  benefit."  In  that  case  it  became  unnecessary 
to  decide  the  point,  for  it  turned  out  that  the  owner  had  done  acts 
which  amounted  to  a  ratification  of  the  sale  by  the  master. 

2dly.  The  Owner. 

The  conveyance  of  property  in  British  ships  is  almost  entirely 
regulated  by  the  provisions  of  the  Eegistry  Act,  stat.  8  &  9  Vict, 
c.  89.  We  have  already  seen  how  a  ship  is  registered  in  the  first 
instance ;  the  nature  of  the  hook  of  registry,  which  the  public  offi- 
cers are  required  to  keep,  and  of  the  certificate  of  registry,  which 
they  deliver  to  the  owners.  It  is  further  necessary  to  observe,  and 
has  indeed  been  incidentally  stated,  that  the  property  of  every  Bri- 
tish vessel  is  considered  by  law  as  divided  into  sixty-four  equal 
parts,  and  that  no  person  can  be  registered  as  owner,  in  respect  of 
any  proportion  not  being  a  sixty-fourth  part,  {t) 

It  is,  however,  provided,  that  if  the  property  of  an  owner  or 
owners  cannot  be  divided  into  sixty -four  parts,  the  owner  or  own- 
ers of  such  fractional  parts  as  are  above  the  number  into  which  it 


(r)  7  M.  &  TV.  342.  See  Vlierboom  v.  Chapman,  13  M.  &  "W.  230,  and  the  obser- 
vations  of  Tindal,  C.  J.,  in  Benson  v.  Chapman,  6  M.  &  Gr.  810,  and  see  also  Ireland 
V.  Thompson,  C.  P.  H.  T.  1847. 

(s)  10  East,  143.  {t)  Sect.  85. 

16 


242  MERCANTILE  PROPERTY. 


How  title  to  British  Ships  may  be  acquired  and  transmitted. 


can  be  divided,  may  transfer  the  same  to  one  another,  or  to  a  new 
owner,  without  payment  of  stamp  duty,  and  their  rights  shall  not 
be  affected  by  the  non  registry  of  their  shares.  And  that  partners 
may  hold  ships  or  shares  in  the  name  of  their  house,  without  distin- 
guishing the  interest  of  each  owner,  which  ship  or  shares  are  to  be 
subject  to  the  rules  that  govern  other  partnership  property.  If  they 
specify  the  names  of  the  partners,  they  must  specify  them  all,  or 
an  interest  will  vest  in  those  only  who  are  specified,  {u) 

It  is  further  to  be  observed,  that  not  more  than  thirty-two  per- 
sons can  be  legal  owners  of  a  ship  at  the  same  time,  or  registered 
as  such ;  a  provision  which  does  not,  however,  affect  the  equitable 
title  {v)  of  minors,  heirs,  legatees,  creditors,  and  others,  duly  repre- 
sented by,  and  holding  from  any  registered  owners  within  that 
number ;  and  the  commissioners  of  customs  have  the  power  of  al- 
lowing joint  stock  companies  of  any  number,  to  hold  ships  through 
the  intervention  of  not  less  than  three  trustees,  (iv) 

Keeping  these  rules  in  mind,  we  will  proceed  to  consider  the 
mode  which  the  Legislature  has  pointed  out  for  the  transfer  of  a 
ship  from  one  person  to  another. 

This  is  effected  by  a  bill  of  sale,  or  other  instrument  in  -UTiting, 
which  must  recite  the  certificate  or  principal  contents  thereof, 
otherwise  the  transfer  is  invalid.*     No  bill,  however,  is  to  be  void 

(u)  Slater  v.  Willis,  1  Beav.  361.       (i)  See  6  Ves.  739,  15  Ves.  68.      (w)  Sect.  36. 


*  The  doctrine  of  the  text,  that  a  bill  of  sale,  or  other  instrument  in  writing,  ia 
essential  to  the  transfer  of  a  ship,  is  well  settled  in  England,  both  in  the  courts  of 
admiralty  and  the  courts  of  common  law.  "  I  have  not  been  able,"  says  Judge  Story, 
in  Ohl  V.  Eagle  Insurance  Company,  4  Mason,  390,  "  to  find  a  single  case  in  English 
jurisprudence,  in  which  it  has  been  held  that  a  ship  might  pass  by  mere  delivery, 
without  any  document  in  writing  of  actual  ownership."  See  The  Sisters,  5  Rob.  ]  55, 
ex  parte  Hackett,  19  Ves.  475.  The  question  has  more  than  once  arisen  in  this  coun- 
try, in  the  courts  of  common  law,  and  they  have  manifested  a  disposition  to  depart 
from  the  rule  of  admiralt}',  and  apply  to  a  controversy  respecting  the  ownership  of 
a  vessel  the  rules  which  ascertain  the  title  of  ordinary  chatties.  See  Bixby  v.  Whit, 
ney,  8  Pick.  86.  Badger  v.  Bank  of  Cumberland,  26  Maine  Rep.  428.  Wendover  v. 
Hodgeboom,  7  John.  Rep.  308. 

Under  the  Registry  Act  of  1792,  a  bill  of  sale  on  the  transfer  of  a  registered  ves- 
eel,  is  essential  to  enable  the  purchaser  to  obtain  a  new  registry,  and  give  an  Ameri- 
can character  to  the  vessel.     And  by  an  act  of  1850,  no  bill  of  sale  is  valid  against 


SHIPPIXG.  243 


How  title  to  British  Ships  may  be  acquired  and  transmitted. 

on  account  of  any  error  in  the  recital,  or  the  recital  of  a  former 
instead  of  the  existing  certificate,  provided  the  identity  of  the  ship 
be  sufficiently  proved  thereby,  (x)  But  no  bill  of  sale  is  valid  or 
eflPectual,  for  any  purpose,  (y)  until  produced  to  the  collector  and 
comptroller  of  the  port  where  the  ship  is  registered,  or  about  to  be 
registered  de  novo,  who  are  to  enter  in  her  last  book  of  registrj^,  in 
the  one  case,  or  in  the  book  of  registry  de  novo,  after  all  requisites 
for  such  registry  de  novo  have  been  complied  with,  in  the  other 
case,  the  name,  residence,  and  description  of  the  vendor  and  ven- 
dee, mortgagor  and  mortgagee,  or  each,  if  more  than  one,  the  num- 
ber of  shares  transferred,  and  the  date  of  the  instrument,  and  of  the 
production  of  it ;  and  are  (except  in  cases  of  registry  de  7iovo,  when 
a  new  certificate  is  granted,)  to  indorse  on  the  slu2:)^s  certificate  of 
registry  when  produced  to  them,  the  aforesaid  particulars  in  a  pre- 
scribed form,  and  give  notice  thereof  to  the  commissioners  of  cus. 
toms,  and  if  required,  to  certify  by  indorsement  on  the  bill  of  sale, 
or  other  instrument,  that  such  entry  on  the  book  and  indorsement 
on  the  certificate  of  registry,  have  taken  place.  (2) 

When  the  entry  in  the  hook  of  registry  has  been  made,  the  bill 
of  sale  or  other  instrument  becomes  effectual  to  pass  the  property 
intended  to  be  transferred,  as  against  all  persons  whatever,  except 
against  such  subsequent  purchasers  and  mortgagees  who  shall  first 
procure  the  indorsement  to  be  made  on  the  certificate  of  registry,  in 
manner  hereinafter  mentioned,  (a)  For  where  the  same  property 
has  been  transferred  more  than  once,  the  several  vendees  and  mort- 
gagees take  priority,  not  according  to  the  time  of  entering  their  respec- 
tive instruments  in  the  hook  of  registry,  hut  according  to  the  time  ivhen 
the  indorsement  is  made  on  the  certificate,  {b) 


(x)  Sect.  34. 

(y)  See  Boyson  v.  Gibson,  16  L.  J.  C.  P.  147. 

(2)  Sect.  37.     See  on  this  section  R.  v.  Philip,  1  Moody  C.  C.  274. 

(«)  Sect.  38. 

(6)  Sect.  39. 


any  other  than  the  grantor,  mortgagor,  or  persons  having  actual  notice  tliereof,  un- 
less it  is  recorded  in  the  office  of  the  collector  of  customs  wliere  such  vessel  is  regis- 
tered or  enrolled.  See  Gordon's  Digest,  sects.  2508,  2509.  Phillips  v.  Ledlc}',  1  Wash 
C.  C.  R.  226.     United  States  v.  Willing  et  als.,  4  Cranch,  48. 


244  MERCANTILE  PROPERTY. 

How  title  to  British  Ships  may  be  acquired  and  transmitted. 

Thus,  if  the  owner  of  a  share  fraudulently  execute  two  differ- 
ent bills  of  sale  thereof,  to  two  different  persons,  and  both  cause 
their  conveyances  to  be  entered  in  the  book  of  registry,  but  the 
second  get  into  possession  of  the  certificate,  and  procure  the  in- 
dorsement to  be  made  on  it,  he,  and  not  the  first  vendee,  will  have 
the  legal  title  to  the  share. 

But  it  is  further  provided,  that  when  any  instrument  of  trans- 
fer has  been  entered  in  the  book  of  registry,  there  must  be  a  lapse 
of  thirty  days,  or  (if  the  ship  were  absent  from  her  port  at  the  time 
of  such  entry)  thirty  days  from  her  arrival  thereat,  before  any  in- 
strument purporting  to  be  a  transfer  of  the  same  ship  or  share  from 
the  same  vendor  or  mortgagor  to  any  other  person,  can  be  entered : 
so,  if  a  second  instrument  have  been  entered,  a  like  period  must 
elapse  between  its  entry,  and  that  of  a  third;  and  wherever  more 
than  one  have  been  entered,  the  of&cer  is  to  indorse  on  the  certifi- 
cate the  particulars  of  that  one  under  which  the  person  claims,  who 
shall  produce  the  certificate  for  that  purpose  within  thirty  days 
after  the  entry  of  his  instrument  in  the  book,  or  of  the  ship's  re- 
turn to  port,  if  she  were  absent  at  the  time  of  such  entry :  and  if 
no  person  produce  the  certificate  within  such  time,  then  the  officer 
is  to  indorse  the  particulars  of  that  person's  instrument  who  shall 
first  produce  the  certificate  for  that  purpose.  It  is,  however,  pro- 
vided, that  if  the  certificate  be  lost,  mislaid,  or  detained,  on  proof 
of  this  by  a  vendee  or  mortgagee,  time  may  be  granted  either  for 
its  recovery  or  for  registry  de  novo,  during  which  additional  time  no 
other  transfer  can  be  entered  in  the  book  of  registry,  (c) 

Thus,  it  appears,  that  in  case  of  successive  sales  of  the  same 
property  by  the  same  person,  each  of  the  rival  vendees  has  thirty 
days  from  the  entry  of  his  instrument,  or  next  subsequent  return 
of  the  ship  to  port,  during  which  no  one  but  himself  can  obtain  a 
perfect  title.  But  if  he  let  that  space  of  time  go  by,  he  will  be  in 
danger  of  having  his  claim  defeated  by  an  indorsement  of  the  pai"- 
ticulars  of  some  other  vendee's  instrument  on  the  certificate,  un- 
less, indeed,  further  time  have  been  granted  to  him,  in  the  manner 
above  pointed  out. 


(c)  Sect.  39.     See  as  to  the  operation  of  this  clause,  and  the  expediency  of  pro- 
turing  immediately  this  indorsement,  Chapman  v.  Thompson,  2  Hare,  142. 


SHIPPING.  245 


How  title  to  British  Shij^s  may  be  acquired  and  transmitted. 

To  put  an  example.     Suppose  the  owner  of  a  share  in  a  ship  at 
sea  fraadulently  executes  one  bill  of  sale  to  A.,  and  another  to  B. ; 

A.  causes  his  bill  of  sale  to  be  entered  in  the  book  of  registry  at 
the  ship's  port:  his  title  is  now  perfect  against  the  vendor,  and 
against  every  one  else,  except  B. ;  and  B.  himself  cannot  procure 
his  bill  of  sale  to  be  even  entered  in  the  book  of  registry,  the  time 
not  having  elapsed,  which  is  given,  as  we  have  shown,  to  A.  exclu- 
sively. The  ship  returns  to  port,  say  on  the  first  of  October,  A. 
allows  that  month  to  elapse  without  taking  any  step ;  on  the  81st 
of  October,  A.'s  thirty  days  expire ;  and  on  the  1st  of  November 

B.  procures  his  instrument  to  be  entered  in  the  book  of  registry, 
but  neglects  to  adopt  any  further  measure  to  secure  his  purchase 
A.  now  obtains  the  certificate  of  registry  from  the  master  of  the 
ship,  but  cannot  perfect  his  title,  by  having  the  particulars  of  his 
bill  of  sale  indorsed  on  it,  until  the  2d  of  December  shall  have  ar- 
rived, the  law  appropriating  the  intermediate  days  to  the  exclusive 
use  of  B.  On  the  2d  of  December,  however,  A.  produces  the  cer- 
tificate to  the  collector  and  comptroller  at  the  ship's  jDort,  has  the 
indorsement  made,  and  his  title  then  becomes  perfect  against  all  the 
world. 

It  is  further  provided  by  the  Eegistry  Act,  that  if,  after  any  bill 
of  sale  has  been  recorded  at  the  port  to  which  the  ship  belongs,  it 
be  produced  with  a  notification  upon  it  of  such  record  and  along 
with  the  certificate  of  registry,  to  the  officers  of  any  other  port ; 
those  officers,  if  required,  are  to  indorse  on  the  certificate  the  trans- 
fer mentioned  in  the  bill  of  sale,  and  give  notice  of  their  having 
done  so  to  the  officers  of  the  port  to  which  the  ship  belongs,  who 
will  record  it  there,  as  if  they  had  made  the  indorsement  them- 
selves, but  mentioning  the  facts.  However,  before  the  officers  of 
the  other  port  can  make  such  indorsement,  they  are  to  give  notice 
of  the  requisition  made  to  them,  to  the  officers  of  the  port  to  which 
the  ship  belongs,  and  ascertain  from  them  whether  any  and  what 
bills  of  sale  have  been  entered  in  the  book  of  registry,  after  which 
they  are  to  proceed  to  indorse  the  certificate,  as  if  their  port  ivere  thai 
to  tohich  the  ship  helongs.  {d) 

Thus,  the  person  who  would  be  entitled  to  have  the  indorse- 

(a)  Sect.  40. 


246  MERCAI^TILE  PROPERTY. 

How  title  to  British  Ships  may  be  acquired  and  transmitted. 


ment  made  ou  the  certificate,  immediately  on  the  return  of  an  ab- 
sent vessel  to  her  port,  may  have  it  made  by  anticipation  during 
her  absence. 

If  a  ship  or  share  be  sold  in  the  owner's  absence,  by  his  known 
agent  and  correspondent  acting  for  him,  and  who  has  executed  a 
bill  of  sale  to  the  purchaser,  without  any  legal  power  to  do  so,  the 
commissioners  of  customs  may,  on  proof  of  the  fair  dealing  of  the 
parties,  permit  the  transfer  to  be  registered,  recorded,  or  indorsed, 
as  the  case  may  be,  as  if  a  legal  power  had  been  produced.  So,  if 
a  bill  of  sale  cannot  be  produced,  or  by  reason  of  distance  of  time, 
or  absence,  or  death  of  parties,  cannot  be  proved  to  have  been  exe- 
cuted, the  commissioners  may,  on  proof  of  the  fair  dealing  of  the 
parties,  permit  the  ship  to  be  registered  de  novo,  as  if  a  bill  of  sale 
had  been  produced.  But  in  any  of  these  cases  good  security  must 
be  given  to  produce  a  legal  power  or  bill  of  sale  in  reasonable  time, 
or  abide  the  future  claims  of  the  absent  owner  or  his  representa- 
tives, which  security  will  be  available  for  the  protection  and  indem- 
nity of  the  party  whose  property  has  thus  been  transferred,  in  ad- 
dition to  his  other  rights,  whether  in  law  or  equity,  (e) 

In  case  of  mortgage. 

The  above  considerations  are  applicable  to  every  instance  in 
which  property  in  shipping  is  transferred,  but  there  are  one  or  two 
regulations  peculiar  to  ^ases  of  mortgage. 

When  a  transfer  is  made  by  way  of  mortgage,  or  to  a  trustee, 
for  the  purpose  of  sale  for  the  payment  of  debts,  the  nature  of  the 
transfer  is  to  be  expressed  in  the  entry  in  the  book,  and  indorse- 
ment on  the  certificate  of  registry,  and  the  transferee  is  not  deemed 
to  have  become,  or  the  transferror  to  have  ceased  to  be,  the  owner 
of  the  property  transferred,  except  so  far  as  may  be  necessary  to 
make  it  available  by  sale  or  otherwise,  for  the  payment  of  the  debt 
it  was  transferred  to  secure.  (/)*     It  has  been  doubted  since  this 

{e)  Sect.  44.  (/")  Sect.  45 

*  The  law  as  to  liability  of  mortgagees,  whether  in  or  out  of  possession,  for  re- 
pairs and  supplies  to  tlie  vessel,  has  been  the  subject  of  many  fluctuating  decisions. 


surppixG.  247 


IIow  title  to  British  Ships  may  be  acquired  and  transmitted. 

enactment,  whether  a  mortgagee  can  insure  the  entire  value  of  the 
ship,  (g)  However,  if  he  take  possession  of  it,  as  he  may,  during 
a  voj^age,  he  is  entitled  to  receive  the  freight  earned  in  that  voy- 
age, [h)  As  the  entire  property  does  not  pass  to  the  mortgagee, 
there  of  course  remains  a  portion  in  the  mortgagor,  which  he  can 
transfer  to  a  second  purchaser  or  mortgagee,  in  the  manner  pre- 
scribed by  the  Eegistry  Act ;  and  it  seems  from  the  remarks  of  the 
Bench  in  a  recent  case,  {i)  that  an  instrument  purporting  to  transfer 


(^)  Irving  V.  Richardson,  2  B,  &  Ad.  196. 

(h)  Kerswell  v.  Bishop,  2  Tyrwh.  602,  2  C.  &  J.  529. 

(^)  Ex  parte  Jones  hi  re  Richardson,  2  Tyrwh.  686,  2  C.  &  J.  525. 


According  to  Chancellor  Kent,  the  weight  of  American  authority  is  in  favor  of  the 
position  that  a  mortgagee  of  a  ship  out  of  possession,  is  not  liable  for  repairs  or  ne- 
cessaries procured  on  the  order  of  the  master,  and  not  upon  the  particular  credit  of 
the  mortgagee,  the  latter  not  being  in  the  receipt  of  the  freight;  though  the  rule  is 
otherwise  when  the  mortgagee  is  in  possession,  and  the  vessel  is  employed  in  his  ser- 
vice. 3  Kent's  Com.  13-i.  Hesketh  v.  Stevens,  7  Barb.  S.  C.  R.  488.  Ring  v.  Frank- 
lin, 2  Hall  K  Y.  R.  1.  Miln  v.  Spinola,  4  Hill's  Rep.  177.  Tucker  v.  Buffington,  15 
Mass.  R.  477.  Duff  v.  Bayard,  4  Walls.  &  Ser.  2  40.  Henderson  v.  Mayhew,  2  Gills. 
R.  393.  Jones  v.  Blum,  2  Rich.  S.  C.  R.  475.  Judge  Sergeant,  in  Duff  v.  Bayard,  thus 
expounds  the  principles  of  the  doctrine.  "  That  the  owners  of  a  vessel  are  liable  for 
supplies  or  necessaries  furnished  for  her  use  by  the  orders  of  the  master,  where  no 
other  percon  has  been  expressly  credited,  is  a  principle  long  established.  But  who 
is  such  owner  in  any  given  ease,  is  a  question  upon  which  there  are  to  be  found  con 
tradictory  cases  and  fluctuating  opinions  in  the  reports.  The  latter  decisions,  how- 
ever, seem  to  agree,  that  one  having  the  legal  title  onl3-,  without  any  interference  in 
the  management  of  the  ship,  or  any  right  to  receive  her  freight  or  earnings,  is  not 
responsible,  whether  the  title  is  by  bill  of  sale  or  other  sufficient  conveyance,  or 
whether  it  is  by  mortgage  or  other  document  in  the  nature  of  a  pledge  or  security. 
Such  persons  are,  it  is  true,  in  one  sense  owners ;  that  is  to  sa^',  they  have  a  valid 
claim  or  title  to  the  property  of  the  vessel,  in  law  or  in  equity.  But  that  is  not  suf- 
ficient. The  owner  who  is  responsible  in  such  cases,  is  the  person,  who,  having  some 
kind  of  claim  or  title,  has  the  control  or  management  of  the  vessel,  and  has  the  right 
to  receive  the  freight  and  earnings.  And  the  ground  of  this  liability  seems  to  be  the 
common  maxim,  qui  sentit  commodum  sentire  debet  et  onus."  It  is  for  the  former  of 
these  {i.  e.,  who  employ  the  vessel),  and  not  for  the  latter,  that  the  master  is  consid- 
ered as  agent,  and  competent  to  bind  them  by  his  orders  for  supplies  furnished  to 
the  vessel.  "  It  is  obviously  right  and  just  that  he  who  enjoys  the  benefits  of  the 
vessel,  and  controls  her  operations,  who  receives  her  gains,  or  has  the  chance  of  so 
doing,  ought  to  pay  the  debts  incurred  for  the  fitting  out,  supply,  and  navigation  of 
the  vessel,  which  is  to  produce  for  him  those  earnings,  and  not  a  person  who  merelj 
holds  a  right  in  her  without  the  profit  or  asufruct." 


248  MERCANTILE  PROPERTY. 

Rights  of  Part  Owners. 


such  residue  of  interest,  and  taking  notice  of  the  right  of  a  prior 
mortgagee,  will  not  entitle  the  party  claiming  under  it  to  a  priority 
to  such  mortgagee,  although  his  transfer  may  never  have  been  in- 
dorsed on  the  certificate,  and  all  proper  formalities  may  have  been 
complied  with  in  the  case  of  the  second  instrument. 

The  mortgagee  is  preferred  to  the  assignees  of  the  mortgagor 
in  case  of  bankruptcy,  and  protected  from  having  the  mortgaged 
proj)erty  considered  as  in  the  bankrupt's  ordering  and  disposi- 
tion. {J) 

Section  IV. — Bights  of  Part  Owners. 

It  remains  to  consider  the  rights  of  part  owners  of  a  ship 
amongst  themselves. 

It  is  possible  that  joint  tenancy  may  be  created  in  a  ship,  as 
well  as  in  any  other  chattel,  by  grant  to  several  persons  jointly, 
and  if  it  be,  the  rule  jus  accrescendi  inter  mercatores  locum  non  habet, 
will  apply  to  it.  (k)  But  the  operation  of  the  Eegistry  Act  occasions 
this  sort  of  property  to  be  usually  conveyed  in  distinct  shares  of 
one  or  more  sixty-fourth  parts,  the  owners  of  which  are  tenants  in 
common  of  the  vessel,  and  would  hold  it  subject  to  the  general 
rule  of  the  common  law,  which  permits  any  one  tenant  in  common 
to  seize  upon  the  chattel,  and  regulate  the  mode  of  its  enjoyment 
to  the  exclusion  of  the  rest,  (l)  were  it  not  that  public  policy  steps 
in,  and  exempts  this  sort  of  property  from  a  rule,  which,  if  applied 
to  it,  might  prove  injurious  to  commerce.  Accordingly,  if  the 
owners  themselves  have  not  precluded  all  dispute  by  agreeing  in 
the  choice  of  a  sAjp's  husband,  or  managing  owner,  and  delegating 
the  care  of  their  interests  to  him,  the  Court  of  Admiralty  interferes 
by  arresting  the  ship,  and  preventing  the  majority  of  owners  from 
sending  her  abroad  against  the  will  of  the  minority,  without  first 
entering  into  a  stipulation,  in  a  sum  equal  in  value  to  the  shares  of 

(j)  Sect.  46;  but  see  Boyson  v.  Gibson,  16  L.  J.  C.  P.  147,  and  Campbell  v. 
Thompson,  2  Hare,  140. 

{k)  See  R.  v.  Philip,  1  Moo.  C.  0.  2Y4. 

(I)  Graves  v.  Sawcer,  L.  Rajm.  15,  1  Lev,  29.  Strelley  v.  Winson,  1  Vern.  297. 
SJdnner,  230. 


SHIPPING.  249 


Riglits  of  Part  Owners. 


the  dissentients,  either  to  bring  back  the  ship  or  pay  the  value  of 
their  shares.  On  giving  this  security  they  are  permitted  to  send 
the  ship  to  sea ,  (m)  and  if  the  minority  are  in  possession  of  it,  may 
take  it  out  of  their  hands  for  that  purpose  by  a  warrant  of  the  court. 
But  the  dissentient  owners  bear  no  part  of  the  expense,  and  are  en- 
titled to  no  part  of  the  profit  of  the  voyage  to  which  they  have  dis- 
agreed, (n)  In  case  the  owners  be  equally  divided  in  opinion,  either 
half  may  apply  to  the  court  to  interfere,  in  the  manner  above 
stated,  (o)* 

As  the  Court  of  Admiralty  may  arrest  the  ship,  for  the  protec- 
tion of  one  part  of  the  owners  against  another,  so  it  may  for  the 
protection  of  the  owner  or  owners  against  a  wrong-doer,  {j)) 

The  ordinary  mode  for  part  owners  to  obtain  an  adjustment  of 
the  ship's  accounts  is  by  suit  in  a  court  of  equity ;  they  may,  how- 
ever, by  naming  a  ship's  husband,  and  inserting  special  provisions 
in  his  appointment,  entitle  themselves  to  an  action  against  him,  in 
case  he  fail  in  making  up  his  account,  and  dividing  the  profits;  (q) 
while,  on  the  other  hand,  the  ship's  husband,  if  he  have  advanced 
money  for  outfits,  may  sue  each  of  the  owners  for  his  j)roportion. 
Part  owners  resemble  partners,  with  respect  to  the  concerns  of  the 
ship,  and  are,  therefore,  generally  speaking,  all  liable  to  the  full 
extent,  of  debts  contracted  for  its  repair  and  other  necessary  ex- 


(m)  See  Abbott  on  Ship.,  part  1,  c.  3. 

(«)  Davis  V.  Johnson,  4  Simon,  539.  Tlie  Apollo,  1  Hagg.  Ad.  Rep.  306.  Abbott 
•D  Shipping,  part  1,  c.  3. 

(o)  Ibid. 

(p)  Per  curiam,  in  re  Blanchard  and  others,  2  B.  &  C.  244. 

{q)  Owston  v.  Ogle,  13  East,  538.  Servante  v.  James,  10  B.  &  C.  413.  See  Raden- 
hurst  V.  Bates,  3  Bingh.  463.  Davies  v.  Hawkins,  3  M.  &  S.  488.  As  to  the  rights  of 
the  ship's  husband  against  the  ship  owners,  see  Helme  v  Smith,  "7  Bingh.  709. 


*  "Mr.  Justice  Story  strenuously  contends  for  the  lawful  exercise,  by  the  courts 
of  admiralty,  of  the  power  to  decree  a  sale  of  the  vessel,  on  the  disagreement  of  the 
part  owner.s  of  a  ship  upon  a  particular  voyage,  whether  the  ship  be  owned  in  equal 
or  unequal  shares.  This  is  the  rule  of  the  maritime  law  abroad,  and  is  sustained  by 
the  decision  of  Judge  "Washington,  in  the  case  of  Davis  &,  Brooks  v.  Brig  Seneca,  re- 
ported in  18th  vol.  of  American  Jurist,  486,  and  by  general  convenience  and  policy." 
Kent's  Comm.,  vol.  3,  152.  See  the  case  of  The  Seneca,  reported  in  1  Gilp.  R.  10,  and 
The  sloop  Hope,  Bee's  Adm.  Rep.  2,  and  "Willings  v.  Blight,  2  Peter's  Adm.  R.  288. 


250  JIERCANTILE  PROPERTY. 

Rights  of  Part  Owners. 

penses,  wliicli  can  be  shown  or  presumed  to  have  been  incurred 
with  their  assent.  But  this  liability  arises  in  every  case  out  of  con- 
tract, and  is  not  an  incident  inseparable  from  the  registered  owner 
ship  of  the  vessel ;  and  therefore,  if  the  registered  owners  can  show 
that  the  expense  was  not  incurred  on  their  credit,  they  will  not  be 
liable  for  it.  And,  in  like  manner,  any  one  of  them  will  be  ex- 
empted who  can  show  that  he  has  not  pledged  his  responsibility ; 
for  the  mere  legal  ownership,  ^er  se,  is  in  no  case  sufficient  to  render 
an  owner  liable,  (r)* 

Where  the  ship  is  under  the  management  of  the  master,  and 
the  owners  divide  the  profits,  the  master  is,  with  resj)ect  to  her  con- 
cerns, prima  facie  (s)  agent  for  them  all.  But  although  their  con- 
nection in  this  respect  resemble  that  of  partners,  yet  it  is  clearly 
not  a  partnership.  (;!)     The  admission  of  one  is  not  binding  upon 

(r)  Teed  v.  Baring,  Abbott  on  Shipping,  p.  84.  See  Briggs  v.  Wilkinson,  7  B.  <fe 
C.  30.  £x  parte  Bland,  2  Rose,  91.  Thompson  v.  Finden,  4  C.  &  P.  158.  Cox  v. 
Reid,  R.  &  M.  199.     Curling  v.  Robertson,  1  M.  &  G.  336. 

(s)  Briggs  V.  Wilkinson,  7  B.  &  C.  34.  Jennings  v.  Griffiths,  R.  &  M.  43.  Young 
V.  Brander,  8  East,  10.  Frazer  v.  Marsh,  13  East,  238.  Reeves  v.  Davis,  1  Ad.  &  Ell. 
312. 

(i!)  See  Wilson  v.  Dickson,  2  B.  <fe  A.  2.  Ilelme  v.  Smith,  7  Bingh.  715.  Briggs  v. 
Wilkinson,  7  B.  <fe  C.  34.  Williams  v.  Thomas,  6  Esp.  18.  See  Robinson  v.  Gleado-w, 
2  Bingh.  K  C.  163.     Wedderburn  v.  Wedderburn,  4  M.  &  Cr.  41. 

*  The  principle  established  by  the  modern  cases  seems  to  be,  that  in  all  that  con- 
cerns the  repairs  and  necessaries  of  the  ship,  one  part  owner  is  agent  for  the  other 
part  owners,  and  where  the  ship  is  under  the  management  of  the  master,  and  the 
owners  divide  the  profits,  the  master  is  agent  for  them  alb  To  withdraw  a  case 
from  the  operations  of  this  general  principle,  it  must  be  shown  that  the  creditor  has 
entered  into  a  contract  with  one  of  tliese  parties,  relying  upon  the  credit  exclusively, 
and  without  any  intention  of  resorting  to  the  other  parties.  It  is  said  tliat  he  cannot 
afterwards,  when  he  finds  that  the  security  which  he  deliberately  chose  is  worthless, 
resort  to  the  original  security  which  he  deliberately  abandoned.  Flanders  on  Ship- 
ping, 379.  CoUyer  on  Partnership,  1225.  Sx  parte  Bland,  2  Rose,  91.  James  v. 
Bixby,  11  Mass.  37.     Hursey  v.  Allen,  6  Mass.  R.  163. 

As  to  responsibility  for  torts,  the  doctrine  is  thus  summed  up  by  Mr.  Justice  Story* 
"Part  owners  of  ships  are,  without  question,  all  responsible  at  the  common  law, 
severally  as  well  as  jointl}',  m  soliJo,ior  all  torts  personally  committed  or  authorized 
by  them,  or  occasioned  to  third  persons  by  the  negligence  of  one  or  more,  or  all  of 
them,  or  by  that  of  the  master  of  the  ship,  or  ship's  husband,  or  other  agent  thereof 
but  not  for  the  wilful  or  malicious  acts  of  tlie  latter."   Story  on  Partn.,  s.  458. 


SHIPPIXG.  251 


Rights  of  Part  Owners. 


the  Other ;  (u)  each  may  transfer  his  share  without  the  consent  of 
the  others,  nor  is  it  liable  to  confiscation  for  acts  done  by  the  others 
without  his  privity :  thus,  if  one  part  owner  be  the  proprietor  of 
the  cargo,  condemnation  thereof  involves  the  condemnation  of  hia 
share  of  the  ship,  but  not  that  of  the  shares  of  other  part  owners, 
who  knew  nothing  of  the  contraband  commodities,  (v)* 


(m)  Jaggers  v.  Binnings,  1  Stark.  64- 
(v)  The  Jonge  Tobias,  1  Rob.  329. 


*  The  most  important  distinction  bet-ween  the  two  relations  is,  that  one  partner 
may  dispose  of  the  entire  subject,  which  constitutes  partnership  property,  but  a  part 
owner  can  only  sell  his  own  interest  But,  although  part  ownership  is  the  relation 
■which  the  law  presumes  to  subsist  between  ship  owners,  a  partnership  may  exist  by 
stipulation,  as  in  the  case  of  any  other  chattel.  Abbott  on  Shipping,  American 
edition,  125.  Harding  v.  Foxcroft,  6  Greenl.  IQ.  Hewitt  v.  Sturdevant,  4  B.  Monr. 
Rep.  459.  NicoU  v.  Mumford,  20  Johns.  622.  Seabrook  v.  Rose,  2  Hill,  Ch.  S.  C.  R. 
555.  French  v.  Price,  24  Pick.  19.  Wherever  a  partnership  exists,  to  which  a  ship 
belongs,  each  partner  is  competent  to  sell  it,  as  he  may  other  partnership  property. 
Lamb  v.  Durant,  12  Mass.  54.     Se  Macey  v.  De  Wolf,  3  Wood  &  Mi.  193. 

It  results  also  from  this  distinction,  that  a  creditor  of  both  part  owners  is  not  en- 
titled to  any  priority  in  payment  out  of  the  vessel,  or  subject  of  the  tenancy  in  com- 
mon, against  the  separate  creditors  of  either,     Harding  v.  Foxcroft,  6  Greenl.  76. 


CHAPTER  HI. 


GOODWILL. 


There  is  another  sort  of  property,  if  property  it  can  be  called,  of 
a  nature  so  exclusively  mercantile,  as  to  deserve  a  separate  men- 
tion. I  mean  tlie  goodwill  of  a  business,  which  though  arising  from 
various,  and  other  accidental  circumstances,  such  as  the  situation 
of  a  house,  the  changes  in  a  neighborhood,  and  even  the  prejudices 
of  customers,  has  been  often  recognized  in  courts  of  equity  as  an 
existing  and  valuable  interest :  (a)  and,  therefore,  when  property  to 
which  it  attaches,  is  sold  under  their  decrees,  they  will  direct  that 
steps  be  taken  to  impress  the  purchaser  with  a  just  notion  of  its 
value,  {h)  It  has  also  been  taken  notice  of  by  a  court  of  law.  (c) 
But  where  the  profits  of  the  business  result,  almost  entirely,  from 
confidence  placed  in  the  personal  skill  of  the  party  employed,  as  in 
the  case  of  surgeons,  or  attorneys,  {d)  the  goodwill  is  too  insignifi- 
cant to  be  taken  notice  of  The  sale  of  a  goodwill,  in  the  absence 
of  any  express  stipulation,  (e)  does  not  preclude  the  seller  from  set- 
ting up  the  same  kind  of  basiness  again  in  the  same  neighborhood, 
if  he  do  not  describe  himself  as  setting  up  the  identical  business 
that  has  been  purchased.  (/)  By  the  conveyance  of  a  shop,  the 
goodwill  passes,  although  not  specifically  mentioned,  (g)     A  sale  of 


(a)  Kennedy  v.  Lee,  3  Mei'.  441. 

(6)  Cooke  V.  CoUingridge,  Jac.  607,  and' note  to  Collyer  on  Part.  p.  1*72. 

(c)  i:x  parte  Farlow,  2  B.  <fe  Ad.  341.  R.  v.  Hungerford,  M.  Co.  JEx  parte  Still, 
4  B.  &  Ad.  592.     Ibid.  Ex  parte  Gosling,  ibid.  596. 

(J)  Farr  v.  Pearce,  3  Madd.  78.  Spicer  v.  James,  Rolls,  M.  T.  1830,  reported 
Collj-er  on  Part.  82.  Bozon  v.  Farlow,  1  Mer.  459.  See  per  Lord  Langdale,  "Whitaker 
V.  Home,  3  Beav.  390. 

(e)  Rannie  v.  Irving,  7  M.  &.  G.  969. 

(/)  Farr  v.  Pearce,  3  Madd.  74.     Crutwell  v.  Lye,  1  Rose,  123. 

{g)  Cliissuni  v.  Dewes,  5  Russ.  29. 


GOODWILL.  253 


Goodwill. 


stock  and  goodwill  for  £60  requires  a  stamp,  not  being  a  mere  sale 
of  goods,  (/i)* 


(h)  South  V.  Finch,  3  Bingh.  N.  C.  506. 


*  This  interest  is  so  entirely  the  growth  of  modern  civilization,  that  the  courts 
have  scarcely  settled  the  landmarks  by  which  it  is  to  be  defined  and  protected.  A 
court  of  equity  will  interpose  by  injunction  to  prevent  any  injury  to  it,  from  the  un- 
lawful acts  of  third  persons,  though  at  an  early  period  it  refused  to  decree  the 
specific  performance  of  a  contract  for  its  conveyance. 

It  is  an  interesting  question,  and  one  upon  which  the  highest  authority  has  been 
at  issue,  whether,  on  the  dissolution  of  a  partnership  by  the  death  of  one  of  its  mem- 
bers, the  goodwill  would  survive,  or  be  considered  as  assets  of  the  partnership.  It 
was  first  determined  in  the  ease  of  professional  partnership,  that  the  goodwill  would 
survive.  Indeed  it  is  difficult  to  perceive  how  any  such  interest  can  exist,  when  a 
professional  connection  is  dissolved  by  the  death  of  one  of  its  members.  The  busi- 
ness of  such  a  firm  must  depend  almost  entirely  upon  public  confidence  in  the  per- 
sonal qualifications  of  those  who  compose  it,  and  it  is  entirely  beyond  the  capacity 
of  a  court  of  equity  to  prolong  or  transfer  a  patronage  flowing  from  such  sources. 
It  would  seem  to  be  the  modern  English  doctrine,  that  the  same  rule  is  applicable 
to  every  species  of  mercantile  business.  Lewis  v.  Langdon,  7  Sim.  421.  Before  the 
decision  of  this  case,  it  had  been  held  by  Vice  Chancellor  Hoffman  in  New  York, 
that  the  goodwill  was  partnership  assets.  Dougherty  v.  Van  Nostrand,  1  Iloflf.  C. 
R.  68.  Besides  the  authorities  cited  by  the  author  in  the  note,  the  subject  is  con- 
eidered  in  the  following  cases.  Whittaker  v.  Howe,  3  Beav.  390.  Horner  v.  Graves, 
7  Bingh.  145.  Eannie  v.  Irvine,  Y  Mann.  &  Grang.  9*78.  Bell  v.  Locke,  8  Paige,  15. 
Case  V.  Abeel,  1  Paige  401.     Marten  v.  Van  Schaik,  4  Paige,  479. 

The  nature  of  the  goodwill,  and  the  protection  which  will  be  extended  to  it,  have 
recently  undergone  a  critical  examination  in  Pennsylvania,  Holden's  Administr.  v. 
McMakin,  1  Pars.  S.  Eq.  Cases,  270.  The  controversy  related  to  the  subscription  list 
of  the  Saturday  Courier,  which  was  claimed  by  the  surviving  partner,  on  the  ground 
of  the  alleged  survivorship  of  the  goodwill.  President  King,  delivering  the  opinion 
of  the  court,  expressed  great  doubt  whether  the  subscription  list  of  a  newspaper 
could  be  considered  as  a  part  of  the  goodwill.  The  judicial  idea  of  the  goodwill 
was  supposed  to  agree  with  its  popular  signification,  viz.,  the  right  and  privilege  of 
continuing  an  old  and  established  business  in  an  old  and  established  place.  The 
vague  and  undefinable  character  of  such  an  interest  might  have  led  the  courts  to 
doubt  as  to  the  propriety  of  bringing  it  into  account,  as  an  item  of  partnership 
property,  in  winding  up  the  business.  The  cases  in  which  these  decisions  were  ren- 
dered, furnished  no  analogy  for  determining  the  character  of  a  subscription  list. 
The  great  value  of  the  particular  list  as  property,  and  the  ease  and  certainty  with 
which  that  value  could  be  ascertained,  were  established  by  evidence.  It  had  been 
decided  in  a  court  of  law,  that  the  subscription  list  of  a  public  journal  would  pass 
to  a  purchaser  of  the  printing  materials  at  a  sheriff's  sale,  as  incident  and  accessary 
to  the  purchase  of  the  establishment.  McFarland  v.  Stewart,  2  Watt's  R.  111.  There 
was  supposed  to  be  no  princii)le  of  equity  upon  which  they  could  be  separated  after 


254  MERCANTILE  PROPERTY. 


Goodwill. 


the  death  of  one  i^artner,  to  the  injury  of  his  representatives,  and  for  the  exclusive 
benefit  of  the  survivor.  The  court,  moreover,  held,  that  if  the  subscription  list  con- 
stituted a  part  of  the  goodwill,  it  nevertheless,  according  to  the  weight  of  authority, 
remained  part  of  the  joint  estate,  and  did  not  survive. 

An  interest  somewhat  analogous  in  its  nature  to  the  goodwill  of  a  business,  is  tha 
right  to  the  exclusive  use  of  a  particular  name  or  mark  upon  goods  and  merchandise. 
Although  no  man  possesses  any  abstract  right  to  the  exclusive  use  of  a  particular 
mark,  such  right  may  be  acquired  by  appropriation  and  undisturbed  enjoyment ;  and 
will  be  recognized  and  protected  both  at  law  and  in  equity.  Tliis  recognition  of 
property  in  trade,  marks,  or  symbols,  is  essential  both  to  protect  the  public  from 
fraudulent  imposition,  and  to  secure  to  the  manufacturer  and  merchant  the  full  bene- 
fit of  his  ingenuity,  industry,  and  integrity.  A  merchant  or  manufacturer  will  not  be 
permitted  to  use  a  trade  mark  or  name  which  has  been  properly  appropriated  by  an- 
other, although  he  may  be  ignorant  of  that  fact,  and  honestly  believe  that  the  name 
in  question  is  only  a  techijical  term  to  designate  the  particular  material  or  species  of 
thing  on  which  it  is  placed.  No  action  for  damages  will  lie  against  a  manufacturer 
who  uses  the  trade  marks  of  another  in  the  ordinary  course  of  business,  and  in  igno- 
rance of  their  previous  appropriation:  but  a  court  of  equity  will  interpose  by  in- 
junction, and  this  protection  will  be  extended  as  fully  to  a  foreign  as  to  a  domestic 
merchant.  It  is  not  necessary  that  there  should  be  an  exact  similarity  between  the 
two  marks :  it  is  sufficient  that  one  is  so  closely  imitated  from  the  other  as  to  deceive 
the  public  and  draw  away  customers.  The  cases  upon  this  subject  are  collected  and 
arranged  in  an  article  in  the  14th  vol.  of  Hunt's  Merchants'  Magazine,  p.  830,  from 
the  pen  of  Mr.  Charles  Edwards  of  New  York,  and  in  a  note  by  the  Reporter  to  the 
case  of  Coats  v.  Holbrook,  Nelson  &  Co.,  2  Sand.  N.  Y.  C.  R.  586.  See  also  the  re- 
cent cases  of  Taylor  v.  Carpenter,  3  Story  Rep.  458.  Marsh  et  al.  v.  Billings  et  als.  1 
Cush.  Rep.  322.  Knott  v.  Morgan,  2  Keen,  213.  Croft  v.  Day,  7  Beav.  84,  Rogers 
V.  Nowill,  5  Man.  G.  &  S.  109, 


CHAPTER  IV. 


PEOPERTY   LN"   NEGOTIABLE   n^^STRUJMENTS. 

Under  the  head  of  Mercantile  Property,  it  seems  right  to  advert 
to  a  peculiarity  in  the  mode  in  which  title  may  be  acquired  to  a  de- 
scription of  chattels  most  usually  found  in  the  hands  of  mercantile 
men,  viz.,  negotiable  instruments.  The  common  and  well-known 
rule  of  law,  is,  that  property  in  a  chattel  personal  cannot,  except 
by  sale  in  market  overt,  be  transferred  to  a  vendee,  however  inno- 
cent, by  a  party  who  does  not  himself  possess  it.  (a)  The  contrary, 
however,  is  the  case  with  respect  to  negotiable  instruments,  a  trans- 
fer of  which,  when  in  that  state  in  which  by  law  and  the  usage  of 
trade,  they  accustomably  pass  from  one  man  to  another  by  delivery, 
causes  the  property  in  them,  like  that  in  coin,  to  pass  along  with 
the  possession,  (/>)  provided  that  the  transferee  has  been  guilty  of  no 
fraud  (c)  in  taking  them,  in  which  case  he  would  be  forced  to  bear 
the  loss,  {d) 


(a)  See  Peer  v.  Humplirey,  2  Ad.  &  R  495. 

(6)  See  Grant  v.  Vaughan,  3  Burr.  1516.  Lang  D.Smyth,  7  Bingh.  284.  Gorgier 
V.  Mieville,  3  B.  <fe  C.  45. 

(c)  Groas  negligence  was  ruled  to  be  the  correct  expression  in  Crook  v.  Jadis,  6  C. 
&  P.  194,  5  B.  &  Ad.  909.  The  negligence  must,  however,  be  so  gross  as  to  render  it 
impossible  that  the  instrument  should  have  been  taken  bona  fide,  and  the  case  of  Gill 
V.  Cubitt  seems  not  to  be  supportable.  Backhouse  v.  Harrison,  5  B.  tfe  Ad.  1105.  See 
the  observations  of  Parke,  B.,  in  Foster  v.  Pearson,  1  C.  M.  <fe  R.  849,  5  Tyrwh.  255. 
CunlifFe  v.  Booth,  3  Bingh.  N.  C.  821.  In  the  case,  however,  of  Goodman  v.  Harvey 
4  Ad.  <fe  E.  870,  the  Q.  B.  ruled  that  gross  negligence  would  not  be  a  sufficient  answer 
where  a  party  has  given  consideration  for  the  bill,  and  that  gross  negligence  could 
only  be  important  so  far  as  it  supplied  evidence  of  mala  fides.  Accord.  Uther  v.  Rich, 
10  Ad.  &  E.  784. 

{d)  Solomons  v.  Bank  of  England,  13  East,  135,  n.  Gill  v.  Cubitt,  3  B.  <fe  C.  466. 
Snow  V.  Peacock,  3  Bingh.  408.  Down  v.  Hailing,  4  B.  &  C.  330.  Slater  v.  "West, 
Dans.  &  Lloyd.  15.  Beckwith  v.  Corral,  3  Bingh.  444.  Strange  v.  Wigney,  6  Bingh. 
677.     Easley  v.  Crockford,  10  Bingh.  243.     Crook  v.  Jadis,  6  C.  <fe  P.  194.     Burn  v. 


256  MERCANTILE  PROPERTY. 

Property  in  Negotiable  Instruments. 

An  instrument  is,  properly  speaking,  negotiable,  when  the  legal 
right  to  the  property  secured  by  it  is  transferable  from  one  man  to 
another  by  its  delivery :  of  this  description  are  bills  and  notes  pay- 
able to  bearer  or  indorsed  in  blank,  (e)  and  exchequer  bills ;  (/)  and 
such  was  held  a  bond,  whereby  the  king  of  Prussia  bound  himself 
and  his  successors  "  to  every  person  who  should  for  the  time  being 
be  the  holder  of  the  bond,"  and  which  was  proved  to  be  usually 
negotiable  in  the  English  market  by  delivery,  {g)  The  forms  of 
several  foreign  securities  of  this  description  will  be  found  in  The 
Attorney-  General  v.  Bouwens,  (A)  which  decided,  that  Danish,  Dutch, 
and  Russian  bonds,  transferahle  in  the  marhet  hy  delivery^  are,  on 
their  owner's  death,  assets  in  this  country,  and  liable  to  probate 
duty,  in  which  respect  they  differ  from  French  rentes^  and  American 
stock,  which  are  considered  to  be  locally  situated  abroad,  being 
transferable  there  only,  and  are,  on  that  account,  exempt 
from  probate  duty  in  this  country,  as  also  are  debts  of  an  or- 
dinary description,  due  from  persons  resident  in  a  foreign  coun- 
try, (i) 

I  call  those  instruments  negotiable,  by  delivery  of  which  the 
legal  right  to  the  property  which  they  secure  may  be  conveyed. 
For  there  are  other  instruments  (/ )  v/hich,  though  saleable  in  the 
market  by  the  usage  of  merchants,  can  yet  only  be  put  in  suit,  in 
the  name  of  the  original  contractee,  and  are  not,  properly  speaking, 
negotiable.     Moreover,  instruments  which  in  one  state  would  be 


Morris,  2  C.  <fe  M.  579,  4  Tyrwh.  485.  Haynes  v.  Foster,  2  C.  &  M.  237,  4  Tyrwh.  66. 
Fancourt  v.  Bull,  1  Bingh.  N.  C.  681. 

(e)  Miller  v.  Race,  1  Burr.  452 ;  and  see  the  notes  to  that  case,  1  Smith's  Leading 
Cases,  258.  Clarke  v.  Shee,  Cowp.  200.  Solomons  v.  B.  of  England,  13  East,  135. 
Grant  v.  Vaughan,  3  Burr.  1516.  Collins  v.  Martin,  3  B.  &  P.  649.  Peacock  v.  Rhodes, 
Dougl.  636.     "Wookey  v.  Pole,  4  B.  &  A.  1. 

(/)  Brandao  v.  Barnett,  6  M.  &  Gr.  630. 

(^)  Gorgier  v.  Mieville,  3  B.  &  C.  45. 

(A)  4M.  <fe  W.  171. 

(i)  Att.  Gen.  v.  Hope,  1  C.  M.  &  R.  530.     See  8  Bligh.  44,  1  C.  &  J.  356. 

(j)  See  Glynne  v.  Baker,  13  East,  509.  Taylor  i;.Kymer,  3  B.  &  Ad.  338.  Taylor 
V.  Trueman,  1  M.  k  M.  453,  1  Lloyd  &  Welsh.  184.  Thompson  v.  Dominy,  14  M.  & 
W.  403.  Partridge  v.  The  Bank  of  England,  15  L.  J.  Q.  B.  395.  See  Ford  v.  Hop 
kins,  1  Sal.  284 ;  and  see  1  Burr.  452.  Ambl.  187,  and  Turner  v.  Cruikshank,  thera 
cited. 


KEGOTIABLE  INSTRUMENTS.  257 

Property  in  Negotiable  Instruments. 

negotiable^  Yany^  by  being  put  into  another,  cease  to  be  so.  Tlius, 
though  a  bill  or  note  will  be  negotiable  if  indorsed  in  blank,  yet 
the  holder  may,  by  a  special  indorsement,  determine  its  nego- 
tiability, {k) 


{k)  Sigourney  v.  Lloyd,  8  B.  &  C.  622,  5  Bingli.  525.     Anclier  v.  Bank  of  England, 
Douglas,  639.    Snee  v.  Prescott,  1  Atk.  249,  per  Lord  Hardwicke.    Treuttel  v.  Baran- 
don,  8  Taunt.  100.     Cunliffe  v.  Whitehead,  3  Bingh.  N.  C.  828. 
17 


BOOK  THE  THIRD. 

OF    MERCANTILE    CONTRACTS. 


OF    MERCANTILE    CONTEACTS. 


We  now  proceed  to  the  -examination  of  those  contracts  which  are 
most  commonly  in  use  among  mercantile  men.  In  these,  though 
for  the  sake  of  clearness  they  are  here  treated  of  under  a  distinct 
head,  a  very  large  portion  of  the  Mercantile  Property  of  the  king 
dom  consists.  Thus,  a  considerable  part  of  a  man's  wealth  is  often 
made  up  of  bills  of  exchange,  bank  notes,  and  credits  with  his 
banker  or  correspondent,  all  which  species  of  property  lie  in  con 
tract,  or  as  the  courts  term  it,  in  action ;  their  owner  being  possessed, 
not  of  the  sums  of  money  specified  in  the  bill  or  note,  or  deposited 
in  the  hands  of  the  banker,  but  of  a  right  to  receive  those  sums 
from  the  person  holding,  or  supposed  to  hold  them ;  and  to  enforce 
their  payment,  if  denied,  through  the  medium  of  some  competent 
tribunal. 

It  would  be  improper,  in  a  work  of  this  description,  to  entei 
upon  any  disquisitions  as  to  the  nature  of  contracts  in  general^  or  to 
attempt  to  point  out  the  distinctions  which  exist  between  the  differ- 
ent classes  of  contracts  recognized  by  the  law  of  England.  With 
these  topics  the  reader  is  supposed  to  be  already  in  some  degree 
acquainted,  and  there  is  not  much  hazard  in  the  supposition,  since 
they  are  discussed  in  every  elementary  treatise  upon  English  law, 
and  particularly  in  the  invaluable  Commentaries  of  Mr.  Justice 
Blackstone. 


CHAPTER  I. 

BILLS    OF   EXCHANGE   AI^D   PEOillSSORT   NOTES. 

Sect.  1.  Their  Definition^  Requisites,  and  Form. 

2.  Parties  to, 

3.  Transfer  of. 
4..  Acceptance. 

5.  Presentment. 

6.  Notice. 

7.  Payment. 

8.  Resistance  against  payment. 

9.  Remedy  on  lost  hills  and  notes. 

Section  I. — Their  Definition,  Requisites^  and  Form. 

A  Bill  of  Exchange  is  a  written  order  for  the  payment  of  a  certain 
sum  of  money  unconditionally.*    He  "wlio  makes  this  order  is  called 


*  The  contracts  arising  on  a  bill  of  exchange  or  promissory  note  are  simple  con- 
tracts, although  they  differ  from  the  ordinary  simple  contracts  of  the  common  law 
in  some  important  particulars.  Under  the  law  of  continental  Europe,  the  addition 
of  a  seal  might  not  deprive  an  instrument  of  its  mercantile  qualities,  but  in  English 
and  American  jurisprudence,  it  would  subject  it  to  the  technical  rules  applicable  to 
common  law  securities.  The  old  form  of  definition,  "an  open  letter,"  etc.,  would 
seem  to  possess  greater  precision.  See  cases  of  Mann  v.  Sutton,  4  Rand.  253.  Clark 
V.  Farmers'  Man.  Comp.  15  Wend.  256.  Foster  v.  Floj'd,  4  McChord  R.  159,  and 
Hibblewhite  v.  McMorine,  6  Mees.  &  Wels.  200.  In  many  of  the  States,  sealed  instru- 
ments, V  ith  negotiable  words,  are  placed  upon  the  same  footing  as  bills  of  exchange 
and  promissory  notes,  as  in  Ohio,  and  North  Carolina,  and  Georgia.  In  some  of  the 
States  promissory  notes  have  never  been  put  on  the  footing  of  bills  of  exchange,  but 
remain  as  at  common  law  before  the  statute  of  Anne,  the  rights  and  liabilities  of  an 
indorser  being  similar  to  those  of  the  assignor  of  a  bond.  Such  is  the  law  in  refer- 
ence to  all  promissory  notes,  except  such  as  are  ex-pressed  on  their  face  to  be  negoti- 
able and  payable  at  some  chartered  bank,  which  prevails  in  Virginia,  Indiana,  and 
Illinois. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  2G3 

Their  Definition,  Requisites,  and  Form. 

the  drawer :  lie  to  whom  it  is  addressed  the  draivee  ;  and  if  he  accept 
it,  the  acceptor:  he  in  whose  favor  it  is  made,  ihQ payee. 

A  Promissory  Note  is  a  written  promise  to  pay  a  certain  sum  of 
money  unconditionally.  He  who  promises  is  called  the  maker ;  he 
to  whom  the  promise  is  made,  the  payee,  (a) 

{a)  A  check  is  a  bill  of  exchange,  addressed  to  a  banker,  and  payable  to  a  certain 
person  or  bearer.*     A  bank  note  is  a  promissory  note  made  by  a  banker. 


*  A  bank  check  is  a  written  order,  addressed  to  a  bank  or  person  carrying  on  the 
banking  business,  directing  them  to  pay  on  presentment,  to  a  person  therein  named, 
or  to  bearer,  a  certain  sum  of  money.  It  is  described  by  Chitty,  in  his  Treatise  on 
Bills,  (52,  322,)  as  uniformly'  payable  to  bearei-.  In  the  case  of  Woodruff  v.  the  Mer- 
chants' Bank  of  the  City  of  New-York,  25  Wend.  673,  this  was  held  to  be  essenti.-il 
to  their  character.  But  in  the  matter  of  Brown,  2  Story's  C.  C.  R.  512,  Judge  Story 
expresses  the  opinion  that  it  is  not  requisite  to  a  check  tliat  it  should  be  payable  to 
bearer,  or  on  demand. 

As  a  general  rule,  a  check  should  be  presented  for  payment  some  time  during 
banking  hours  of  the  day  after  it  was  issued,  as  against  the  drawer,  or  as  against  the 
party  delivering  it,  on  the  day  after  it  was  received  from  him ;  and  where  it  is 
received  at  a  place  different  from  that  of  payment,  it  should  be  forwarded  on  the 
following  day.  Chitty  on  Bills,  512,  a.  The  subject  of  diligence,  as  to  the  present- 
ment of  checks,  is  considered  in  10  AVend.  304,  Mohawk  Bank  v.  Broderick,  and  13 
Wend.  5'19,  Gough  v.  Staats,  and  the  Merchants'  Bank  v.  Spicer,  6  "Wend.  443.  Alex- 
ander V.  Burchfieldt,  39  E.  C.  L.  R.  1061. 

Bank  checks  so  nearly  resemble  bills  of  exchange  and  promissory  notes,  that  they 
are  frequently  spoken  of  without  any  discrimination.  In  Harker  v.  Anderson,  21 
Wendell's  Rep.  373,  Justice  Cowen  has  placed  them  in  all  respects  upon  the  same 
footing,  and  fortified  his  opinion  by  an  elaborate  citation  of  authorities.  Other  cases 
are  to  be  found  in  the  American  Reports  which  sustain  the  same  doctrine,  and 
amo>g  them  may  be  mentioned  the  case  of  Brown  v.  Lusk,  4  Yerg.  Rep.  210.  In  the 
matter  of  Brown  in  Bankruptcy,  2  Story's  C.  C.  R.  502,  Mr.  Justice  Story  reviewed 
the  law  upon  this  subject.  He  distinguishes  checks  from  bills  of  exchange  m  several 
important  particulars:  first,  that  they  are  always  drawn  upon  a  bank  or  banker- 
second,  that  they  are  paj-able  immediately  on  presentment,  and  without  daj-s  of 
grace ;  and  third,  that  they  are  not  presentable  for  acceptance,  but  only  for  payment. 
Judge  Story  farther  held,  in  accordance  with  the  opinion  expressed  by  Chancellor 
Kent,  in  his  Commentaries,  and  bj' Justice  Sutherland,  in  Murray  v.  Judah,  6  Cowen's 
Rep.  490,  and  in  opposition  to  the  authority  of  Harker  v.  Anderson,  that  the  want  of 
due  presentment  of  a  check,  and  notice  of  non-payment  thereof,  only  exonerated  the 
drawer  so  far  as  it  was  the  occasion  of  any  actual  damage  to  him.  But  a  different 
rule  applies  to  indorsers,  who  are  discharged  by  want  of  diligence  in  making  pre- 
sentment, whether  it  result  in  prejudice  or  not.  The  distinction  was  followed  in 
New-York,  in  the  subsequent  case  of  Little  v.  the  Phoenix  Bank,  2  Hill's  N.  Y.  R 
425.     The  same  principle  is  acknowledged  in  Daniels  v.  Kyle,  1  Kelly,  304. 


2(34  3.IERCANTILE  CONTRACTS. 


Their  Definition,  Requisites,  and  Form. 


Bills  of  excliange  derive  their  i^eculiar  properties  from  the  cus- 
tom of  merchants ;  promissory  notes,  from  stat.  3  &  4  Ann,  cap.  9, 
which  places  them  on  the  same  footing  with  bills  of  exchange. 
That  act  was  passed  in  consequence  of  the  refusal  of  Lord  Holt  to 
concede  to  the  custom  which  had  sprung  up  among  merchants  of 
treating  promissory  notes  as  negotiable,  the  effect  which  would,  at 
a  somewhat  later  period,  probably  have  been  attributed  to  it.  His 
Lordship,  departing  perhaps  somewhat  from  that  excellent  good 
sense  which  usually  characterized  him,  treated  the  endeavor  to  up- 
hold the  negotiability  jof  notes  with  some  indignation,  saying  that 
"  it  proceeded  from  the 'obstinacy  and  opinionativeness  of  the  mer- 
chants, who  were  endeavoring  to  set  the  law  of  Lombard  street* 
above  the  law  of  Westminster  Hall."  {b) 

Although  a  promissory  note,  while  in  its  original  shape,  bears 
no  resemblance  to  a  bill ;  yet  when  indorsed,  it  is  exactly  similar  to 
one ;  for  then  it  is  an  order  by  the  indorser  of  the  note  upon  the 
maker,  to  pay  to  the  indorsee.  The  indorser  is,  as  it  were,  the 
drawer ;  the  maker,  the  acceptor ;  and  the  indorsee  the  payee,  (c) 
The  reader,  bearing  this  similitude  in  his  mind,  will  easily  be  able 
to  apply  to  notes  the  decisions  hereinafter  cited  concerning  bills, 
and  vice  versa. 

A  bill  of  exchange  operates  as  an  undertaking  from  the  drawer 
to  the  payee  and  every  subsequent  holder,  that  the  drawee  is  a  per- 
son competent  to  accept,  that  is,  engage  to  pay  it ;  and  that  he  will, 
when  requested,  accept,  and  when  it  becomes  due,  pay  it.  {d)  If  ho 
refuse  to  accept,  the  contract  is  broken,  and  the  statute  of  limitation 


(6)  Clerk  v.  Martin,  2  Ld.  Raym.  757. 

(c)  See  Heylin  v.  Adamson,  Burr.  669.  Brown  v.  Harraden,  4  T.  R.  148.  Carlos 
V.  Fancourti  5  T.  R.  482.     Edie  v.  E  I.  Company,  Burr.  1224. 

id)  This  is  the  effect  of  a  bill  as  ordinarily  -worded,  but  pay  without  acceptance,  is 
a  good  bill.     R.  v.  Kinnear,  2  M.  &  Rob.  117. 


*  The  student  -will  find  a  learned  and  interesting  history  of  promissory  notes  and 
inland  bills  in  the  appendix  to  vol.  1  of  Cranch's  Reports.  It  is  stated  by  Mr.  Web- 
eter,  in  his  argument  in  the  case  of  The  Bank  of  Augusta  v.  Earle,  13  Peters,  564- 
that  neither  inland  bills  nor  promissory  notes  were  negotiable  or  transferable,  so  as 
to  enable  the  holder  to  bring  suit  thereon  in  his  own  name,  imtil  several  years  after 
the  notes  of  the  Bank  of  England  went  into  circulation 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  205 

Their  Definition,  Requisites,  and  Form. 

begins  to  run  from  that  period,  (e)  for  the  engagement  is  not  a 
double  one ;  first^  that  the  drawee  shall  accept  upon  presentment 
for  acceptance,  and  secondly,  pay  upon  presentment  for  payment, 
but  single,  namely,  in  the  case  of  a  bill  payable  after  sight,  that 
the  drawee  shall,  upon  the  bill  being  presented  to  him  in  a  reason- 
able time  after  date,  accept  the  same,  and  having  accepted  shall 
pay  it  when  duly  presented  for  payment ;  and  in  the  case  of  a  bill 
payable  after  date,  that  the  drawee  shall  accept  it,  if  it  is  presented 
to  him  before  the  time  for  payment,  or  if  it  is  not  presented  for 
acceptance  at  all,  then  that  he  shall  pay  it  when  duly  presented  for 
payment.  (/) 

A  note  operates  as  an  undertaking  by  the  maker  to  the  payee 
and  every  subsequent  holder,  that  he  will  pay  the  money  therein 
named,  in  the  mode  therein  specified. 

ISTo  particular  form  of  words  is  requisite  to  constitute  a  note  or 
bill ;  {g)  and  if  it  appear  doubtful  for  which  of  the  two  a  particular 
instrument  was  intended,  it  may  be  treated  as  either.  (A)*     But  it 

(e)  "Whitehead  v.  "Walker,  9  M.  &  "W.  507. 

(/)  Whitehead  v.  Walker,  9  M.  &  W.  507. 

{g)  Chadwiek  v.  Allen,  Str.  706.  Morris  v.  Lea,  Ld.  Raym.  1396,  Str.  629.  Shut- 
tleworth  v.  Stephens,  1  Camp.  407.  Greig  v.  Milner,  8  Taunt.  739.  Stark  v.  Chees- 
man,  Carth.  509.  Dehers  v.  Harriott,  Show.  163.  Robinson  v.  Bland,  2  Burr.  1077. 
Ridout  V.  Bristow,  1  C.  <fe  J.  231.  1  Tyrwh.  84  Green  v.  Davies,  4  B.  &  C.  235. 
Block.  V.  Bell,  1  M.  &.  Rob.  149. 

{h)  Edis  V.  Bury,  6  B.  &  C.  433.  See  Dickenson  v.  Teague,  1  C.  M.  &  R.  231,  4 
Tyrwb.  450.     Block  v.  Bell,  1  M.  &  Rob.  149. 


*  There  are  a  class  of  cases  in  which  it  is  difficult  to  determine  whether  a  party, 
whose  name  is  upon  a  promissory  note,  is  to  be  regarded  as  a  maker  or  gaurantor.  A 
Llank  indorsement,  if  made  contemporaneously  with  the  inception  of  the  note, 
whether  the  latter  be  negotiable  or  not,  is  treated,  in  Massachusetts  and  some  of  the 
ether  States,  as  an  original  promise.  Baker  v.  Briggs,  8  Pick.  122.  Flint  v.  Day,  9 
Verm.  R.  345.     Martin  v.  Boyd,  11  N.  H.  R.  385. 

In  New  York  a  distinction  has  been  taken  in  the  case  of  notes  which  are  negotia- 
ble ;  and  it  has  been  held  that  an  indorsement  of  such  a  note,  made  at  the  time  of 
its  execution,  does  not  convert  the  party  into  a  maker  or  a  guarantor,  but  his  chai-acter 
is  simply  that  of  an  indorser  upon  the  note.  Seabury  v.  Hungerford,  2  Hill's  N.  Y.  R. 
80.    Hall  V.  Newcomb,  3  Hill's  N.  Y.  R.  233.     Dean  v.  Hall,  17  Wend.  214. 

A  blank  indorsement,  made  after  the  execution  of  the  note,  can  operate,  at  best^ 
but  as  a  guaranty,  and  then  only  upon  proof  of  a  distinct  and  valid  consideration 
Ulen  V.  Kittredge,  7  Mass.  R.  233.     Dean  v.  Hall,  17  Wend.  Rep.  214. 


266  MERCANTILE  CONTRACTS. 

Their  Definition,  Requisites,  and  Form. 


must  fall  strictly  within  one  of  the  above  definitions.  Thus,  there 
must  be  an  order  or  promise  to  pay  ;  the  mere  achnowledgment  of 
a  debt,  such  as  an  I.  0.  U.,  is  not  a  promissory  note,  {i)  nor  does  a 

{%)  Fisher  v.  Leslie,  1  Esp.  426.  Childres  v.  Boulnois,  1  Dowl.  N.  P.  C.  8.  Ellis 
V.  Ellis,  Gow.  216.  Israel  v.  Israel,  1  Camp.  499,  but  see  Gny  v.  Harris,  Cliitty  on 
Bills,  oth  ed.  428,  contra.  In  Casliborne  v.  Dutton,  P.  S.  N.,  8tli  ed.  S"?!,  the  follow- 
ing instrument  was,  after  solemn  argument,  held  to  be  a  good  note. 

"I  do  acknowledge  myself  to  be  indebted  to  A.  in  £  to  be  paid  on  demand  for 
value  received." 

The  words  to  he  paid  being  held  to  amount  to  a  promise  to  pay. 

In  Brooks  v.  Elkins,  2  M.  &  "W.  74,  the  following  instrument  was  held  to  requiie 

a  stamp. 

"11th  October,  1831. 

"  1.  0.  U.  20Z.  to  be  paid  on  the  22d  instant. 

"  W.  Brooks." 

"I  have  received  the  imperfect  books  which,  together  with  the  cash  overpaid  oa 
the  settlement  of  your  account  amounts  to  80Z.,  which  sum  I  will  pay  in  two  years." 
Held  a  note.    "Wheatley  v.  Williams,  1  M.  «&  W.  533. 

"I  have  received*  the  sum  of  20/.  which  I  borrowed  from  you,  and  I  have  to  be 
accountable  for  the  said  sum  with  interest."  Held  an  agreement,  not  a  note.  Homo 
V.  Redfearne,  4  Bing.  N.  C.  433. 

"11th  November,  1839. 

"I.  0.  U.  45/.  13*.  which  I  borrowed  of  Mrs.  Melanotte,  and  to  pay  her  five  per 
cent,  till  paid.  "  Robert  Teasdale." 

Held  not  a  note,  and  not  to  require  a  stamp  as  an  agreement.  Melanotte  v.  Teasdale, 
13  M.  &  W.  216. 

"  Memorandum.  Mr.  Sibree  has  this  day  deposited  with  me  500Z.  on  the  sale  of 
10,300/.  3  per  cent.  Spanish,  to  be  returned  on  demand.  James  T.  Tripp."  Held  not 
a  note.    Sibree  v.  Tripp,  15  M.  &  W.  23. 


"Where  the  indorsement  is  special,  it  must  receive  such  a  construction  as  will  best 
carry  out  the  intention  of  the  parties,  and  which  is  to  be  gathered  from  its  terms. 
The  courts  of  New  York  have  construed  such  words  as  these,  "I  guaranty  the  pay- 
ment of  the  within  note,"  whether  indorsed  at  the  time,  or  subsequent  to  the  execu- 
tion of  the  note,  to  import  an  absolute  promise,  and  not  simply  a  guaranty.  But  thig 
construction  has  been  repudiated  in  Massachusetts.  Manrow  v.  Durham,  3  Hill's  N. 
Y.  R.  584.  Oxford  Bank  v.  Haynes,  8  Pick.  423.  The  doctrine  in  Massachusetts  ia 
evidently  approved  by  Judge  Story,  in  his  work  on  Promissory  Notes,  581. 

In  New  York  the  courts  have  drawn  a  distinction  between  a  guaranty  of  the 
"  payment,'  and  a  guaranty  "  of  the  collection"  of  a  note ;  holding  the  latter  to  be 
a  mere  guaranty,  and  void  within  the  Statute  of  Frauds,  unless  a  consideration  ap- 
pear on  the  face  of  the  indorsement.     Hunt  v.  Brown,  5  Hill's  N.  Y.  R.  145. 

The  student  will  find  the  American  authorities,  on  the  whole  subject,  collected 
and  reviewed  in  the  treatise  referred  to,  of  Jud(je  Story  on  Promissory  Notes. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  267 

Tlieir  Definition,  Requisites,  and  Form. 

supplication  to  the  drawee  that  he  will  pay,  amount  to  a  bill  of  ex- 
change ;  for  that  purpose  there  must  be  an  order.  (J)  Again,  it 
must  be  for  the  payment  of  money  alone  ;  Qc)  an  order  or  promise 
to  pay  "  in  cash  or  Bank  of  England  notes,"  is  insufficient ;  (Z)  and 
that  money  must  be  a  certain  sum,  for  a  promise  to  pay  J.  E  "  65Z., 
with  all  other  sums  that  may  be  due  to  him,"  or  to  pay  13/.,  and  all 
fines  according  to  rule,  (m)  is  not  a  promissory  note,  (n)  Moreover, 
the  money  must  be  payable  unconditionally.^     If  it  contain  any 


"John  Mason,  ISth  Feb.,  183G,  borrowed  of  his  sister  M.  A.  M.,  the  sum  of  14/. 
in  cash,  as  per  loan,  in  promise  of  payment  of  which  I  am  truly  thankful  for  and 
shall  never  be  forgotten  by  me,  John  Mason,  your  affectionate  brother,  14/."  Held  to 
be  a  note.    Ellis  v.  Mason,  Y  Dowl.  593. 

"11th  September,  1839. 

"  I  undertake  to  pay  to  Mr.  Robert  Jarvis  the  sum  of  6/.  4s.  for  a  suit  of  clothes 
ordered  hj  Daniel  Page.  "S.  "W".  Wilkins." 

Held  a  guarantee,  7iot  a  note.     Jarvis  v.  Wilkins,  7  M.  &  W.  410.     Baron  Parke  said, 
that  had  "supplied"  been  inserted  instead  of  "ordered,"  it  would  have  been  a  note. 

*'  At  twelve  months  after  date  I  promise  to  pay  R.  &  Co.  -500/.  to  be  held  by  them 
as  a  collateral  security  for  moneys  now  owing  them  by  J.  M.,  which  they  may  be  un- 
able to  receive  on  realizing  the  securities  they  now  hold,  and  others  which  may  be 
placed  in  their  hands  by  him." 

Held  not  a  note.     Robins  v.  May,  11  Ad.  &  E.  213. 

(_;■)  Little  v.  Slaekford,  1  M.  &  M.  171.  A  mere  authority  to  pay  is  not  a  bill. 
Norris  v.  Solomon,  2  M.  &  Rob.  266.     Russell  v.  Powell,  14  M.  &  W.  418. 

{k)  Martin  v.  Chauntrj-,  Str.  1271.  Anon,  B.  N.  P.  272.  Fx  parte  Imeson,  2 
Rose,  225.  £Jx  parte  Davison,  Buck.  31.  R.  v.  Wilcox,  Bayley,  oth  ed.  p.  11.  Bol- 
ton V.  King,  4  B.  &  Ad.  619. 

{I)  Sed  quaere,  since  3  <t  4  Wm.  4,  c.  98,  sect.  6.  Continued  7  &  8  Vict.  c.  32, 
Beet.  27. 

(w)  Ayrey  v.  Fearnsides,  4  M.  &  W.  168, 

{ii)  Smith  V.  Nightingale,  2  Star.  375. 


*  In  the  case  of  Patterson  v.  Poindexter,  6  Watts  h  Serg.  227,  it  was  held  that  an 
instrument  in  writing  issued  by  a  bank,  signed  by  the  assistant  cashier,  in  these  words, 
*I  hereby  certify  that  C.  T.  has  deposited  in  this  bank,  payable  twelve  months  from 
1st  May,  1839,  with  five  per  cent,  interest  till  due,  per  ann.,  $3691  63,  for  the  use 
of  R  P.  tfe  Co.,  and  payable  only  to  their  order  upon  the  return  of  this  certificate," 
was  not  a  promissory  note  within  the  statute  of  Ann,  but  a  certificate  of  deposit  on 
special  terms.  Such  an  instrument  was  deemed  negotiable  for  the  purpose  of  trans- 
fer only,  but  not  to  make  R.  P.  tfe  Co.  liable  on  their  indorsement  to  the  liolJer.  It 
was  regarded  as  a  special  agreement,  to  pay  the  dej^osit  to  any  one  who  should  pre- 
Bent  the  certificate,  and  the  depositor's  order. 

The  decision  in  Patterson  v.  Poindexter,  is  inconsistent  with  the  weight  of  Aine- 


268  MERCANTILE  CONTRACTS. 

Their  Definition,  Requisites,  and  Form. 

condition  precedent,  or  defeasance,  or  be  payable  at  an  uncertain 
time,  or  out  of  an  uncertain  fund,  it  is  no  bill  or  note,  (o)*     In  one 


(o)  Colehan  v.  Cooke,  "Willes,  393.  Appleby  v.  Biddulph,  8  Mod.  363,  4  Vin.  240, 
pi.  16.  Roberts  v.  Peake,  Burr.  323.  Beardsley  «;.  Baldwin,  Str.  1151.  Joselin  v.  La- 
Berre,  10  Mod.  294,  316.  Haydock  v.  Lineh,  Ld.  Ray.  1563.  Dawkes  v.  Deloraine, 
Bl.  782.  Jenny  v.  Herle,  Ld.  Ray.  1361,  Str.  591.  Hill  v.  Halford,  2  B.  &  P.  413. 
Leeds  v.  Lancashire,  2  Camp.  205.  Hartley  v.  Wilkinson,  4  Camp.  12Y,  4  K  <fe  S.  25. 
Williamson  v.  Bennet,  2  Camp.  417.  Crowfoot  v.  Gurney,  9  Bingh.  574.  Clai-ke  v. 
Perceval,  2  B.  &  Ad.  660.  Worley  v.  Harrison,  3  A.  &  E.  669.  Wiieatley  v.  Wil- 
liams, 1  M.  &  W.  532.  Drury  v.  Macaulay,  16  M.  &  W.  147.  Moffat  v.  Edwards,  Car. 
&  M.  16. 


rican  authority.  An  instrument  almost  identical  in  terms,  was  held  to  be  a  promis- 
sory note  in  Connecticut,  in  Kilgore  v.  Bulkley,  14  Conn.  363.  The  same  doctrine 
■was  established  in  New  York  in  Bank  of  Orleans  v.  Merril,  2  Hill's  N.  Y.  R.  295,  and 
by  the  Supreme  Court  of  the  United  States  in  Miller  v.  Austin,  13  Howard,  S.  C. 
R.  218. 

*  A  note  or  bill  made  payable  out  of  a  particular  fund,  is  not  payable  at  all 
events  and  imconditionally,  inasmuch  as  the  fund  may  prove  deficient.  Atkinson 
V.  Marks,  1  Cow.  691.  Cowperthwaite  v.  Sheffield,  1  Sand.  Sup.  Ct.  Rep.  416.  Warden 
V.  Dodge,  4  Denio,  159.  Upon  the  same  principle  have  proceeded  a  class  of  cases  in 
which  orders  upon  public  functionaries  liave  been  held  not  negotiable.  Tlius,  in 
Reeside  v.  Knox,  2  Whart.  233,  an  order  drawn  by  a  mail  contractor  on  the  Post- 
master General,  in  these  words:  "On  1st  of  January,  1836,  pay  to  my  order,  five 
thousand  dollars,  value  received,  and  charge  the  same  to  my  account  for  transport- 
ing the  United  States  mail,"  was  held  not  to  entitle  an  indorsee  to  sue  in  his  own 
name.  In  this  case  the  Court  lay  down  the  general  proposition,  that  every  bill  on 
government  is,  in  contemplation  of  law,  drawn  on  a  fund,  and  that  its  acceptance  is 
merely  a  recognition  of  the  instrument  as  a  transfer  of  credit,  and  that  such  a  bill 
is  not  negotiable.  S.  P.  Strader  v.  Batch eler,  8  B.  Monr.  168.  So  in  the  case  of  the 
United  States  v.  Bank  of  United  States,  5  How.  382,  an  order  in  the  form  of  a  bill 
of  exchange  had  been  drawn  by  the  Secretary  of  the  Treasury  of  the  United  States 
upon  the  same  officer  of  the  French  government,  in  favor  of  the  Bank  of  the  United 
States,  for  a  sum  of  money  due  by  a  treaty  stipulation  between  the  two  govern- 
ments: the  order  showing  on  its  face  the  nature  of  the  debt.  It  was  held  by  a  majo- 
rity of  the  Court  that  this  was  not  a  bill  of  exchange,  subject  to  commercial  law 
and  usages,  on  which  the  drawer  was  responsible  for  re-exchange.  "  A  bill  of  ex- 
change," saj-s  J.  Catron,  delivering  the  opinion  of  the  majority  of  the  Court,  "  must 
carry  on  its  face  its  authority  to  demand  the  money  drawn  for;  so  that  the  holder 
or  the  notary  acting  as  his  agent,  may  receive  the  money  and  give  a  discharge  on 
presenting  tlie  bill  and  receiving  payment:  or  if  payment  is  refused,  enter  a  protest, 
from  which  follows  the  incident  of  damages  ;  but  if  no  demand  can  be  made  upon 
the  bill  standing  alone,  or  it  depends  upon  other  papers  and  documents  to  give  it 
effect,  and  these  must  necessai'ily  accompany  the  bill  and  be  presented  with  it,  it 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  269 

Their  Definition,  Requisites,  and  Form. 

of  the  latest  cases  on  this  subject,  the  instrument  was  in  the  follow- 
ing form : — 

1200?.  Warrington,  Ath  March,  1824. 

On  demand,  we  promise  to  pay  Mr.  George  Clarke,  or 
order,  twelve  hundred  pounds,  for  value  received,  in  stock,  ale, 
brewing-vessels,  &c.,  this  being  intended  to  stand  against  the  un- 
dersigned Mary  Perceval  as  a  set-off  for  the  sum  left  me  in  my 
father's  will  above  my  sister  Ann's  share. 

Thomas  Perceval. 
(Witness,)  William  Hall.  Mary  Perceval. 

The  Court  of  King's  Bench  held  that  the  1200?.  was  not  paya- 
ble at  all  events,  and  the  instrument  therefore  not  a  promissory 
note,  {p) 


{p)  Clarke  v.  Perceval,  2  B.  &  Ad.  660.    See  also  Robins  v.  May,  11  Ad.  &  R 
213. 


cannot  be  a  simple  bill  of  exchange  that  circulates  from  hand  to  hand  as  a  represen- 
tative of  current  cash.  In  this  case,  the  mere  signature  of  the  Secretary  of  the  Trea- 
sury could  not  be  recognized  by  the  French  government,  as  conferring  authority 
upon  the  holder  to  demand  payment.  The  transaction  being  one  of  nation  with  na- 
tion, he, who  demanded  payment  must  have  had  not  only  the  autliority  of  his  nation 
before  he  could  have  approached  the  French  government,  but  that  authority  must 
have  been  communicated  by  the  head  of  this  government,  through  the  proper  de- 
partment carrying  on  our  national  intercourse,  which  was  the  State  dapartment : 
until  the  French  government  was  thus  officially  advised,  tlie  bill  was  valueless  in 
the  hands  of  the  holder  against  France."  From  this  opinion  Justices  McLean  and 
Wayne  dissented. 

There  are  other  circumstances  besides  the  character  of  the  drawer  or  drawee, 
and  the  nature  of  the  fund  or  transaction,  which  will  take  an  instrument  in  the  form 
of  a  bill  or  note,  out  of  the  pale  of  the  commercial  law.  It  must  not  only  be  an 
absolute  and  unconditional  engagement  to  pay  money,  but  it  must  be  a  simple  pro- 
mise, unclogged  with  incidents  which  would  destroy  its  character  or  value  as  a  com- 
mercial security.  Overton  v.  Tyler,  3  Barr.  346.  A.  L.  C.  vol.  1,  p.  309.  "  A  nego- 
tiable bill  or  note,"  says  C.  J.  Gibson,  delivering  the  opinion  of  the  Court,  "  is  a  cou- 
rier without  luggage.  It  is  requisite  that  it  should  be  framed  in  the  fewest  words, 
and  those  importing  the  most  certain  and  precise  contract;  and  though  tl?is  i"equi- 
site  is  a  minor  one,  it  is  entitled  to  weight  in  determining  a  question  of  intention. 
To  be  within  tlie  statute,  it  must  be  free  from  conditions,  or  contingencies  which 
would  embarrass  it  in  its  course." 


270  MERCANTILE  CONTRACTS. 

Their  Definition,  Requisites,  and  Form. 

But  an  order  hy  the  freigliler  of  a  ship  to  pay  money  on  account 
of  freight^  {q)  or  an  order  to  pay  so  much  as  the  drawer's  quarter'' s 
half  pay  hy  advance,  (r)  or  for  value  deposited  and  registered,  {s)  or  I 
promise  to  pay  M.  A.,  on  demand,  £  hy  giving  up  clothes  and 
papers,  {t)  or  when  J.  S.  comes  of  age,  to  wit,  June  12,  1750,  (a)  or 
six  weeks  after  the  death  of  A.  B.,  {v)  have  been  held  payable  at  all 
events,  and  therefore  good ;  for,  to  use  the  words  of  Willes,  C.  J., 
"  If  a  bill  or  note  be  made  payable  at  ever  so  distant  a  day,  yet  if 
it  be  a  day  that  must  come,  it  is  no  objection  to  the  bill  or  note ;" 
and  therefore  a  note  payable  within  two  months  after  his  Ilaj'esty's 
ship  A.  B.  shall  he  paid  off,  is  good,  for  the  paymaster  being  Gov- 
ernment, it  is  morally  certain  that  payment  will  be  made,  {w) 

An  instrument  is  not  the  less  a  note,  because  it  contains  a 
memorandum  that  the  maker  has  deposited  title  deeds  with  the 
payee  as  a  collateral  security,  (x)  So  an  instrument,  the  effect  of 
which  was — I  promise  to  pay  600Z.  by  instalments,  and  I  agree  to 
set  off  95Z.,  was  held  not  to  be  a  note ;  for  besides  its  complexity, 
the  95Z.  could  not  be  payable  to  an  indorsee,  {y) 

If  at  the  time  of  making  a  hill  or  note  an  indorsement  be  written 
on  it,  rendering  it  payable  only  on  certain  conditions ;  that  will  de- 
prive it  of  the  character  of  negotiability,  and  turn  it  into  an  agree- 
ment as  between  the  parties  privy  to  it.  (2)  But  the  indorsement 
on  a  note  of  a  mere  reference  to  an  agreement  for  the  purpose  of 
ear-marking  it  as  the  note  named  in  that  agreement,  has  not  such 

(q)  Pierson  v.  Dunlop,  Cowp.  571,  for  it  admits  so  much  freight  to  be  due.  But 
an  order  from  the  owner  to  the  freighter  to  pay  so  much  on  account  of  freight  is  no 
bill.     Bunbury  v.  Lisset,  Str.  1211. 

(r)  M'Cleod  v.  Smee,  Ld.  Raym.  1481. 

(.s)  Haussolier  v.  Hartsinb,  7  T.  R.  733. 

{t)  Dixon  V.  Nutall,  6  C.  &  P.  320.  See  also  Slienton  v.  James,  5  Q.  B.  199.  Fox 
V.  Frith,  Car.  &  Marsh,  502. 

(?<)  Goss  V.  Nelson,  Burr.  226. 

(v)  Colehan  v.  Cooke,  Str.  1217,  Willes,  3yS.  Roffey  v.  Greenwell,  10  Ad.  &  E 
222. 

(w)  Andrews  v.  Franklin,  Str.  24.  "  I  promise  to  pay,  or  cause  to  be  paid,"  is  a 
good  note.     Lovell  v.  Hill,  6  C.  &  P.  238. 

(x)  Wise  V.  Charlton,  4  Ad.  &  E.  786.     Fancourt  v.  Thorne,  16  L.  J.,  Q.  B.  344. 

(jr)  Davies  v.  Wilkinson,  10  Ad.  &,  E.  98. 

(2)  Leeds  v.  Lancashire,  2  Camp.  205  Hartly  v.  Wilkinson,  4  M.  &  S.  25.  Stone 
V.  Metcalf,  1  Stark.  23. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  271 


Their  Definition,  Requisites,  and  Form. 


an  effect,  (a)  Nor  can  sucli  an  instrument  ever  be  rendered  con- 
ditional bj  a  contemporaneous  parol  agreement,  for  it  is  one  of  the 
first  principles  of  the  law  of  evidence,  that  oral  testimony  shall 
never  be  permitted  to  vary  or  contradict  the  terms  of  any  written 
contract,  (i) 

Although  conformity  with  one  of  the  above  definitions  is  in 
general  strictly  required ;  yet,  if  a  word  be  fraudulently  inserted 
by  the  maker  or  drawer,  in  order  to  prevent  the  instrument  from 
acquiring  the  legal  properties  of  a  bill  or  note,  as  where  the  maker 
of  a  note  worded  it  thus — "  I  promise  not  to  pay,"  the  court  will 
reject  the  word  so  fraudulently  introduced,  and  read  the  instrument 
without  it,  (c) 

A  bill  or  note  is  called  inland  when  made  and  payable  in  Eng- 
land ;  {d)  foreign^-^  when  made  payable  abroad.  "We  will  first  con- 
sider the  form  and  requisites  of  inland  bills  and  notes,  and  after- 
wards remark  upon  the  incidents  peculiar  to  those  which  are  foreign: 
premising  that  a  bill,  drawn  in  England  and  payable  abroad,  is 
governed  by  the  law  of  the  country  where  it  is  made  payable,  ac- 
cording to  the  maxim  of  the  Civilians,  "  Contraxisse  unusqmsque  in 
eo  loco  intelligitui\  171  quo  ut  solveret  se  ohligaverit,^^  (e)  and  that  in 
pleading,  such  an  instrument  is  always  presumed  to  be  inland,  un- 
less the  contrary  be  shown.  (/) 


(a)  Brill  V.   Crick,    1   M.    &   W.    232.      See  Cholmley  v.   Dsxvley,   14   M.  &  ^Y. 
344. 

(6)  Foster  v.  Jolly,  1  C.  M.  &  R.  105. 

(c)  Per  Lord  Macclesfield,  cited  by  Lord  Hardwicke,  2  Atk.  32 ;  Bayley,  .5th  ed, 
p.  6.     Allen  v.  Mawson,  4  Camp.  115. 

(d)  A  bill  drawn  in  England  on  a  person  residing  abroad,  but  payable  in  Eng- 
land, is  an  inland  bill.     Araner  v.  Clarke,  2  C.  M.  &  R.  468. 

(e)  Rothschild  v.  Carrie,  1  Q.  B.  43. 

(/)  Armani  v.  Castrique,  13  M.  &  W.  443. 


*  It  is  a  point  now  well  settled  by  authority,  that  a  bill  of  exchange  drawn  in 
one  of  the  United  States,  and  payable  in  another,  is  a  foreign,  and  not  an  inland  bilk 
Buckner  v.  Finley,  2  Peters'  Rep.  586.  Bank  of  the  United  States  v.  Daniel  12  Pe- 
ters, 32.  Phoenix  Bank  v.  Hussey,  12  Pick.  483.  Wells  v.  Whitehead,  26  Wend.  527 
Halliday  v.  McDougall,  20  Wend.  80.  Brown  v.  Ferguson,  4  Leigh.  37.  Rice  v.  Ho» 
gan,  8  Dana,  134.  In  some  of  the  States,  however,  there  are  express  statutory  pro- 
visions, making  such  bills  inland. 


272  MERCANTILE  CONTRACTS. 

Their  Defiaition,  Requisites,  and  Form. 

FORM   OF   AN    INLAND   BILL   OF   EXCHANGE. 

£100         „         ,,  London^  January  1,  1823. 

At  sight,  (or  on  demand,  or  at days 

[Stamp.]  after  sight,  or  at days  after  date),  pay 

to  Mr. ,  or  order,  (or  hearer,)  one  hun- 
dred pounds,  for  value  received. 

John  Wood. 
To  Mr.  Thomas  Jones,  merchant, 
at  Liverpool. 


FORM  OF   A  PROMISSORY  NOTE. 

£100         ,,         „  London,  January  1,  1833. 

Two  months  after  date,  I  promise  to  pay  to 

[Stamp.]  Mr.  ■ ,  or  order,  one  hundred  pounds, 

for  value  received.^ 

John  Wood. 

The  principal  parts  of  these  instruments  are  the  amount,  stamp, 
date,  time  for  payment,  place  of  payment,  designation  of  2^^y^^i  name 
of  drawer,  and  name  of  drawee.  We  will  consider  these  in  order, 
observing  first,  however,  that  all  negotiable  bills  or  notes  made  in 
England,  if  for  less  than  twenty  shillings,  are  void  by  stat.  48  Geo. 
S,  c.  88,  s.  2 ;  and  if  for  more  than  twenty  shillings  and  less  than 
five  pounds,  are  (with  the  exception  of  drafts  by  a  man  on  his 
banker)  also  void,  unless  they  specify  the  name  and  abode  of  the 
payee,  are  attested  by  one  subscribing  witness,  bear  date  at  or  be- 
fore the  time  of  issue,  and  are  made  payable  within  twenty-one 
days  after  date,  but  not  to  bearer  on  demand ;  nor  will  such  instru- 


*  It  waa  at  one  time  supposed  that  the  words  "for  value,"  were  essential  parts  of 
a  bill  or  note ;  but  it  is  now  settled  that  they  are  not  material. — Byles  on  Bills,  (A. 
edition),  p.  63.  The  character  of  the  instrument  raises  a  presumption  of  considera- 
tion under  the  Mercantile  Law.  Hatch  v.  Frayes,  11  Ad.  &  Ell.  702.  Watson  v. 
Kightley,  15  Ad.  &  Ell.  702.  Benjamin  v.  Tillman,  2  M'Lean,  213.  Bristol  v.  "War- 
ner, 19  Conn.  7.  Townshend  v.  Derby,  3  Met.  363.  Hubble  v.  Fogartie,  3  Rich.  413. 
Kendall  v.  Gal'rin,  15  Main.  131. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  073 

Their  Definition,  Requisites,  and  Form. 

ments  be  negotiable  after  the  time  therein  limited  for  payment.     7 
Geo.  4,  c.  6,  and  17  Geo.  3,  c.  30. 

Amount. — AVith  regard  to  the  amount.  It  is  usual  to  specify 
this  in  figures  on  the  lower  left-hand  corner  of  the  instrument  as 
well  as  in  writing  in  the  body.  Where  a  difference  appears  be- 
tween the  words  and  figures,  evidence  cannot  be  received  for  the 
purpose  of  explaining  it,  and  the  Court  of  Common  Pleas  has  de- 
cided that  it  is  proper  to  adopt  the  rule  of  commercial  writers,  viz., 
that  where  a  difference  appears  between  the  figures  and  words  of 
the  bill  it  is  safer  to  attend  to  the  words,  (g)^ 

/Stamjj. — The  stamp  is  an  essential  part  of  every  inland  bill  and 
note,  and  though  it  purport  to  have  been  drawn  abroad,  and  be  in 
the  hands  of  an  innocent  holder,  yet  any  party  may  show  that  it 
was  actually  made  in  this  country,  and  insist  upon  the  want  of  a 
stamp.  (A)  If  unstamped,  it  is  a  nullity,  and  cannot  be  given  in 
evidence  even  as  an  admission  of  a  debt  from  one  of  the  parties 
therein  mentioned  to  the  other,  (i)  The  paper  on  which  a  bill  or 
note  is  written  must  have  the  stamp  previously  impressed  upon  it, 
for  if  that  be  neglected,  it  cannot  afterwards  be  stamped,  (j)  except 
in  the  single  case  of  its  having  been  impressed  with  a  stamp  of 
equal  or  higher  value,  but  of  a  wrong  denomination,  (k)  However, 
it  will  be  sufficient  if  it  be  impressed  wnth  a  stamp  of  adequate  or 
greater  amount,  though  of  an  improper  denomination,  unless  such 
Btamp  be  specifically  appropriated  to  some  other  instrument,  by  hav- 

{g)  Saunderson  v.  Piper,  Bing.  N.  C.  425. 

{h)  Jordaine  v.  Lashbrook,  V  T.  R.  601.     Steadman  v.  Duhamel,  1  C.  B.  888. 

(i)  Wilson  V.  Vysar,  4  Taunt.  228.  Jardine  v.  Payne,  1  B.  &  Ad.  6Y0.  Cundy  v. 
Harriot,  1  B.  &  Ad.  696. 

(j)  See  Wright  v.  Riley,  Peake,  1Y3.  Roderick  v.  Hovil,  3  Camp.  103.  Rapp.  v. 
Alnutt,  ibid.  106.  Green  v.  Davies,  4  B.  &  C.  235.  Abrahams  v.  Skinner,  12  Ad.  & 
E.  763. 

(k)  1  Ann.  stat.  2,  c.  23,  s.  2  <k  3.  Stat.  23,  Geo.  3,  c.  25,  s.  19.  Stat.  37,  Geo.  3, 
c.  136,  s.  5.  See  Bradley  v.  Bardsley,  14  M.  &  W.  873.  Chamberlain  v.  Porter,  1  N. 
E.  30. 


*  There  is  an  important  provision  of  the  law  of  Louisiana,  rendering  invalid  any 
bill  or  note,  the  amount  of  which  shall  be  expressed  in  figures  only. 

18 


274  MERCANTILE  CONTRACTS. 

Their  Definition,  Requisites,  and  Form. 

ing  its  name  on  the  face  of  it.  {I)  The  amount  of  duty  upon  bills 
or  notes  is  fixed  by  stat.  55  Geo.  3,  c.  184. 

Where  the  stamp  duty  is  payable,  its  amount  will  not  be  in- 
creased by  the  circumstance  of  interest  being  reserved  from  the 
date  of  the  bill  or  note,  (m)  or  even  from  a  day  prior  to  the 
date,  (n) 

There  is  a  proviso  in  stat,  9  Geo.  4,  c.  14,  usually  called  Lord 
Tenterden's  Act,  sect.  8,  which  enacts  that  "no  memorandum  or 
other  writing  made  necessary  by  this  Act  shall  be  deemed  to  be  an 
agreement  within  the  meaning  of  any  statute  relating  to  ihe  duties 
of  stamps."  Under  this  proviso,  however,  an  unstamped  note  can- 
not be  given  in  evidence  for  the  purpose  of  avoiding  the  statute,  (o) 
though  an  unstamped  agreement  may.  {p) 

There  are  some  instruments  which,  though  not,  properly  speak- 
ing, bills  or  notes,  because  payable  at  an  uncertain  time  or  out  of 
an  uncertain  fund,  yet  require  stamps  by  the  words  of  the  schedule 
of  55  Geo.  3,  c.  184.  {q) 

Date. — The  date,  though  a  usual  and  convenient  part  of  every 
bill  and  note,  is  not  in  general  an  essential  one ;  for  if  it  be  omit- 
ted, the  instrument  dates  from  the  day  on  which  it  was  made,  (r) 
Post-dating  of  a  bill  or  note  in  order  to  evade  the  stamp  laws,  is 
rendered  a  very  serious  offence  by  stat.  55  Geo.  3,  c.  184,  and  ren- 
ders the  instrument  incapable  of  being  used  in  evidence,  {s) 

As  an  undated  bill  or  note  dates  from  the  time  when  it  was 
made,  so,  vice  versd,  if  a  question  arise  as  to  the  time  of  making,  it 
is  prima  facie  taken  to  have  been  made  on  the  day  of  which  it  is 

{I)  65  Geo.  3,  c.  184,  s.  10. 

(m)  Pruessing  v.  Ing,  4  B.  &  Aid.  204. 

(w)  Wills  V.  Noot,  4  Tyrwh.  '726. 

(o)  Jones  V.  Ryder,  4  M.  <fe  W.  32. 

(jo)  Morris  v.  Dixon,  4  Ad.  &  E.  845. 

{q)  See  Hutchinson  v.  Heyworth,  9  Ad.  &  R  375.  Jones  v.  Simpson,  2  B.  <fe  C. 
818.  Emly  v.  Collins,  6  M.  &  S.  144.  Lord  Braybrooke  v.  Meredith,  13  Sim.  2*71. 
Firbank  v.  Bell,  1  B.  <fe  A.  30.     Butts  v.  Swan,  2  B.  <fe  B.  78. 

(r)  De  la  Courtier  v.  Bellamy,  2  Show.  422.  Hague  v.  French,  3  B.  &  P.  173. 
Giles  V.  Bourne,  6  M.  &  S.  73. 

(s)  Field  V.  Wood,  6  Dowl.  24.  7  Ad.  &  E  114.  Serle  v.  Norton,  9  M.  &  "W 
S09. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  275 

Their  Definition,  Requisites,  and  Form. 

dated,  (t)     If  it  bear  no  date  the  time  of  making  may  be  inferred 
from  tlie  circumstances,  (u) 

Time  for  Payment — When  the  word  month  is  used  in  specifying 
the  time  of  payment,  it  is,  as  in  other  mercantile  contracts,  to  be 
understood  of  a  calendar  month.  The  time  for  payment  is  gener- 
ally expressed  to  be  on  demand,  or  at  sight,  or  a  certain  time  after 
sight,  or  a  certain  time  after  date;  the  effect  of  these  and  other  words 
in  regulating  the  time  at  which  the  instrument  should  be  presented 
for  payment,  will  be  discussed  hereafter,  when  we  come  to  treat,  in 
the  fifth  section,  on  presentments.  If  no  time  of  payment  be  spe- 
cified, the  instrument  is  payable  upon  demand,  (v) 

Place  of  Payment — Although,  in  the  forms  above  given,  no  par- 
ticular place  of  payment  is  specified,  the  drawer  may,  if  he  think 
proper,  fix  one ;  and  if  he  do,  a  presentm.ent  must  be  made  at  the 
place  mentioned,  (iv)  in  order  to  charge  him  with  the  acceptor's  de- 
fault ;  but  it  is  otherwise  if  it  be  only  named  in  a  memorandum  at 
the  foot  of  a  promissory  note,  {x)  though  a  distinction  has  been 
taken  in  this  respect  between  a  memorandum  printed  and  one  writ- 
ten, (y) 

Designation  of  Payee. — The  bill  or  note  may  be  payable  to  a 
particular  individual,  or  to  a  particular  individual  or  his  order,  or 
generally  to  the  hearer.*     "When  an  individual  is  mentioned,  a  mis- 

{t)  Sinclair  v.  Baggaley,  4  M.  &  "W.  312.  Anderson  v.  Weston,  6  Bingh.  N.  C. 
296. 

(m)  Ihid. 

{v)  Bayley,  6th  ed.  109.    See  Whitloek  v.  Underwood,  2  B.  ife  C.  157. 

(mi)  Roche  V.  Campbell,  3  Camp.  247.     Gibb  v.  Mather,  8  Bingh.  214. 

{x)  Exon  V.  Russell,  4  M.  &  S.  505.  Williams  v.  Waring,  10  B.  &  C.  1.  Vide 
Hardy  t).  Woodroofe,  2  Stark.  319.  Saunderson  v.  Judge,  2  H.  Bl.  509.  Wild  v.  Ren- 
nard,  1  Camp.  425,  n.  Callaghau  v.  Aylett,  2  Camp.  549,  and  the  remarks  on  those 
cases  in  Bayley,  5th  edit.  222. 

(y)  Trecothick  v.  Edwin,  1  Stark.  468. 


*  It  was  formerly  a  matter  of  doubt  whether  it  was  not  essential  to  the  character 
of  a  bill  of  exchange,  that  i*;  should  be  negotiable,  that  is  to  say,  that  it  should  be 
payable  either  to  A.  or  his  order,  or  to  the  bearer.     But  this  doubt  has  been  lonq 


276  MERCANTILE  CONTRACTS. 


Their  ■Definition,  Requisites,  and  Form. 


take  in  his  name  is  of  no  importance,  if  it  be  sufficiently  clear  who 
was  intended,  (z)  If  the  instrument  be  made  payable  to  an  indi- 
vidual without  further  words,  it  will  not  be  negotiable.  If  it  be 
payable  to  an  individual  or  his  order,  he  may  transfer  his  right  to  a 
third  party,  by  indorsing  his  name  upon  it ;  (a)  if  to  hearer  gener- 
ally, or  to  a  specified  individual  or  hearer,  it  may  be  transferred  by 
mere  delivery  ;  and  in  the  last  case  it  matters  not,  though  the  indi- 
vidual named  never  existed,  and  could  not  possibly  exist :  thus  a 
draft  payable  to  the  ship  Fortune  or  bearer,  is  negotiable  by  deliv- 
ery. {J})    If  payable  to  a  fictitious  person  or  his  order,  although  no 


(z)  Rex  V.  Box,  6  Taunt.  325. 

(a)  A  question  has  lately  been  raised,  whether  a  note  payable  to  the  maker's 
order,  be  assignable  under  the  Statute  3  <&  4  Anne,  c.  9.  A  declaration  so  describing 
a  note,  and  stating  that  the  maker  indorsed  it  to  the  plaintiff  has  been  held  bad  on 
demurrer,  by  the  Court  of  Exchequer,  Flight  v.  Maclean,  16  M.  &  W.  57,  but  it  may 
be  questioned  whether  the  effect  of  the  indorsement  in  blank  of  such  an  instrument 
would  not  at  all  events  be  to  make  it  payable  to  bearer,  and  whether  it  might  not  in 
pleading  be  thus  properly  described.  In  the  more  recent  case,  however,  of  Wood  v. 
Mytton,  T.  T.  1847,  the  Court  of  Queen's  Bench  held  such  a  note  to  be  a  good  note 
within  the  statute.* 

(6)  Grant  v.  Vaughan,  Burr.  1516. 


since  removed,  and  it  is  now  settled  in  Great  Britain  and  the  United  States  (although 
it  is  otherwise  in  France),  that  it  is  not  necessary  to  constitute  a  bill  of  exchange  or 
promissory  note,  that  it  should  be  negotiable.  Thus,  it  has  been  held  that  an  instru- 
ment without  these  words  will  be  entitled  to  days  of  grace.  Smith  v.  Kendall,  6 
Term.R.  123.  Duncan  v.  Maryland  Sav.  Inst.  10  Gill.  &  J.  300.  But  the  transfer  of 
a  bill  or  note  without  negotiable  words,  will  not  authorize  the  indoi'see  to  bring  an 
action  against  the  maker  or  acceptor,  in  his  own  name.  Gerard  v.  La  CosH,  1  Dall. 
194,  1  A.  L.  C.  316,  329. 

*  The  question  does  not  j'et  seem  to  be  fully  settled  in  England,  whether  a  note 
payable  to  the  maker's  own  order  is  a  promissory  note  within  the  statute  of  Anne. 
See  Flight  v.  Maclean,  16  Mees.  &  W.  51.  Hooper  v.  Williams,  2  Exch.  13.  Wood  v. 
Mytton,  10  Adol.  &  Ell.  N.  S.  806.  Gay  v.  Lander,  6  C.  B.  336.  It  is  supposed  by  the 
American  editor's  of  Meeson  &  Welsby,  that  this  question  would  occasion  no  embar- 
rassment in  our  courts,  and  that  a  construction  proceeding  upon  a  minute  verbal 
consideration  of  an  ancient  remedial  statute  like  this  of  3  &  4  Anne,  would  be 
deemed  inadmissible.  It  is  suggested  as  the  true  ground  of-  decision,  that  according 
to  long-ascertained  judicial  interpretation  and  practice,  the  intention  of  that  statute 
was  to  place  promissory  notes  upon  the  same  footing  as  bills  of  exchange;  and  there 
is  no  doubt  that  bills  of  ea  iliange  payable  to  the  drawer's  order  are  negotiable  by 
the  Law  Merchant. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  271 

Their  Definition,  Reqixisites,  and  Form. 

order  can  be  made  bj  the  payee,  wlio  is  not  in  existence,  yet  if  the 
instrument  be  issued  into  the  world  with  an  indorsement  in  blank 
(the  nature  of  which  will  presently  be  explained),  purporting  to  be 
made  by  such  fictitious  person,  it  will,  as  against  the  drawer  or 
maker,  be  considered  payable  to  bearer ;  and  so  will  a  bill  drawn  in 
a  fictitious  name,  as  against  an  acceptor,  who  knew  that  it  was 
such,  (c)  But  though  a  bill  or  note  with  a  fictitious  payee  may  be 
negotiable,  yet  it  is  not  so  if  he  be  uncertain,  ex.  gr.^  if  the  instru- 
ment be  payable  to  A.  or  B.  (cZ)  But  a  note  may  be  made  payable 
to  the  trustees  acting  under  AJs  loill^  and  parol  evidence  will  be  ad- 
missible to  show  who  they  are  and  what  the  trusts  are,  (e)  and  the 
same  law  applies  to  the  case  of  a  bill  or  note  payable  to  the  manager 
of  a  bank.  (/)  If  a  blank  be  left  for  the  payee's  name,  any  hona 
fide  holder  may  insert  his  own,  by  which  he  will  acquire  all  the 
rights  of  payee,  and  convert  the  instrument  from  a  mere  writing 
into  a  bill  of  exchange,  [g) 

Name  of  Maker  or  Drawer. — The  name  of  the  maker  or  drawer 
must  be  inserted  or  subscribed  {h)  by  himself  or  his  agent ;  but  as 
there  must  be  no  uncertainty  about  the  payee,  so  neither  must  there 
be  about  the  maker  or  drawer ;  thus  a  note  must  not  be  signed  A. 
B.,  or  else  C.  D. ;  {i)  the  name  of  the  drawer,  however,  may  be  in- 
scribed before  it  is  certain  what  will  be  the  exact  form  of  the  in- 
strument, for  it  has  been  decided  that  he  who  signs  his  name  upon 
a  sheet  of  stamped  paper,  which  he  delivers  to  another,  is  liable  on 
any  bill  which  that  person  may  think  fit  to  draw  on  it,  and  which 


(c)  Tatlock  V.  Harris,  3  T.  R.  174.  Vere  v.  Lewis,  ibid.  182.  Minet  v.  Gibson, 
ibid.  481,  1  H.  Bl.  569.     Collins  v.  Emmett,  1  H.  BL  313. 

{d)  Blanckenhagen  v.  Blundell,  2  B.  <fe.  A.  417. 

{e)  Megginson  v.  Harper,  4  Tyrwh.  96,  2  C.  <fe  M.  322. 

(/)  Robertson  v.  Sheward,  1  M.  &  Gr.  511,  and  see  R.  v.  Box,  6  Taunt.  325.  Cart- 
ridge V.  Griffiths,  1  B.  &  A.  5Y.  Metcalf  v.  Bruin,  12  East,  400,  2  Camp.  422.  Scares 
V.  Glyn,  14  L.  J.  Q.  B.  313. 

{g)  Crutchley  v.  Clarence,  2  M.  &  S.  90.  Crutchley  v.  Mann,  5  Taimt.  529.  At- 
wood  V.  Griffin,  1  R.  &  M.  425.     R.  v.  Randall,  Bayley  on  Bills,  5th  ed.  p.  37. 

(A)  Taylor  v.  Dobbins,  Str.  399.  Elliott  v.  Cowper,  Str.  609.  Lord  Raym.  137& 
Smith  V.  Jarvis,  Lord  Raym.  1484.     Ereskin  v.  Murray,  ibid.  1542. 

(i)  Ferris  v.  Bond,  Ba^'ley,  5th  edit.  17. 


278  MERCANTILE  CONTRACTS. 


Their  Definition,  Requisites,  and  Form. 


the  Stamp  is  sufficient  to  cover.  (7)  If  a  man  draw  a  bill  or  make 
a  note  in  the  name  of  another  without  authority,  he  may  be  per- 
sonally liable  on  it.  {Jc)  But  no  one  can  be  liable  as  acceptor,  unless 
for  honor,  but  the  real  drawee.  {I) 

By  Stat.  7  &  8  Vict.  c.  110,  s.  45,  bills  drawn  or  accepted,  ana 
notes  made  by  the  directors  of  a  joint  stock  company,  under  that 
act,  are  to  be  made  or  accepted  by,  and  in  the  name  of  two  direct 
ors,  and  by  them  expressed  to  be  in  behalf  of  the  company,  and 
countersigned  by  the  secretary  or  other  appointed  officer. 

And  by  7  &  8  Yict.  c.  113,  s.  22,  bills  and  notes  of  a  banking 
company  regulated  by  it,  may  be  made,  accepted  or  indorsed  in  any 
manner  provided  by  the  deed  of  settlement,  so  that  they  be  signed 
by  a  manager  or  director  on  behalf  of  the  company,  and  it  be  so 
expressed. 

Name  of  Drawee. — A  bill  may  be  addressed  to  the  drawer  him- 
self, though  in  legal  operation  such  an  instrument  is  rather  a  note 
than  a  bill,  (m)  And  an  instrument  will  not  be  less  a  bill,  because, 
instead  of  being  addressed  to  a  particular  person  it  is  addressed  to  a 
particular  house,  at  least  as  far  as  the  person  who  accepts  it  is  con- 
cerned, (72)  nor  because  the  word  at  is  prefixed  to  the  drawee's  name.  (0) 

The  following  is  the  form  of  a  foreign  bill  of  exchange  : — 

London^  January  1,  1806. 
[Stamp.]  Exchange  for  10,000  livres. 

At  two  usances  (or  "  at  sight,''''  or "  after  date'^) 

pay  this,  my  first  hill  of  exchange,  {second  and  third  of  the  same  tenor 

(j)  Collins  V.  Emmett,  1  H.  Bl.  313.  Leslie  v.  Hastings,  1  M.  &  Rob.  119.  Mol- 
loy  V.  Delves,  7  Bingh.  428.     See  Abrahams  v.  Skinner,  12  Ad.  &  E.  763. 

{k)  See  Wilson  v.  Barthrop,  2  M.  &  W.  863.     Polhill  v.  Walters,  3  B.  <fe  Ad.  114. 

(l)  Ibid.     Davies  v.  Clark,  6  Q.  B.  10. 

(9?i)  Block  V.  Bell,  1  M.  &  Rob.  149.  Starke  v.  Cheesman,  Carth.  509.  Dehers  v. 
Harriot,  Show.  163.  Robinson  v.  Bland,  Burr.  1077.  Jocel}-!!  v.  Lacerre,  Fort.  282. 
As  to  a  note  payable  to  the  maker's  order,  see  ante,  p.  274,  note.  Miller  v.  Thomp- 
son, 3  M.  <fe  Gr.  676,  where  a  bill  drawn  by  a  bank  on  its  own  branch  was  treated 
as  a  note. 

(w)  Gray  v.  Milner,  8  Taunt.  739. 

(o)  Shuttleworth  v.  Stephens,  1  Camp.  407.  Allen  v.  Maw  son,  4  Camp.  115.  Se« 
R.  I'.  Hunter,  Bayley  on  Bills,  5th  ed.  7. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  079 

Their  Definition,  Requisites,  and  Form. 

and  date  not  paid)  to  Messrs. or  order ^  (or  "Z^earer,")  ten  ihou' 

sand  Uvres,  value  received  of  them,  and  place  the  same  to  account^  as  pet 
advice  from 

James  Hood. 
To  Mr. ,  at  Paris. 

payable  at 

Foreign  bills  are  usually  drawn  in  sets ;  that  is,  copies  of  tli6 
bills  are  made  on  separate  jjieces  of  paper,  each  part  containing  a 
condition  that  it  shall  continue  payable  only  so  long  as  the  others 
remain  unpaid — a  method,  the  adoption  of  which  considerably  di- 
minishes the  chances  of  losing  the  bill.*  Bills  drawn  in  Eng-land 
on  a  foreign  country  must  be  stamped  as  directed  by  stat.  55  Geo. 
8,  cap.  184,  sch.  I. ;  and  by  the  same  act,  sec.  29,  promissory  notes 
payable  to  bearer  on  demand,  made,  or  purporting  to  be  made  by 
or  on  behalf  of  any  person  resident  out  of  Great  Britain,  except 
when  made  and  payable  in  Ireland  only,  cannot  be  negotiated  here, 
unless  they  be  stamped  in  like  manner  as  notes  of  the  same  tenor 
and  value  made  in  Great  Britain,  under  penalty  of  201. 

But  bills  draivn  in  a  foreign  country,  or  at  sea,  require  no  stamp 
under  any  English  act  of  parliament ;  {pi)  and  where  a  person  re- 
sident at  Antwerp  desired  his  correspondent  in  England  to  fill  up 
a  bill  of  exchange,  and  to  return  it  to  him,  which  was  done,  and  he 
then  signed  it  as  drawer  at  Antwerp,  this  bill  was  held  to  have 


{p)  Boehm  v.  Campbell,  Gow.  K  P.  C.  56.  Snaith  v.  Mingay,  1  M.  <fe  S.  87. 
Cruteliley  v.  Mann,  5  Taunt.  529.  See  Ximenes  v.  Jacques,  1  Esp.  21 L  Hamelin  v. 
Bruck,  15  L.  J.  Q.  B.  343. 


*  In  the  case  of  Downes  &  Co.  v.  Edward  B.  Church,  13  Peters'  S.  C.  R.  205,  it 
was  held  that  iu  an  action  upon  the  second  set  of  foreign  bills  of  exchange,  which  was 
protested  for  non-acceptance,  with  the  protest  thereto  attached,  the  plaintiff  can  re- 
covei",  without  producing  the  first  of  the  same  set,  or  accounting  for  its  non-produc- 
tion. But  in  Wells  v.  Whitehead,  15  Wend.  527,  where  the  second  of  a  set  of  three 
bills  of  exchange  had  been  protested  for  non-acceptance,  the  plaintiff,  in  a  suit 
brouglit  against  an  indorser  upon  the  first  set,  was  not  allowed  to  recover,  because 
he  failed  to  produce  the  second  of  the  set  which  had  been  protested,  or  to  account 
for  its  non-production.  No  other  rule  would  protect  the  defendant  from  a  subsequent 
claim  by  an  acceptor  supra  protest. 


280  SIERCANTILE  COKTRACTS. 

Parties  to  a  Bill  or  Note. 

been  virtually  drawn  abroad,  and  to  require  no  stamp,  (g)  And 
tbougli  the  foreign  country  in  which  the  bill  was  drawn  may  have 
a  law  requiring  it  to  bear  a  particular  stamp,  it  will  nevertheless 
be  valid  in  this  country  without  such  stamp,  for  our  courts  take  no 
notice  of  the  revenue  laws  of  another  state,  (r)  But  if  the  bill  be 
drawn  or  note  be  made  in  a  British  possession  abroad,  the  local 
law  of  which  requires  it  to  be  stamped,  it  will  not  be  available  here 
unless  so  stamped.  (5)  Such  local  law  must,  however,  be  proved  by 
the  party  who  relies  on  it.  (;!) 


Section  II. — Parties  to  a  Bill  or  Note. 

The  parties  to  a  bill  or  note  must  of  course  be  such  as  would 
be  capable  of  entering  into  any  other  contract.*  Thus,  an  infant 
ought  not  to  be  one:  {u)  even  though  the  instrument  be  given  for 
necessaries,  {v)  Neither  ought  a  feme  covert^  {w)  unless  she  act  as 
agent  for  her  husband,  {x)  or  he  be  under  a  civil  incapacity  of  re- 

(g)  Boelim  V.  Campbell.  See  Abrahams  v.  Skinner,  12  Ad.  &  E.  '763  Snaith  v. 
Mingay,  and  Hamelin  v.  Bruck,  uh.  sup. 

(r)  James  v.  Catherwood,  3  D.  &  R.  190. 

(s)  Alves  V.  Hodgson,  1  T.  R.  241. 

{t)  Buchanan  v.  Rucker,  1  Camp.  63.  Le  Cheminant  v.  Pearson,  4  Taunt.  SGY. 
Millar  V.  Heiurick,  4  Camp.  155. 

(w)  Williams  v.  Harrison,  Carth.  160;  3  Salk.  197.  Gibbs  v.  Merrell,  3  Taunt, 
307. 

{v)  ■Williamson  v.  Watts,  1  Camp.  552.     Trueman  v.  Hurst,  1  T.  R.  40. 

(m.)  Marshall  v.  Rutten,  8  T.  R.  545.     Caudell  v.  Shaw,  4  T.  R.  361. 

{x)  Cotes  V.  Davis,  1  Camp.  485.  Prestwick  v.  Marshall,  7  Bingh.  565.  Prince 
V.  Brunatte,  1  Bingh.  N.  C.  435.  Yet  if  she  do  draw  a  bill,  and  the  drawee  accept  it, 
he  thereby  admits  her  ability. 


*  A  person  may  become  a  party  to  a  bill  of  exchange,  not  only  by  his  own  imme- 
diate act,  but  by  that  of  his  agent  or  partner.  Where  his  liability  arises  through 
the  intervention  of  an  agent,  he  is  said  to  draw,  accept,  or  indorse  by  procuration. 
As  this  agency  is  a  mere  ministerial  act,  it  may  be  exercised  by  infants,  feme  coverts, 
and  others  incapable  of  contracting  on  their  own  account.  This  authority  may  be 
created  by  instrument  of  writing,  or  by  verbal  directions,  or  be  implied  from  the 
relations  existing  between  the  actual  maker  of  the  note  and  the  persons  whom  he 
assumes  to  represent.     Long  v.  Colburn,  11  Mass.  Rep.  97.     Chitty  on  Bills,  28. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  281 

Parties  to  a  Bill  or  Note. 

siding  here,  (y)  But  where  a  married  woman,  being  administratrix, 
lent  her  husband  a  sum  of  money  which  she  had  received  in  that 
character,  and  took  for  it  the  joint  and  several  promissory  note  of 
her  husband  and  two  other  persons,  payable  to  her  with  interest, 
the  Court  of  King's  Bench  held,  though  she  could  not  have  sued 
on  it  in  her  husband's  lifetime,  yet,  that  any  time  within  six  years 
after  his  death  she  might,  (z)  for  the  note  being  a  chose  in  action^  had 
become  hers  by  survivoisJup,  according  to  the  ordinary  rule  that 
choses  in  action  given  to  the  wife  during  the  coverture  survive  to 
her  after  her  husband'^  death,  unless  he  have  reduced  them  into 
possession.  However,  if  a  bill  or  note  be  made  payable  to  the 
order  of  a  feme  covert^  or  be  so  indorsed,  her  husband  may  either 
negotiate  or  sue  upon  it,  and  that  either  in  his  own  name,  or  jointly 
with  his  wife,  (a)  But  if  it  be  made  or  indorsed  payable  to  her 
alone,  he  cannot  sue  upon  it  in  his  own  name  nor  can  he  transfer 
it.  He  may  reduce  it  into  possession  by  receipt  of  the  amount,  or 
by  suing  upon  it  jointly  with  his  wife ;  but  if  she  die  before  he  has 
thus  reduced  it  into  possession,  it  will  belong  to  her  executor  or 
administrator ;  if  she  survive  him,  she  may  sue  upon  it.  (h)  The 
effect  of  bills  and  notes,  to  which  agents,  mercantile  corporations, 
or  firms,  are  parties,  has  already  been  discussed  in  the  first  book, 
under  those  respective  heads.  It  will,  however,  be  proper  in  this 
place  to  mention  some  peculiar  rules  respecting  hanking  corpora- 
tions and  p)arinerskips^  who,  together  with  bankers  carrying  on  busi- 
ness individually,  have  been  the  objects  of  certain  special  legisla- 
tive enactments. 

There  are  three  classes  of  banks  existing  in  England — 

1.  The  Bank  of  England. 

2.  Banks  of  six  or  fewer  than  six  persons. 

8.  Banking  corporations,  and  companies  of  more  than  six  per- 
sons. 


(y)  Derry  v.  Duchess  of  Mazarine,  Ld.  Raym.  147. 

(2)  Richards  v.  Richards,  2  B.  <fe  Ad.  447.  Accord.  Gaters  i;.  Madeley,  6  M.  &  "W 
423.     Nash  v.  Nash,  2  Madd.  135. 

(a)  Arnold  v.  Revoult,  1  B.  <fe  B.  443.  Philliskirk  v.  Pluckwell,  2  M.  &  S. 
893. 

(6)  Sherrington  v.  Yates,  12  M.  &  W.  855.  Hart  v.  Stevens  6  Q.  B 
937. 


282  MERCANTILE  CONTRACTS. 

Parties  to  a  Bill  or  Note. 

1.  The  Bank  of  England^  (c)  which  is  a  corporation,  (cZ)  enjoying 
privileges  now  regulated  by  3  &  4  W.^  c.  98,  and  7  &  8  Vict.  c.  32, 
can  issue  bills  or  notes  unstamped.  It  hjiS  the  exclusive  privilege 
of  doing  so  within  three  miles  of  London,  (e)  and  may  reissue  its 
notes  after  payment  thereof,  ad  libitum.  (/)  Its  notes  payable  to 
bearer  on  demand,  are,  like  cash,  a  legal  tender,  except  by  the  Bank 
itself,  or  its  branches,  (g)  Such  notes,  if  issued  out  of  London, 
must  be  made  payable  where  issued.  (/<) 

2.  Banks  of  six  or  fewer  than  six  peisons,  who,  on  the  6th  of  May, 
1844,  were  carrying  on  the  business  of  a  banker  in  England  or 
Wales,  having  first  obtained  a  license  and  given  security  by  bond, 
may,  subject  to  the  restrictions  hereafter  specified,  and  except  within 
the  city  of  London,  or  within  three  miles  thereof,  issue  on  unstamped 
paper  promissory  notes  for  five  pounds  or  upwards,  payable  to 
hearer  on  demand,  or  to  order,  at  any  period  not  exceeding  seven  days 
after  sight,  and  also  to  draw  and  issue  on  unstamped  paper  bills  of 
exchange,  payable  to  order  on  demand,  or  any  period  not  exceeding 
seven  days  after  sight,  or  twenty-one  days  after  date ;  provided  such 
bills  of  exchange  be  drawn  on  a  bank  in  London,  Westminster,  or 
Southwark,  or  be  drawn  by  a  banker  or  bankers  at  a  town  or 
place  where  he  or  they  shall  be  duly  licensed  to  issue  unstamped 
notes  and  bills  upon  himself,  or  themselves,  or  his  or  their  copartner 
or  copartners,  payable  at  any  other  town  or  place  where  such  banker 
or  bankers  shall  also  be  duly  licensed  to  issue  such  notes  and  bills 
as  aforesaid.  ({) 

3.  Banking  {j)  corporations  and  companies  of  more  than  sixpersons, 

(c)  The  history  of  the  Bank  of  England,  and  of  its  exclusive  privileges,  is  given, 
and  the  statutes  creating  them  set  out  at  large,  in  Bank  of  England  v.  Anderson,  3 
Bingh.  N.  C.  589. 

{d)  39  &  40  Geo.  3,  c.  28,  s.  15 ;  3  tfe  4  Wm.  4,  c.  98,  s.  1. 

(e)  9  Geo.  4,  c.  23,  s.  1. 

(/)  55  Geo.  3,  c.  184,  s.  20. 

(^)  3  &  4  Wm.  4,  c.  98,  s.  6. 

(/t)  Ibid.,  s.  4. 

(i)  9  Geo.  4,  c.  23,  s.  1.     See  also  7  &  8  Vict.  c.  32,  sect.  26,  as  to  other  bills. 

Ij)  Stat.  3  &  4  Wm.  4,  c.  98,  s.  2;  39  <fe  40  Geo.  3,  c.  28 ;  7  Geo.  4.  c.  46.  See 
Chitty,  8  ed.  p.  16.  Bank  of  England  v.  Anderson,  3  Bingh.  N.  C.  589.  Booth  v. 
Bank  of  England,  6  Bingh.  N.  C.  415.  As  to  banking  companies  established  since 
May  6th,  1844  see  7  &  8  Vict.  c.  113. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  KOTES.  283 

Parties  to  a  Bill  or  Note. 

are  forbidden  to  issue  in  London,  or  within  sixty-five  miles  thereof, 
any  bill  or  note,  for  the  payment  of  money  on  demand,  or  upon 
which  any  person  holding  the  same  may  obtain  payment  on  de- 
mand ;  or  to  borrow,  owe,  or  take  up  any  sum  of  money,  on  their 
notes  payable  on  demand,  or  at  any  less  time  than  six  months  from 
ths  borrowing  thereof,  during  the  continuance  of  the  exclusive 
privileges  of  the  Bank  of  England ;  Qc)  but  if  they  carry  on  business 
in  London,  or  within  sixty-five  miles  thereof,  they  may  draw,  ac- 
cept, or  indorse  hills  of  exchange^  provided  they  be  not  payable  to 
the  bearer  on  demand.  (/)  Such  a  corporation  or  company,  how 
ever,  having  an  establishment  more  than  sixty-five  miles  from  Lon- 
don, provided  it  carried  on  the  business  of  banking  and  issued  notes 
on  the  6th  of  May,  18-i4,  may,  subject  to  the  restrictions  hereafter 
specified,  issue  bills  or  notes,  payable  on  demand  or  otherwise  at 
the  place  luhere  they  are  issued  and  also  at  London^  {in)  and  have  an 
agent  in  London,  or  any  other  place  where  the  same  shall  be  made 
payable,  for  the  purpose  of  such  payment  only.  But  no  such  bill 
or  note  shall  be  for  less  than  five  pounds,  or  be  reissued  in  Lon- 
ccon,  or  within  sixty-five  miles  thereof. 

Even  beyond  the  distance  of  sixty-five  miles  from  London,  such 
a  corporation  or  company  can  only  issue  such  bills  or  notes,  subject 
to  the  regulations  prescribed  by  stat,  7  Geo.  4,  c.  46,  which  directs 
that  their  bills  and  notes  shall  be  made  payable  at  some  place  or 
places  specified  thereon,  exceeding  the  limited  distance,  (subject 
however  to  the  license  given  by  3  &  4  TVm.  4,  c.  98,  s.  2 ;  3  &  4 
Wm.  4,  c.  88,  s.  2;  and  7  &  8  Vict.  c.  82,  s.  11  &  22;)  that  the 
corporation  or  copartnership  shall  have  no  establishment  as  bankers 
in  London,  or  within  sixty-five  miles  thereof;  that  every  member 
of  such  corporation  or  partnership  shall  be  responsible  for  the  pay- 
ment of  bills  and  notes  issued  by  the  corporation  or  partnership, 
such  person  being  a  member  at  the  date  of  the  bills  or  notes,  or 
becoming  so  before  they  are  payable,  or  while  any  sum  on  any  of 

{h)  This  restriction  was  formerly  larger,  3  <&  4  Wm.  4,  c.  98,  sect.  3,  and  39  &  40 
Geo.  3,  c,  28,  sect.  15.  See  Bank  ol  England  v.  Anderson,  3  Bingh.  N.  C.  689.  Booth 
V.  Bank  of  England,  6  Bingh.  K  C.  415. 

(^)  7  &  8  Vict.  c.  32,  s.  26. 

(m)  3  A  4  Wm.  4,  c.  98,  s.  2,  and  3  &  4  Wm.  4,  c.  83,  s.  2.  The  license  given  bj 
the  latter  section  seems  more  extensive  than  that  of  the  former. 


284  ilERCAIsTILE  CONTRACTS. 

Pai-ties  to  a  Bill  or  Note. 

tliem  is  unpaid ;  and  that  tliey  shall  deliver  into  the  stamp-ofB.ce, 
before  they  issue  any  bills  or  notes,  and  every  year  afterwards,  be- 
tween February  28th  and  March  25th,  an  account  in  form  specified 
in  a  schedule  to  the  act,  which  account  sets  forth  the  true  name  of 
the  corporation  or  partnership,  and  of  every  bank  established  by 
them,  and  the  names  and  abode  of  two  members  resident  in  Eng- 
land, who  have  been  appointed  public  oflS.cers  of  the  corporation  or 
Tjartnership.  A  further  account  is  also  to  be  delivered  within  the 
year,  if  there  be  any  change  in  the  officers  or  members. 

The  copartnership  is  to  sue  and  be  sued  {n)  in  the  name  of  any  one 
of  the  above  mentioned  officers,  (o)  of  whose  appointment,  though 
it  may  be  otherwise  proved,  (p)  a  copy  of  the  account  certified 
under  the  hand  of  one  of  the  commissioners  of  stamps  is  evidence ; 
this  copy  also  proves  that  all  persons  named  therein  were  members 
at  the  period  of  its  date.  (2')  A  decree  or  judgment  against  such 
public  officer  binds  the  copartnership,  and  execution  may  be  taken 
out  against  any  member  for  the  time  being,  and  if  that  prove  in- 
effectual, against  any  person  who  was  a  member  at  the  time  of  the 
contract,  or  became  a  member  before  it  was  executed,  or  was  a  mem- 
ber at  the  time  of  judgment  obtained ;  but  no  such  execution  as 
last  mentioned  can  be  issued,  without  leave  first  granted  on  motion 
in  open  court,  which  motion  cannot  be  made  without  notice  to  the 
party  sought  to  be  charged,  nor  more  than  three  years  after  he  has 
ceased  to  be  a  member,  (r) 

(n)  This  is  compulsory,  Steward  v.  Gi-eaves,  10  M.  AW.  Ill,  and  in  such  suits 
the  officer  is  not  allowed  to  plead  his  individual  bankruptcy,  at  all  events  when  the 
plaintiff  will  undertake  not  to  sue  out  execution  against  his  person,  lands,  or  goods. 
Steward  v.  Dunn,  11  M.  <fe  W.  63. 

(o)  See,  in  case  of  change  of  partners,  "Wilson  v.  Craven,  8  M.  &.  "W.  584. 

(p)  Edwards  v.  Buchanan,  3  B.  &  Ad.  788. 

(q)  A  cop3'  of  the  return  so  certified  is  evidence,  by  itself,  of  the  facts  stated  in  it> 
and  it  is  not  necessary  to  prove  aliunde  that  the  person  who  made  the  affidavit  an- 
nexed, was  the  public  officer,  and  his  continuance  in  office,  till  tlie  contrary  is  shown, 
•will  be  presumed.  Steward  v.  ]')uni ,  12  M.  &  W.  655.  It  will  likewise  be  evidence 
that  the  persons  named  were  members  at  the  time  of  swearing  the  affidavit,  if  no 
other  date  be  assigned,  and  notwithstanding  it  may  appear  not  to  have  been  made 
between  Feb.  28th  and  March  25th,  the  period  described  for  making  the  return. 
Bosanquet  v.  Woodford,  5  Q.  B.  310.  As  to  the  degree  of  certainty  required  in  the 
return,  see  Armitage  v.  Hamer,  3  B.  <&  Ad.  793. 

(r)  See  Barker  v.  Buttress,  1  Beav.  134     It  would  from  that  case  appear  that  ia 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  285 

Parties  to  a  Bill  or  Note. 

The  practical  mode  of  charging  members  after  a  judgment 
against  the  public  officer  is  by  scire  facias^  which  in  the  case  of  an 
actual  member  issues  as  of  course,  in  the  case  of  a  late  member  by 
leave  on  motion  made  in  open  court ;  (s)  against  the  officer  himself 
no  scire  facias  is  necessary,  he  being  a  party  on  the  record,  {t) 

The  right  of  suing  and  being  sued  by  their  own  members, 
through  the  medium  of  their  public  officer,  is  extended  to  them  by 
1  &  2  Vict.  c.  96,  and  they  are  prohibited  from  setting  off  their 
shares  in  any  such  suit. 

The  issue  of  bank-notes  or  bills,  whether  by  banks  of  many  or 
few  partners,  is  now  subject  to  the  following  restrictions  imposed 
by  the  statute  7  &  8  Vict.  c.  32,  the  present  Bank  Charter  Act, 
which  provides  (w)  that  no  person  other  than  a  banker,  who  on 
May  6th,  1844,  was  lawfully  issuing  his  own  bank-notes,  shall 
make  or  issue  them  in  the  United  Kingdom.  "That(v)  it  shall 
not  be  lawful  for  any  banker  to  draw,  accept,  make,  or  issue  in 
England  or  TVales  any  bill  of  exchange,  or  promissory  note  or 
engagement  for  the  payment  of  money  payable  to  bearer  on  de- 
mand, or  to  borrow,  owe,  or  take  u-^  in  England  or  Wales  any 
sum  or  sums  of  money  on  the  bills  or  notes  of  such  banker  payable 
to  bearer  on  demand :"  save  and  except  that  any  banker  who  was 
on  May  6th,  1844,  lawfully  issuing  his  own  bank-notes  under  the 
authority  of  a  license,  may  continue  to  issue  such  notes,  but  only 
to  the  extent  and  under  the  conditions  afterwards  mentioned.  But 
it  declares  that  the  right  of  any  company  or  partnership  to  con 

the  event  of  the  death  of  a  shareholder,  against  whom  execution  had  not  been  ob 
tained,  a  scire  facias  ■would  not  be  maintainable  against  his  representatives. 

(s)  Cross  V.  Law,  6  M.  &  W.  217 ;  8  Dowl.  "794.  Whittenbury  v.  Law,  6  Bingh. 
N.  C.  345.  Ransford  v.  Bosanquet,  12  Ad.  &  E.  813,  as  to  proceedings  in  sci.  fa 
against  members.  See  Fowler  v.  Rickerby,  3  Scott  N.  C.  138,  153;  2  M.  &  Gr.  760. 
Clowes  V.  Brettell,  10  M.  &  W.  507,  11  M.  &  W.  461,  which  decide  that  there  can  be 
no  plea  of  non-joindec  As  to  the  consequence  of  issuing  a  scire  facias  without  leave, 
eee  Bradley  v.  "Warburg,  11  M.  &,  W.  452.  Bradley  v.  Urquhart,  ib.  583,  see  7  <fe  8  Vict. 
c.  113,  and  chapter  on  Joint  Stock  Companies  and  as  to  the  circumstances  under 
•whicl:  the  Court  grants  leave,  see  Eardley  v.  Law,  12  Ad.  &,  E.  802. 

(t)  8  Dowl.  899.     Harwood  v.  Law,  Parke,  B.,  dubitante,  7  M.  &  W.  203. 

(m)  Sect.  10.  The  term  banker  applies  to  all  corporations,  societies,  partnerships, 
and  persons,  and  every  individual  person  carrying  on  the  business  of  banking,  excepi 
the  Bank  of  England.     Sect.  28. 

{v)  Sect.  11, 


286  MERCANTILE  CONTRACTS. 

Parties  to  a  Bill  or  Note. 

tinue  the  issue  shall  not  be  jDrejudiced  by  any  change  which  may 
take  place  in  the  personal  composition  of  it,  either  by  transfer  of 
shares  or  the  admission  of  any  new  partner,  or  the  retirement  of 
any  present  member ;  provided,  that  it  shall  not  be  lawful  for  any 
company  or  partnership  then  consisting  of  only  six  or  less  than  six 
persons,  to  issue  such  notes,  after  the  number  of  partners  shall  ex- 
ceed six  in  the  whole.  If  a  {w)  banker  becomes  bankrupt,  or  ceases 
to  carry  on  the  business  of  a  banker,  or  discontinues  tne  issue  of 
bank-notes,  he  may  not  afterwards  issue  them.  Every  banker  {x) 
who  claimed  the  right  of  issuing  such  notes  was  directed,  within 
one  month  after  the  passing  of  the  act,  to  give  notice  to  the  com- 
missioners of  stamps  and  taxes  of  such  claim,  who  were  thereupon 
to  ascertain  whether  he  was,  on  the  8th  of  May,  1844,  a  banker, 
lawfully  issuing  his  own  notes,  and  if  he  were,  to  ascertain  the 
average  amount  of  the  bank-notes  of  such  banker,  or  of  united 
banks,  {y)  which  were  in  circulation  during  the  period  of  twelve 
weeks  preceding  April  12th,  1844,  and  to  certify  such  amount, 
when  so  ascertained,  to  the  banker,  and  to  publish  it(2)  in  the 
Gazette.  The  statute  then  declares  that  such  banker  shall  not 
at  any  time  after  October  10th,  1844,  have  in  circulation  upon  the 
average  of  four  weeks,  (for  the  ascertainment  of  which  there  are 
special  provisions,)  (a)  a  greater  amount  of  notes  than  the  amount 
so  certified.  A  bank  exceeding  the  limit  forfeits  the  sum  equal  to 
the  excess ;  (5)  but  in  the  event  of  two  banks,  each  of  which  con- 
sists of  more  than  six  members,  uniting,  the  commissioners  may 
make  a  fresh  certificate  of  the  aggregate  of  the  amounts  they  were 
entitled  to  issue,  and  thereupon  the  united  body  may  issue  notes  to 
the  extent  so  certified. 

When  several  persons  who  are  not  in  partnership  accept  a  bill, 
or  make  a  promissory  note,  the  question  whether  they  are  bound 
jointly,  or  jointly  and  severally,  depends  upon  the  wording  of  the 
instrument.  A  note  beginning  with  "  /  promise,^^  and  signed  by 
several  persons,  has  been  held  joint  and  several ;  (c)  but  a  note  so 
beginning,  and  signed  by  one  partner  for  himself  and  his  copart- 

(w)  Sect.  12.  {x)  Sect  13.  {y)  Sect.  14. 

(z)  Sect.  1.5.  (a)  Sects.  18,  19,  20.  (6)  Sect.  16. 

(c)  Clark  v.  Blackstock,  Holt,  474.     March  v.  Ward,  Peake,  130.     Lord  Gal  way 
».  Matthew,  1  Camp.  403 ;  10  East^  264.    Hall  v.  Smith,  1  B.  &  C.  407,  1  D.  «fe  R.  584, 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  287 

Transfer  of  Bills  and  Notes. 

ners,  is  a  joint  note,  and  the  partner  signing  is  not  severally  liable 
upon  it.  (d)  In  no  case  will  the  signature  of  one  of  such  makers 
or  drawees  bind  any  person  except  himself;  (e)  nor  if  such  persons 
be  payees,  can  any  one  of  them  transfer  the  bill  or  note  by  his  in 
dividual  indorsement,  (/)  An  executor  or  administrator  becoming 
party  to  the  bill  or  note,  given  for  the  debt  of  the  deceased,  binda 
himself  personally,  (g) 


Section"  III. — Transfer  of  Bills  and  Notes* 
Although,  by  the  ordinary  rule  of  law,  the  benefit  of  contracts 

{d)  Ex  parte  Buckley  in  re  Clarke,  14  M.  &  W.  469,  overruling;  Hall  v.  Smith,  1 
B.  &  C.  407. 

(e)  B.  N.  R  279.  Marius,  2d  ed.  16 ;  Beawes,  1st  ed.  444.  See  Innes  v.  Stephen- 
son, 1  M.  &  Rob.  146. 

(/)  Carvick  v.  Viekery,  Dougl.  653,  n.  134. 

(g)  Ridout  V.  Bristow,  1  Tyrwh.  90,  1  C.  &  J.  231.  Childs  v.  Monins,  2  B.  <k  B. 
460.     Serle  v.  Waterworth,  4  M.  &  W.  9.     Nelson  v.  Serle,  4  M.  &  W.  795. 

*  The  indorsement  of  a  bill  is  not  merely  a  transfer  of  the  paper,  but  a  fresh  and 
iubstantive  contract.  It  is  equivalent  to  a  new  bill  drawn  by  the  indorser  upon  the 
acceptor  ia  favor  of  the  indorsee.  As  it  falls  under  the  general  rule  that  the  obliga- 
tions of  a  personal  contract  are  to  be  determined  by  the  law  of  the  place  of  its  ex- 
ecution, an  indorser  may  become  responsible  for  a  much  higher  rate  of  damages  and 
of  interest,  upon  the  dishonor  of  a  note,  then  he  can  recover  from  the  drawer.  Slo- 
cum  V.  Pomeroy,  6  Cranch,  221.  Van  Taphorst  v.  Pearce,  4  Mass.  253.  Powers  v. 
Lynch,  3  Mass.  R.  77.  Story  on  Conflict  of  Laws,  262.  So,  although  no  suit  can  be 
brought  in  the  Federal  courts  against  the  maker  of  a  promissory  note  by  an  assignee, 
unless  the  action  could  have  been  maintained  if  there  had  been  no  assignment,  yet 
as  between  immediate  indorsee  and  indorser,  being  citizens  and  inhabitants  of  dif- 
ferent states,  the  jurisdiction  of  the  Federal  courts  attaches  as  upon  a  distinct  con- 
tract between  these  parties,  independently  of  the  residence  of  the  original  and  remote 
parties  to  the  instrument.  Coffee  v.  Planters'  Bank  of  Tennessee,  13  How.  S.  C.  R. 
183.  "The  contract  of  indorsement,"  sajs  C.  J.  Gibson,  in  Patterson  v.  Poindcxter,  6 
Watts  &  Serg.  234,  "is  not  an  independent  one,  but  a  parasite,  which  like  the  cha- 
meleon takes  the  hue  of  the  thing  with  which  it  is  connected.  Attached  to  com- 
mercial paper  it  becomes  a  commercial  contract,  operating  as  a  contingent  guaranty 
of  payment,  and  a  transfer  of  the  title,  where  the  paper  is  negotiable ;  attached  to 
any  other  chose  in  action,  it  becomes  an  equitable  assignment  of  the  bene-ficial  inter- 
est, without  recourse  to  the  assignor."  For  illustrations  of  the  same  principle,  sea 
Aymar  v.  Sheldon,  12  Wend.  439.  Allen  v.  Merchants'  Bank,  22  Wend.  215.  Hatcher 
I'.  McMorine,  4  Dea.  N.  C.  122;  but  see  Rothschild  v.  Currie,  1  Q.  B.  43. 


288  MERCANTILE  CONTRACTS. 

Transfer  of  Bills  and  Notes. 

cannot  he  transferred,  so  as  to  give  the  transferee  a  right  to  sue  at 
law  upon  them  in  his  own  name ;  yet  those  arising  out  of  bills  and 
notes,  generally  speaking,  may  be  so,  in  the  manner  hereinafter 
specified;  and,  though  it  once  was  doubted  whether  an  English 
note  were  transferable  abroad,  it  has  been  since  decided  that  it  is 
so ;  {h)  and  a  foreign  note  is  in  like  manner  transferable  so  as  to 
entitle  the  transferee  to  sue  here,  (^)  but  it  must  be  transferred  ac- 
cording to  the  law  of  the  foreign  country,  (j)  at  least  if  the  in- 
dorsement be  made  there ;  if  elsewhere,  Mr.  Chitty  thinks  that  the 
mode  of  indorsement  follows  the  law  of  the  place  of  indorsement. 
(Chitty  on  Bills,  253.) 

A  bill  or  note  payable  to  bearer,  or  indorsed  in  blank,  may  be 
transferred  by  mere  delivery.  Other  bills  and  notes,  by  the  in- 
dorsement of  the  transferor's  name  on  the  instrument.  (Z;)*  Indeed, 
if  the  bill  or  note  be  for  less  than  five  pounds,  the  indorsement 
must  mention  the  name  and  place  of  abode  of  the  indorsee,  bear 
date  at  or  before  the  time  of  making  it,  and  be  attested  by  a  sub- 
scribing witness.  {I) 


(h)  De  la  Cbaumette  v.  Bank  of  England,  2  B.  &  Ad.  358. 
(i)  Milne  v.  Graham,  1  B.  <fe  C.  192.     Bently  v.  Northouse,  M.  &  M.  66. 
(;■)  Trimbey  v.  Vignier,  6  C.  &  P.  25;  1  Bingh.  N.  C.  151. 

(A.)  Which  indorsement  maybe  written  iu  pencil,  as  well  as  ink.    Geary  v.  Physic, 
5  B.  <fe  C.  234. 

(Z)  17  Geo.  3,  c.  30,  s.  1.     By  the  French  law  an  indorsement  must  specify  the 


*  The  following  extraordinary  decision  was  made  in  the  case  of  Brown  v.  The 
Butchers  &,  Drovers'  Bank,  6  Hill's  N.  Y.  R.  443.  The  next  step  in  breaking  down 
the  settled  principles  of  commercial  law,  would  be  to  declare  that  a  parol  contract 
of  indorsement  evidenced  by  no  writing,  would  be  obligatory  as  such.  Brown,  the 
defendant,  was  held  to  be  the  indorser  of  a  note,  on  which  the  figures  1,  2,  8  were 
written  with  a  lead  pencil,  his  name  not  appearing  at  all  upon  the  paper,  there  being 
parol  evidence  to  show  that  the  figures  were  made  by  him,  and  that  he  intended, 
by  placing  them  on  the  back  of  the  paper,  to  bind  himself  as  indorser.  It  also  ap- 
peared that  he  was  able  to  write.  The  Court,  in  defence  of  this  doctrine,  refers  to 
cases,  where  a  mark  made  by  a  party  after  his  name,  has  been  held  to  be  a  sufiicient 
signing,  within  the  Statute  of  Frauds.  A  mark  is  the  adoption  of  a  name,  and  un- 
less it  was  admissible,  there  are  many  contracts  of  which  an  unlettered  man  could 
not  derive  the  benefit.  But  should  this  exception  be  extended  any  farther  than  the 
necessities  of  society  absolutely  require,  and  to  cases  in  which  the  name  of  the  party 
sought  to  be  charged  does  not  appear  at  all  upon  the  instrument? 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  289 

Transfer  of  Bills  and  Notes. 

Indorsements  are  either  full  or  in  blank  ;  a  full  indorsement  is 
one  which  mentions  the  name  of  the  party  in  whose  favor  it  was 
made.  An  indorsement  in  blank,  one  which  does  not  mention 
such  name. 

A  bill  or  note  indorsed  in  blank  is,  as  has  been  said,  transfera- 
ble by  merely  delivering  it  to  the  intended  transferee,  (m)  but  one 
indorsed  in  full  must  be  indorsed  again  by  the  person  to  whom  it 
was  so  indorsed  in  full,  in  order  to  render  it  transferable  to  every 
intent,  for  he  who  indorses  to  a  particular  person,  declares  his 
intention  not  to  be  made  liable,  except  by  that  person's  indorse- 
ment over.  Indeed,  where  a  bill  was  indorsed  in  blank  by  the 
payee,  and  after  other  indorsements  specially  indorsed  to  Jackson, 
who  delivered  it  without  indorsement  to  Muir  and  Atkinson,  who 
discounted  it  with  the  plaintiff.  Lord  Kenyon  allowed  the  plaintiff 
to  strike  out  all  the  indorsements  except  that  of  the  payee,  and  re- 
cover in  an  action  on  it  against  the  acceptor.  (?i)*  And  where  a 
bill  was  specially  indorsed  to  the  plaintiff,  who,  without  indorsing, 
handed  it  to  B.,  who  indorsed  it,  and  gave  it  to  the  plaintiff,  it  was 
held  that  B.  was  liable  as  the  drawer  of  a  fresh  bill,  and  that  no 
new  stamp  was  requisite,  (o)  The  authority  of  this  decision  has 
been  a  little  questioned,  and,  at  all  events,  does  not  govern  the  case 


value  given  and  the  indorsee's  name,  and  must  be  dated.  Trimbey  v.  Vignier,  6  C. 
«fe  P.  25  ;  1  Bingh.  N.  C.  151. 

{m)  Delivery,  as  will  be  again  mentioned,  is  implied  in  the  very  term  indorsement. 
Marston  v.  Allen^  8  M.  &  W.  494.     Adams  v.  Jones,  12  Ad.  <fe  E.  455. 

(n)  Smith  v.  Clark,  Peake,  225. 

(o)  Penny  v.  Innes,  5  Tyrwh.  lOY  ;  1  C.  M.  &  R.  439.  But  see  Plimley  v.  West- 
ley,  2  Bingh.  N.  C.  2t9.  Gwinnell  v.  Herbert,  5  Ad.  &  E.  436,  and  Burmester  v.  Ho- 
garth, 11  M.  &  W,  97,  in  which  case  a  remark  was  made  which  appears  not  to  have 
occurred  in  any  former  discussion,  namely,  that  if  the  indorsement  of  a  bill,  specially 
indorsed,  be  the  drawing  of  a  new  bill,  it  is  the  drawing  of  one  of  a  different  class, 
viz.,  of  a  bill  payable  to  bearer. 


*  It  has  long  been  the  settled  doctrine  of  the  English  and  American  courts,  that 
the  bonajide  holder  of  a  bill  of  exchange,  may  at  any  time  before  or  after  the  insti- 
tution of  a  suit  against  an  indorser,  by  writing  over  a  blank  indorsement,  direct  that 
the  money  should  be  paid  to  a  particular  person ;  and  that  the  holder  does  not 
thereby  become  an  indorser.  Evans  v.  Gee,  11  Peters  S.  C.  Rep.  80. 
19 


290  MERCANTILE  CONTRACTS. 

Transfer  of  Bills  and  Notes. 


of  a  promissory  note,  tlie  indorsee  of  wliicli  cannot  be  declared 
against  as  maker  in  such,  a  case  as  the  above,  {jp) 

A  mistake  in  spelling  the  name  of  a  person  to  whom  a  bill  is 
specially  indorsed,  will  not  prevent  that  person  from  transferring  it 
by  the  indorsement  of  his  name  properly  spelt  upon  it.  {q) 

An  indorsement  may  be  so  worded  as  to  restrain  the  negotia- 
bility of  the  instrument,  and  is  then  called  a  restrictive  indorsement; 
thus,  "pay  the  contents  to  J.  S.  only,"  or  "  to  J.  S.  for  my  use,"  are 
restrictive  indorsements,  and  put  an  end  to  the  instrument's  trans- 
ferability. (?•)  But  in  such  case  there  must  appear  an  unequivocal 
intention  to  restrain,  (s)  therefore  an  indorsement  in  full  to  A.  with- 
out the  words  "  or  order,"  will  not  deprive  A.  of  the  power  of 
transferring  by  his  indorsement,  {t)  An  indorsement  cannot  be  for 
part  of  the  sum  secured  by  the  bill  or  note,  if  the  residue  continue 
unpaid,  (for  that  would  subject  the  previous  parties  to  a  variety  of 
suits,)  though  it  seems  that,  if  the  residue  be  paid,  it  may.  (w) 
Where  the  drawer  or  maker  has,  in  the  original  wording  of  a  bill 
or  note,  rendered  it  payable  to  an  individual,  without  adding  words 
of  transfer,  such  as  "  or  order^''  it  is,  as  Ave  have  seen,  not  transfer- 
able. However,  if  the  holder  of  such  a  bill  think  proper  to  in- 
dorse it,  lie  will  be  chargeable  on  his  indorsement,  (y)  (though  ante- 
cedent jDarties  to  the  instrument  will  not,)  unless  indeed  the  stamp 
laws  interfere  so  as  to  prevent  it ;  and  from  the  case  gf  Penny  v. 
Lines,  above  stated,  it  might  have  been  supposed  that  the  stamp 
laws  would,  in  such  a  case,  have  interposed  an  obstacle,  the  iden- 


(p)  Gwinnell  v.  Herbert,  5  Ad,  ik  E.  436. 

{q)  Leonard  v.  Wilson,  4  Tyrwh.  415,  2  C.  <fe  M.  589. 

(r)  Per  Wilmot,  J.,  Burr.  1227  ;  Bl.  229.  See  Robertson  v.  Kensington,  4  Taunt. 
30.  Sigourney  v.  Lloyd,  8  B.  <fe  C.  622.  Aneher  v.  Bank  of  England,  Dougl.  615, 
eST.  Similar  to  a  restrictive  indorsement  is  the  common  practice,  which  will  be 
hereafter  noticed,  of  writing  the  name  of  the  payee's  banker  across  a  check. 

(s)  Treuttel  v.  Barandon,  8  Taunt.  100.     Potts  v.  Reed,  6  Esp.  57. 

{t)  Moore  v.  Manning,  Cora.  311.  Acheson  v.  Fountain,  Str.  557;  B.  N.  P.  275. 
Edie  V.  E.  L  Company,  Bl.  295 ;  Burr.  1216. 

(m)  Hawkins  v.  Cardy,  Ld.  Raym.  360;  Carth.  466;  12  Mod.  213;  Salk.  6.5. 
Johnson  v.  Kennion,  2  Wils.  262,  per  Gould,  J.  Reid  v.  Furnival,  1  C.  &  M. 
538. 

(i.)  Hill  V.  Lewis,  Salk.  132.  See  Penny  v.  Innes,  5  Tyi-wh.  107,  1  C.  M.  &  R.  439. 
Bayley,  5th  ed.  120.     Sed  vide  Plimley  v.  Westley,  2  Bingh.  N.  C.  249. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  291 

Transfer  of  Bills  and  Notes. 

tity  of  the  instrument  continuing.  But  in  PlimJey  v.  Westleij  {w) 
the  Court  of  Common  Pleas  seem  to  have  been  of  a  different  opin- 
ion. In  that  case  the  defendant  being  indebted  to  the  phaintiif  for 
goods,  indorsed  to  him  a  note  made  by  H.  payable  to  E.  and  W., 
■\vithout  the  words  "  or  order^''  indorsed  by  E.  and  W.  and  by  J. 
K.,  from  whom  defendant  received  it.  The  Court  seems  to  have 
been  of  the  opinion  that  the  defendant  was  not  liable  on  this  note 
for  want  of  a  fresh  stamp.  But,  as  that  point  was  not  essential  to 
the  decision  of  the  case,  which  was  th?„t  the  defendant  was  liable 
for  the  price  of  the  goods,  the  note  not  having  been  paid  when  due, 
its  authority  on  the  question  respecting  the  stamp  does  not  appear 
conclusive,  {x) 

Such  is  the  mode  of  transferring  a  bill  or  note,  which  transfer 
may  in  general  be  made  by  any  holder,  or  his  legal  representative ; 
as,  if  the  holder  die,  by  his  executors  or  administrators ;  (?/)  if  he 
become  bankrupt,  by  his  assignees,  unless  under  particular  circum- 
stances, as  where  the  bankrupt  held  the  bill  in  the  character  of 
trustee  or  agent  for  another  person ;  {i)  and  if  a  bill  or  note  be 
given  to  a  married  woman,  (a)  or  if  the  holder  of  a  bill  or  note 
marry,  the  right  to  transfer  it  devolves  during  their  joint  lives 
upon  her  husband,  (5)  and,  it  has  been  said,  in  his  assignees  if  he 
become  a  bankrupt,  (c)  But  persons  holding  bills  in  aider  droit 
should  exercise  this  power  of  transfer  with  much  caution,  for  un- 

(w)  2  Bingh.  N.  C.  249. 

(x)  Burniester  v.  Hogarth,  1 1  JI.  <fc  W.  9Y. 

{y)  Rawlinson  v.  Stone,  3  Wils.  1. 

(2)  Ramsbottom  v.  Cator,  1  Stark.  228.  Ex  parte  M'Gae,  2  Rose,  3T6 ;  19  Ves. 
60Y.  Arden  v.  Watkins,  3  East,  317.  Willis  v.  Freeman,  12  East,  656.  Gladstone 
V.  Hadwen,  1  M.  <fe  S.  517.  Bruce  v.  Hurley,  1  Stark.  23.  Ex  parte  Smith,  1  Buck. 
355.  Zinck  v.  Walker,  Bl.  1154.  Giles  v.  Perkins,  9  East,  12.  Ex  parte  Rowton,  1 
Rose,  15.  Ex  parte  Seargeant,  1  Rose,  153.  Ex  parte  Hull  m  re  Boldero,  19  Ves. 
25;  1  Rose,  232.  Ex  parte  Towgood,  19  Yes.  229.  Ex  jyarte  Buchanan,  1  Rose,  280. 
Ex  parte  Harford,  2  Rose,  1G2.  Ex  parte  Armestead,  2  Gh'un  &,  Ja.  371.  Thompsoa 
V.  Giles,  2  B.  &  C.  422,  and  post,  Bk.  4,  Chapter  Bankruptcy. 

(a)  Mason  v.  Morgan,  4  Nev.  &  Mann.  46  ;  2  Ad.  &  E.  31. 

(6)  Mdson  V.  Morgan,  2  Ad.  &  E.  31.  M'Neilage  v.  Holloway,  1  B.  &  A.  218. 
Connor  v.  Martin,  Str.  516.  Sherrington  v.  Yates,  11  M.  <fe  W.  42,  overruled,  S.  G 
12  M.  &  W.  855.     Hart  1-.  Stevens,  6  Q.  B.  937. 

(c)  Yates  v.  Sherrington,  11  M.  <fc  W.  42,  overruled  on  another  point,  12  M.  &  W 
655.     See  also  Hart  v.  Stevens,  6  Q.  B.  937. 


292  MERCANTILE  CONTRACTS. 

Transfer  of  Bills  and  Notes. 

less  tliey  by  some  special  form  of  words  prevent  such,  liability, 
they  will  be  personally  bound  by  their  indorsement.  (cZ)  When  a 
bill  or  note  is  lost  or  stolen,  a  thief  or  finder  can  of  course  convey 
no  title  in  it  to  any  other  person,  if  at  the  time  of  the  loss  it  be 
transferable  only  by  indorsement ;  and  if  it  be  transferable  by  mere 
delivery,  although  the  thief  or  finder  may  convey  a  title  in  it  to 
any  person  acquiring  it  from  him,  honafide^  and  for  a  valuable  con- 
sideration, (e)  yet,  if  such  person  take  it  without  sufficient  caution, 
under  circumstances  which  should  have  led  him  to  suspect  the  true 
state  of  the  case,  and  subject  him  to  the  imputation  of  such  gross 
negligence  as  evidences  fraud,  he  will  not  be  allowed  to  retain  it, 
even  though  he  have  given  its  full  volue.  (/) 

As  to  the  time  at  which  a  bill  or  note  may  be  transferred,  it 
may  be  so  at  any  time  before  it  has  become  due,  (nay,  in  one  case 
it  was  held  no  objection  that  the  indorsement  had  been  made  be- 
fore the  bill  itself  was  drawn,)  {g)  or  after  {Ji)  it  had  become  due.  (^) 
But  then  a  person  who  takes  a  bill  after  it  is  due,  or  with  notice  of 
its  having  been  dishonored  by  non-acceptance,  takes  it  subject  to 
all  the  equities  with  which  it  was  incumbered  while  in  the  hands 
of  the  person  from  whom  he  received  it,  for  it  comes,  to  use  Lord 
Ellenborough's  words,  disgraced  to  him ;  thus,  if  he  took  it  from  a 
thief  or  finder,  he  could  not  recover  on  it,  inasmuch  as  the  thief  or 


{d)  Childs  V.  Monis,  2  B.  <fe  B.  460.  King  v.  Thorn,  1  T.  R,  487.  Goupy  v.  Harden, 
Holt,  342;  2  Marsh.  404;  T  Taunt.  159.  Eaton  v.  Bell,  5  B.  &  A.  34.  Thomas  v 
Bishop,  Str.  955. 

(e)  Anon.  Ld.  Rayra.  738;  Salk.  126;  3  Salk.  71.  Miller  v.  Race,  Burr.  452. 
Lavrson  v.  "Weston,  4  Esp.  56.  Grant  v.  Vaughan,  Burr.  1516.  Peacock  v.  Rhodes, 
Dougl.  611,  633.     Snow  v.  Saddler,  3  Bingli.  610. 

(/)  Strange  v.  Wigney,  6  Bingh.  683.  Solomons  v.  Bank  of  England,  13  East, 
135.  Gill  V.  Cubitt,  3  B.  &  C.  406.  Down  v.  Hailing,  4  B.  <fe  C.  330.  Snow  v.  Pea- 
cock, 3  Bingh.  406.  Beckwith  v.  Corrall,  3  Bingh.  444.  Easley  v.  Crockford,  10 
Bingh,  243.  Egan  v.  Threllfall,  5  D.  «fe  R.  326,  n.  See  Crook  v.  Jadis,  5  B.  <fe  Ad- 
909.  Cunllffe  v.  Booth,  3  Bingh.  N.  C.  821.  Goodman  v.  Harvey,  4  Ad.  &  E.  780. 
Uther  V.  Rich,  10  Ad.  &  E.  784.  The  two  last  cases  decide  that  gross  negligence  does 
not  per  oe  invalidate  the  holder's  title,  and  is  only  important  as  evidence  of  fraud 

{rj)  Sehultz  V.  Astley,  2  Bingh.  N.  C.  544. 

(/,)  Unless  it  be  for  less  than  bl.     17  Geo.  3,  c.  30,  s.  1. 

(j)  Dehers  v.  Harriott,  1  Shower,  163.  Mutford  v.  Walcott,  Ld.  Raym  575. 
Charles  v.  Marsden,  1  Taunt.  224.  Graves  v.  Key,  3  B.  &  Ad.  313.  Stein  v.  Yglesiaa, 
1  C.  M.  &  R.  565. 


BILLS  OF  EXCHANGE  AXD  PROMISSORY  NOTES.  293 


Transfer  of  Bills  and  Notes. 


finder  could  not :  (j)  and  it  was  long  thought,  on  the  same  princi- 
ple, if  A.  accepted  a  bill  for  B.'s  accommodation,  and  B.  indorsed  it 
overdue,  the  indorsee  could  not  sue  on  it,  inasmuch  as  the  drawee  ; 
could  not  do  so.  Bat  this  was  first  qualified  by  excluding  the 
case  of  a  bill  accepted  when  overdue,  which  it  must,  therefore,  clearly 
have  been  the  intention  of  the  parties  to  allow  to  be  negotiated 
when  overdue,  {h)  And,  subsequently,  the  Court  of  Common  Pleas 
decided  that  to  the  action  against  an  acceptor,  "it  was  no  plea  to 
say  that  tlie  bill  was  accepted  without  value  before  due,  and  in- 
dorsed after  it  became  due."  But  these  equities,  as  they  are  called, 
must  be  such  as  naturally  arise  out  of  the  bill  or  note  transaction, 
not  out  of  some  collateral  matter,  as  for  instance,  alright  of  set-off, 
which,  the  maker  or  acceptor  would  have  had  against  the  party 
who  transferred  it  to  the  holder.  (Z)- 


{j)  Taylor  v.  Mather,  3  T.  R.  83,  n.  Brown  v.  Davies,  3  T.  R.  80.  Boehm  i;.  Stir- 
ling, 7  T.  R.  431.  Tinson  v.  Francis,  Selw.  N.  P.  Sth  ed.  321.  Crossley  v.  Ham,  13 
East,  498.  Lee  v.  Zagury,  8  Taunt.  114.  Beauchamp  v.  Parry,  1  B.  &  Ad.  89,  per 
Lord  Tenterden.  But  a  bill  or  note  payable  on  demand,  especially  if  with  interest,  is 
not  considered  overdue,  at  least  not  without  some  evidence  of  payment  having  been 
demanded  and  refused.  Brooks  v.  Mitchell,  9  M.  &  "W.  15.  Barrough  v.  "White,  4  B.  & 
C.  325 ;  2  C.  <fe  P.  8.  See  Ileywood  v.  Watson,  4  Bingh.  496.  Gascoyne  v.  Smith, 
M'Clel.  &  Y.  338.     Sed  vide  Banks  v.  Colwell,  3  T.  R.  81. 

(k)  Stein  v.  Yglesias,  3  Dowl.  252.  Sturtevant  v.  Ford,  4  M.  &,  Gr.  103.  See 
Charles  v.  Marsden,  1  Taunt.  224.  Atwood  v.  Crowder,  1  Stark.  483.  Lazarus  v. 
Cowie,  3  Q.  B.  450. 

(/)  Burrough  v.  Moss,  10  B.  &  C.  558.  Whitehead  v.  Walker,  10  M.  &  W.  696. 
"I  do  not  think  that  the  holder  is  precluded  from  suing  in  all  cases  of  accommoda- 
tion bills  indorsed  after  the  time  at  which  they  purport  to  be  payable.  Nothing 
dehors  the  bill,  as  payment,  «fec.,  ought,  I  think,  to  affect  an  indorsee  for  value." 
Tindal,  C.  J.,  in  Sturtevant  v.  Ford,  4  M.  &  Gr.  101.  Stain  v.  Yglesias,  1  C.  M.  &  R. 
565.  But  see  Goodall  v.  Ra}',  4  Dowl.  82,  hereafter  commented  upon.  As  to  th« 
limit  of  the  abo\  e  rule  in  other  respects,  see  Chalmers  v.  Lanion,  1  Camp.  383.  Bo- 
6anquet  v.  Dudman,  1  Stark.  1.  Atwood  v.  Crowdie,  1  Stark.  483  Buzzard  v.  Fleck- 
noe,  1  Stark.  333.  Collinridge  v.  Farquharson,  1  Stark.  259.  Dunn  v.  O'Keefe,  6 
Taunt.  305,  affirmed  5  M.  &  S.  282,  in  error. 


*  The  modern  English  doctrine  is,  that  the  indorsee  of  an  overdue  note  takes  it 
subject  to  equities  between  the  maker  and  indorser,  arising  out  of  the  transaction 
itself,  but  not  a  set-ofF,  arising  out  of  collateral  matters.  Burrough  v.  Moss,  10  Barn. 
&  Cres.  558.  Whitehead  v.  Walker,  10  Mees.  &  Welb.  696.  The  doctrine  was  re- 
cognized in  Pennsylvania,  in  Ilughe?  v.  Large,  2  Barr's  Rejx  103,  and  C.  J.  Gibson, 


294  MERCANTILE  CONTRACTS. 

Transfer  of  Bills  and  Notes. 

But  though  a  bill  or  note  is,  generally  speaking,  negotiable  af- 
ter it  has  become  due,  yet  it  is  not  so  after  it  has  once  been^aiof 
at  maturity,  if  such  negotiation  would  have  the  effect  of  charging 
persons  who  otherwise  would  be  discharged,  (m)  Indeed,  in  most 
cases  it  is  expressly  forbidden  to  be  reissued  by  the  stamp  laws,  {n) 
However,  an  indorser,  who  pays  a  bill  as  such,  may  afterwards  ne- 
gotiate it,  for  his  indorsement  can  give  no  right  save  against  him- 
self, and  those  whom  he  himself  might  sue.  (o)  And,  although,  if 
a  bill  be  j)a/(Z  at  maturity,  that  payment  will  discharge  the  parties 
to  it  even  though  their  names  should  be  left  on  the  bill  by  acci- 
dent and  it  should  subsequently  be  negotiated,  yet,  if  it  be  paid 
before  it  arrives^ at  maturity,  the  person  so  paying  or  receiving  pay- 
ment must  run  the  risk,  if  he  allow  his  name  to  remain  on  it,' of 
being  subsequently  called  on  by  a  bona  fide  holder,  if  it  should  get 
into  the  hands  of  such  a  person. — "Nothing,"  to  use  the  words  of 
Parke,  B.,  "  will  discharge  the  acceptor  or  the  drawer  except  pay- 
ment according  to  the  laio  merchant,  that  is,  payment  of  the  bill  at 
maturity.  If  a  party  pays  it  before,  he  purchases  it,  and  is  in  the 
same  situation  as  if  he  had  discharged  it.  {p) 

Lastly.  It  is  to  be  observed  on  the  subject  of  transfer,  that  the 
party  who  indorses,  undertakes  thereby  to  the  indorsee  and  every 

{m)  Beck  v.  Robley,  cited  1  H.  Bl.  89,  n.  And  see  Bartrum  v.  Caddy,  9  Ad.  & 
E.  275 ;  see,  however,  the  judgment  in  Lazarus  v.  Cowie,  3  Q.  B.  464. 

{n)  See  55  G.  3,  c.  184,  and  Bartrum  v.  Caddy,  9  Ad.  &  E.  275;  also  Lazarus  v. 
Cowie,  3  Q.  B.  459. 

(o)  Callow  V.  Lawrence,  3  M.  (feS.  95.  Hubbard  w.  Jackson,  4  Bingh.  390.  Graves 
V.  Key,  3  B.  &  Ad.  313. 

(jd)  Morley  v.  Culverwell,  1  M.  &.  W.  174;  and  see  Deacon  v.  Stodhart,  2  M.  & 
Gr.  317,  post  sect.  8. 


in  delivering  the  opinion  of  the  Court,  observes,  that  "  it  is  somewhat  remarkable 
that  this  distinction  between  equities  and  cross  demands  did  not  occur  in  England 
before  1830,  though  it  had  been  taken  three  years  before  in  Massachusetts  and  New 
York."  The  rule  was  also  followed  in  Connecticut,  in  Robinson  v.  Lyman,  10  Conn, 
80 ;  in  New  Hampshire,  in  Chandler  v.  Drew,  6  N.  Hamp.  469.  But  in  New  York, 
by  a  provision  of  the  Revised  Statutes,  and  in  Massachusetts  by  subsequent  adjudi- 
cation, the  right  of  set-off  has  been  greatly  er,'>.<irged.  See  Peabody  v.  Peters,  5  Pick. 
1 ;  Sargent  v.  Sargent,  5  Pick.  311.  For  applications  of  the  principle  in  later  Ameri- 
can cases,  see  Miner  v.  Hoyt,  4  Hill,  193.  Baxter  v.  Little,  6  Met.  7.  Tuscumbia 
Railroad  Co.  v.  Rhodes,  8  Alab.  206.     Tinsley  v.  Beall,  2  Georg.  134. 


BILLS  OF  EXCHANGE  xVND  PROMISSORY  NOTES.  295 

Transfer  of  Bills  and  Notes. 

subsequent  liolder,  that  the  bill  or  note  shall  be  discharged  by  the 
drawee  or  maker  when  it  becomes  due.  (5')*  The  transfer  of  a  bill 
or  note  by  mere  delivery  raises  no  such  undertaking  on  the  part 
of  the  transferor  :  (r)  however,  if  such  transfer  was  by  way  of  pay- 


{g)  In  fact,  the  contract  of  an  indorser  is  in  so  many  respects  similar  to  that  of  a 
drawer,  that  it  is  often  said  that  every  indorser  is  the  drawer  of  a  new  bill,  and  so 
far  is  this  idea  carried,  that  where  in  an  action  against  an  indorse:  he  pleaded  that 
he  did  not  draw  the  bill,  and  the  plaintiff  signed  judgment,  it  was  set  aside,  the  Court 
saying  that  the  plea,  though  demurrable  in  form  was  good  in  substance,  for  that  the 
indorser  waa  a  new  drawer  in  contemplation  of  law.  Allen  v.  Walker,  2  M.  &  W. 
317. 

(r)  Such  transfer  by  delivery,  if  for  valuable  consideration,  teems  to  imply  a 
warranty  that  the  bill  or  note  is  genuine.  Jones  v.  Hyde,  5  Taunt.  488.  Bruce  v. 
Bruce,  1  Marsh  165.*    It  has  been  questioned  whether  the  transfer  of  a  note  payable 


*  The  indorsers  of  an  accommodation  bill  are  not  joint  sureties,  but  are  liable  to 
each  other  in  tlie  order  of  their  becoming  parties.  Tlie  indorsev  of  a  promissory 
note,  who  receives  no  value  for  his  indorsement  from  a  subsequent  indorser,  or  from 
the  drawer,  cannot  set  up  the  want  of  consideration  received  by  himself;  he  is  not 
permitted  to  say  that  the  promise  is  made  without  consideration ;  because  money 
paid  by  the  promisee  to  another,  is  as  valid  a  consideration  as  if  paid  to  the  pro 
missor  himself.  McDonald  v.  Magruder,  3  Peters  S.  C.  R.  470.  Williams  v.  Bosson 
&  Brothers,  11  Ohio  Rep.  62.  Bank  of  United  States  v.  Bierne,  1  Grattan,  236. 
"The  rights  and  duties  of  the  several  parties  to  an  accommodation  note,  or  bill  of 
exchange,  are  the  same  as  upon  those  which  are  denominated  business  notes." 
Church  V.  Barlow,  9  Pick.  547. 

*  The  American  authorities  recognize  the  doctrine  that  the  transfer  of  a  bank- 
note by  delivery  is  a  warranty  of  its  genuineness.  A  great  difference  of  opinion, 
however,  prevails  upon  the  question  whether  there  is  an  implied  warranty  of  value. 
Mr.  Parsons,  in  his  work  on  Contracts,  Vol.  I.  p.  220,  suggests  that  the  effect  of  a 
payment  in  the  bills  of  an  insolvent  bank,  both  parties  being  equally  ignorant  of  the 
fact,  must  depend  upon  the  question  (to  be  determined  by  the  peculiar  circumstances 
of  each  case)  whether  the  payee  takes  the  bills  as  absolute  payment  at  his  own  risk^ 
or  takes  them  only  as  conditional  payment,  he  to  be  bound  only  to  use  due  diligence 
in  collecting  the  bills,  and  if  he  fails  the  paj-ment  to  be  null.  Perhaps,  he  adds,  the 
weight  of  authority,  as  well  as  of  reason,  is  in  favour  of  this  last  view  predominating, 
where  there  is  no  sufficient  evidence  of  a  contrary  intention.  In  the  late  case  of 
Timmis  v.  Gibbons,  14  E.  L.  &  E.  R.  64,  a  question  was  presented  very  similar  in  its 
nature.  The  plaintiff  had  deposited  with  a  banking  company  in  London  certain 
countrj'  bank-notes,  for  which  he  received  a  memorandum  acknowledging  the  receipt 
"  of  £80,  for  which  we  are  accountable."  It  turned  out  that  the  bank  which  had 
issued  the  bills  had  stopped  payment  upon  the  day  of  deposit,  but  neither  of  the 
parties  was  aware  of  the  fact.     The  Court  of  Queen's  Bench  Iield  that  the  plaintiff 


296  MERCANTILE  CONTRACTS. 


Transfer  of  Bills  and  Notes. 


ment  of  a  former  debt,  tliat  debt  will  not  be  looked  upon  as  satis- 
fied, unless  the  bill  or  note  be  discliarged  when  it  comes  to  ma- 
turity. An  indorsement  admits  the  ability  and  signature  of  every 
antecedent  party,  [s) 

With  regard  to  the  meaning  of  the  term  indorsement,  it  should 
be  remarked  that  it  includes  delivery  to  the  indorsee,  and  therefore 
a  denial  of  the  indorsement  includes  a  denial  of  such  delivery,  {t) 


to  bearer  by  delivery,  does  not  imply  a  ■warrant}^  that  the  maker  of  the  note  is 
solvent  at  the  time  of  such  delivery.  But  the  general  opinion  seems  against  such 
implication:  see  the  subject  discussed  in  Rogers  v.  Langford,  1  C.  &  il.  637. 

(s)  Lambert  v.  Pack,  Sal.  127;  Ld.  Raym.  443;  12  Mod.  244;  Holt,  117.  Wil- 
liams V.  Seagrove,  2  Barnard,  82.  Crichlow  v.  T.^rrj,  2  Camp.  1S2.  See  Armani  v. 
Castrique,  13  M.  &  W.  443.  But  an  indorsement  seems  to  be  no  warranty  that  prior 
indorsements  are  genuine.  E.  L  Compy.  v.  Tritton,  3  B.  &  C.  280.  It  has  been  said 
that  an  indorsement  in  blank  is  an  equivocal  act:  and  if  a  man  indorse  a  bill  in 
blank,  and  give  it  to  his  agent  to  obtain  payment,  that  agent  may  either  use  his 
principal's  signature  to  discharge  the  party  paying,  by  writing  a  receipt  over  it,  or 
may  consider  it  a  transter  of  the  right  of  action  on  the  bill  to  himself.  Clark  v. 
Pigot,  Sal.  126,  12  Mod.  192.     Adams  y.  Oakes,  6  C.  <fe  P.  71. 

{t)  Marston  v.  Allen,  8  M.  <fe  W.  494.  Adams  v.  Jones,  12  Ad.  &  E.  455.  See 
Hayes  v.  Caulfield,  5  Q.  B.  81. 


could  not  maintain  an  action  either  for  money  lent,  or  money  had  and  received, 
against  the  banking  company.  The  Court  treated  it  as  a  case  of  complete  failure  of 
the  consideration  upon  which  defendants'  promise  had  been  founded,  the  promise 
having  in  fact  been  made  under  a  material  mistake  of  fact.  The  deposit  of  notes 
under  such  circumstances  was  distinguished  from  their  pay^nent  in  satisfaction  of  an 
antecedent  debt,  or  on  a  present  sale.  In  reference  to  a  suggestion  of  counsel,  that  the 
maxim  of  caveat  emptor  was  applicable  to  a  payment  of  notes  over  the  counter  upon 
a  present  sale,  but  not  to  their  transfer  in  consideration  of  a  precedent  debt,  the 
Court  declined  considering  it,  inasmuch  as  no  sale  or  debt  was  supposed  to  exist 
between  the  parties  to  the  controversy  before  them.  Lord  Campbell,  C.  J.,  however, 
intimated  an  opinion  that  thei'e  was  no  solid  distinction  between  the  two  cases.  The 
courts  of  New  York,  New  Hampshire,  Vermont,  and  Maine,  have  decided  that  a 
payment  in  insolvent  notes,  the  fact  being  unknown  to  both  parties,  does  not  dis- 
charge a  debt.  Lightbody  v.  Ontario  Bank,  13  Wend.  107.  Fogg  v.  Sawyer,  9  N.  H. 
365.  Wainwright  v.  Webster,  11  Verm.  576.  Frontier  Bank  v.  Morse,  22  Maine,  88. 
This  doctrine  seems  to  be  sanctioned  by  the  approbation  of  Judge  Story.  Story  on 
P.  Notes,  125.  A  different  view  of  the  law  has  been  taken  in  Massachusetts,  Penn- 
gylTania,  Virginia,  Tennessee,  and  Alabama.  Young  v.  Adams,  6  Mass.  182.  Bayard 
V.  Shunk,  1  Walls  &.  Y.  92.  Edmunds  v.  Digges,  1  Gratt.  359.  Loury  v.  Murrel,  2 
Porter,  282.     Scruggs  v.  Gass,  8  Yerg.  175. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES,  297 

Acceptance. 


Section  IV. — Acceptances^ 

It  has  been  already  stated,  that  he  who  draws  a  bill  undertakes 
thereby  that  the  drawee  shall,  when  requested,  accept,  that  is,  en- 
gage to  pay  it ;  the  request  made  for  this  purpose  by  the  holder  to 
the  drawee,  is  called  a  presentment  for  acceptance.  As  there  is  no 
drawee  in  a  note,  there  can  of  course  be  no  such  presentment, 
though  when  a  note  is  payable  within  a  certain  time  after  sight,  it 
must  be  2'>i'€sented  to  the  maker,  in  order  that  such  time  may  begin 
to  run.  (w) 

This  acceptance,  which  may,  at  least  in  most  cases,  be  made 
before  the  bill  is  actually  drawn,  (y)  and  which  will  bind  the 
acceptor,  though  not  made  till  after  the  time  appointed  for  pay- 
ment, (id)  may,  in  case  of  a  foreign  bill,  be  either  verbal  or  in 
writing ;  (x)  and  Ireland  is  for  this  purpose  to  be  considered  a 
country  foreign  to  England,  even  since  the  Union,  {y)  But  by 
Stat.  1  &  2  Geo.  4,  c.  78,  s.  2,  the  acceptance  of  an  inland  bill  must 
be  in  writing  on  the  bill ;  and  though  a  bill  drawn  in  Ireland  on  a 
person  in  England,  or  vice  versa,  is,  as  we  have  just  seen,  not  an 
inland  bill  within  this  act,  yet  a  bill  drawn  in  Ireland  on  another 
person  also  in  Ireland  is,  and  the  same  rules  prevail  respecting 
Scotland.  {£)  No  particular  form  is  necessary  to  make  an  acceptance 
by  the  drawee,  it  need  not  even  be  signed  by  him :  (a)  any  expres- 

{u)  Sturdy  v.  Henderson,  4  B.  &  A.  592.     See  Dixon  v.  Nuttall,  6  C.  A  P.  320. 

{v)  Molloy  v.  Delves,  7  Bingh.  428.  Leslie  v.  Hastings,  1  M.  &  Rob.  119.  Simon 
V.  Lloyd,  3  Dowl.  816.  Schultz  v.  Astlej-,  2  Bingh.  N.  C.  544.  Pillans  v.  Van 
Mierop,  Burr.  1663.  Mason  v.  Hunt,  Dougl.  284,  297.  Sed  vide  Johnson  v.  Collings, 
1  East,  98. 

(m)  Jackson  v.  Piggott,  Ld.  Raym.  364.  Mutford  v.  Walcot,  Ld.  Raym.  574;  Sal. 
129.     Stein  v.  Yglesias,  5  Tyrwh.  172 ;  1  C.  M.  &  R.  565. 

{x)  Lumley  v.  Palmer,  Str.  1000.  Julian  v.  Shobrook,  2  "Wils.  9.  Powell  v.  Mon- 
nier,  1  Atk.  612.    Pillans  v.  Van  Mierop,  Burr.  1662.     Sproat  v.  Matthews,  1  T.  R.  182. 

{y)  Mahoney  v.  Aslin,  2  B,  &  Ad.  478. 

(z)  Mahoney  v.  Aslin,  uhi  supra. 

(a)  Dufaur  v.  Oxenden,  1  M.  &  Rob.  90. 

*  The  making  of  a  promissorj^  note  is  equivalent  to  the  acceptance  of  a  bill  of 
exchange,  for  it  is  an  engagement  to  pay  the  money  for  which  the  note  is  given ;  and 
therefore  nothing  under  this  head  is  applicable  to  promissory  notes. 


298  MERCANTILE  CO^'TRACTS. 


Acceptance. 


sions  indicative  of  liis  inteution  to  pay  the  bill  when  due,  will 
be  sufficient,  (i)  Indeed,  so  liberal  are  the  courts  in  construing 
acceptances,  that  the  words  "presented,"  "seen,"  or  "the  day 
of  the  month,"  if  written  upon  the  bill,  prima  facie  amount  to 
acceptances,  (c)  Similar  liberality  is  used  in  construing  verbal 
acceptances,  {d)  A  promise  to  accept  a  bill  already  draivn  upon  an 
executed  consideration,  (e)  or  that  the  bill  "shall  meet  with  due 
honor,"  (/)  or  that  the  drawee  will  accept,  or  certainly  pay  the 
bill,  {g)  have  been  held  to  amount  to  acceptances.  (A)  But  a  promise 
to  accept  a  non-existing  bill  will  not  amount  to  an  acceptance ;  (^■)* 


(6)  Billing  v.  Devaux,  3  M.  &  Gr.  565. 

(c)  Anon.  Comb.  401,  per  Holt.  Vide  PoiPell  v.  Monnier,  1  Atk.  611.  Moor  v. 
Whitby,  B.  N.  P.  270.     Dufaur  v.  Oxenden,  1  M.  &  Rob.  90. 

{d)  See  Mendizabal  v.  Machado,  6  C.  <k  P.  218,  an  extremely  strong  case. 

(e)  Pillans  v.  Van  Mierop,  Burr.  1662.  See  Mason  v.  Hunt,  Dougl.  284,  297. 
Pierson  v.  Dunlop,  Cowp.  571.    Billing  v.  Devaux,  3  M.  &  Gr.  565. 

(/)  Clark  V.  Cock,  4  East,  57.     See  Pierson  v.  Dunlop. 

{g)  Wynne  v.  Raikes,  3  East,  514.  See  on  this  subject  Fairley  v.  Herring,  3  Bingh. 
625.  Powell  V.  Monnier,  1  Atk.  611.  Miln  v.  Prest,  4  Camp.  393;  Holt,  181.  Wil- 
kinson  v.  Lutwidge,  Str.  648.     Grant  v.  Hunt,  1  C.  B.  44. 

(A)  Pierson  v.  Dunlop.     Mason  v.  Hunt,  supra. 

(^)  Johnson  v.  Collings,  1  East,  98.     Bank  of  Ireland  v.  Archer,  11  M.  &  W.  383. 


*  It  seems  now  to  be  settled  \>y  the  law  of  England,  that  a  promise  to  accept  a 
non-existing  bill  of  exchange  does  not  amount  to  an  acceptance  thereof,  when  drawn 
in  favor  of  the  holder,  even  though  he  has  taken  the  bill  upon  the  faith  of  such 
promise.  See  opinions  of  Sir  Wm.  FoUet  et  al.  in  Russel  et  al.  v.  Wiggins  et  al.,  2 
Story's  C.  C.  R.  213.  Wildes  et  al.  v.  Savage,  1  Story,  22.  Bank  of  Ireland  v.  Archer, 
11  Mees  &  Welsh.  383.  But  see  Am.  L.  Magazine,  vol.  6,  342.  A  different  doctrine, 
however,  generally  prevails  in  the  United  States.  A  letter  written  within  a  reason- 
able time,  either  before  or  after  the  date  of  a  bill  of  exchange,  describing  itintermi 
not  to  he  mistaken,  and  promising  to  accept  it,  is  regarded,  if  shown  to  the  person 
who  afterwards  receives  the  bill  upon  the  credit  of  the  letter,  as  a  virtual  acceptance 
thereof,  and  binding  upon  the  party  making  the  promise.  Coolidge  v.  Payson,  2 
Wheat.  Rep.  66.  Schimmelpennick  v.  Bayard,  1  Peters'  Rep.  284.  Townley  v.  Sumrall, 
2  Peters'  Rep.  170.  Boyce  v.  Edwards,  4  Peters,  110.  Wildes  et  al.  v.  Savage,  1 
Story's  C.  C.  R.  22.  Russell  et  al.  v.  'Wiggins  et  al.,  2  Story's  C.  C.  C.  213.  Bayard 
V.  Lathy,  2  McLean's  C.  C.  R.  462.  Parker  v.  Greele,  2  Wend.  545.  Von  Phul  v. 
Sloan,  2  Robins.  Louis.  Rep.  158.  Wilson  v.  Clements,  3  Mass.  Rep.  1.  Vance  & 
Dicks  V.  Ward,  2  Dana,  95.  Kendriek  v.  Campbell,  1  Bailey,  522.  The  doctrine, 
however,  is  confined  to  those  bills  which  are  payable  on  demand,  or  at  a  fixed  pe« 
riod  after  date. 


BILLS  OF  EXCHANGE  AKD  PROMISSORY  NOTES.  099 

Acceptance. 

and  a  promise  by  tlie  drawee  to  the  drawer,  who  was  not  the  payee, 
that  the  bill  "  should  have  attention,"  is  no  acceptance,  unless  in 
the  course  of  dealings  it  had  usually  been  considered  such:  {j)  and 
theie  are  other  cases,  each  depending  on  its  own  peculiar  circum- 
stances, in  which  equivocal  words  have  been  held  not  to  amount  to 
acceptance.  {IS) 

There  are  some  cases  in  which  mere  acts  of  the  drawee,  such  as 
keeping  or  destroying  the  bill,  may  amount  to  acceptance;  (Z) 
though  such  their  tendency  may  be  explained  away  by  other  cir- 
cumstances, {m) 

An  acceptance  may  be  either  absolute  or  conditional. 

A  conditional  acceptance  becomes  available  when  the  condition  is 
performed,  (n)  and  not  before ;  (0)  for,  though  the  bill  must,  as  we 
have  seen,  be  drawn  for  the  payment  of  the  sum  mentioned  in  it 
unconditionally,  and  the  payee  may  therefore,  if  he  think  proper, 
refuse  to  take  an  acceptance  upon  condition  ;  yet  if  he  do  take  such 
acceptance,  he  must  abide  by  it.  {j)) 

(j)  Rees  V.  Warwick,  2  B.  A  A.  113  ;  2  Stark.  411. 

{k)  See  Powell  v.  Jones,  1  Esp.  17.  Anderson  v.  Hick,  3  Camp.  1*79.  Anderson  m, 
Heath,  4  M.  &,  S.  403. 

{I)  Bayley  on  Bills,  5th  ed.  191-193. 

{m)  Ibid. 

(n)  Pierson  v.  Dunlop,  Cowp.  511.     Mlln  v.  Pest,  Holt,  181  ;  4  Camp.  393. 

(0)  Banbury  v.  Lisset,  Str.  1211.     Sproat  v.  Matthews,  1  T.  R.  182. 

{p)  Smith  V.  Abbott,  Str.  1152.  Julian  v.  Shobrook,  2  Wils.  9.  See  Mitchell  v. 
Baling,  10  B.  &  C.  4. 


Judge  Story,  in  the  case  cited  above,  of  Wildes  et  al.  v.  Savage,  remarks,  that 
"  the  Supreme  Court  have  shown  a  strong  disinclination  to  enlarge,  in  &ny  respect, 
the  doctrine  of  a  virtual  acceptance  of  a  non-existing  bill.  It  is,  perhaps,  to  be 
lamented  that  it  ever  was  established  ;  and  if  the  question  had  been  entirely  new,  I 
am  satisfied  that  it  would  not  have  been  recognized  as  fit  to  be  promulgated  by  that 
court,  it  being  at  once  unsound  in  policy  and  full  of  inconvenience."  And  it  is  to  be 
observed,  that  all  the  subsequent  cases  have  confined  the  rule  strictly  within  the 
limits  laid  down  in  Coolidge  v.  Payson.  But  such  a  promise  is  not  assignable. 
McEvers  v.  Mason,  10  Johns.  Rep.  207.  Scott  v.  McLellan.  It  was  held  in  Kennedy 
V.  Geddes  &,  Co.,  8  Porter,  263,  that  a  verbal  promise  to  accept  a  non-existing  bill, 
made  even  to  the  person  in  whose  favor  the  bill  is  to  be  drawn,  does  not  amount  to 
an  acceptance.  The  same  rule  now  prevails  in  New  York,  by  virtue  of  a  provision 
of  the  Revised  Statutes. 


500  MERCANTILE  CONTRACTS. 


Acceptance. 


It  has  been  laid  down  that  an  acceptance  may  be  rendered  con- 
ditional by  another  contemporaneous  writing,  ((7)  though  not  as 
against  a  bona  fide  holder  ignorant  of  the  existence  of  such  writing. 
Its  terms  cannot  be  varied  by  any  contemporaneous  parol  agree- 
ment, since  that  would  be  against  the  first  principles  of  the  law  of 
evidence,  (r)* 

As  an  acceptance  may  vary  from  the  tenor  of  the  order,  by  in- 
troducing a  condition,  so  it  may  vary  from  it  as  to  the  sum,  time, 
place,  or  mode  of  payment ;  (-s)  and  if  the  holder  think  proper  to 
take  any  such  acceptance,  he  will  be  bound  by  it,  though  he  has  a 
right  to  require  one  in  writing  conformable  to  the  tenor  of  the 
order,  specifying,  if  none  be  mentioned,  a  place  for  its  payment, 
and  mentioning  the  time  of  presentment,  if  it  be  payable  after 
eight,  it) 

An  acceptance  once  complete  and  issued,  cannot  be  revoked; 
but  before  issue  it  may.  {u)  It  admits  the  drawer's  ability  to  make 
the  bill,  (f )  and,  if  made  after  sight  of  the  bill,  his  signature,  {iv)  but 
not  the  ability  or  signature  of  an  indorser,  though  his  name  were 
on  the  bill  at  the  time  of  acceptance ;  {x)  and  even  though  the 
drawer  and  indorser  were  the  same  person  and  the  bill  was  payable  to 
his  order,  it  does  not  admit  his  handwriting  on  the  indorsement,  (3/) 


(5)  Bowerbank  v.  Monteiro,  4  Taunt.  844.  But  see  stat.  1  &  2  Geo.  4,  c.  TS,  s.  2. 
See  Spiller  v.  Westlake,  2  B.  &  Ad.  155.     Gibbon  v.  Scott,  2  Stark.  286. 

(r)  Adams  v.  Wordley,  1  M.  &  W.  34Y.  See  Lohman  v.  Rougemont,  6  Bingli.  N.  C. 
253,  et  qucere. 

(s)  See  Baylej'  on  Bills,  5tli  ed.  199.  Weggersloffe  v.  Keen,  1  Str.  214.  Hamelia 
V.  Bruck,  15  L.  J.  Q.  B.  343. 

(t)  Bayley  on  Bills,  5th  ed.  202,  203. 

(m)  Marius,  20.  Cox  v.  Troy,  5  B.  &  A.  474.  Grant  v.  Hunt,  1  C.  B.  44.  See  Ben 
tinck  V.  Darrien,  6  East,  199. 

(ii.)  Porthouse  v.  Parker,  1  Camp.  82.  Prince  v.  Brunatte,  1  Bingh.  N.  C.  435 
Pitt  V.  Cliappelow,  8  M.  k  "VV.  616.     Braithwaite  v.  Gardiner,  15  L.  J.  Q.  B.  187. 

(w)  Wilkinson  v.  Lutwidge,  Str.  648.  Jenny  v.  Fowler,  ibid.  946.  Saunderson  v. 
Collman,  4  M.  k  Gr.  209. 

{x)  Smith  V.  Chester,  1  T.  R.  654.     Carviek  v.  Vickery,  Dougl.  630. 

(y)  Robinson  v.  Yarro-w,  7  Taunt.  455  ;  but  where  the  drawer  is  a  fictitious  person, 
the  acceptor's  undertaking  is,  that  he  will  pay  to  the  signature  of  the  same  person 


S.  P.  The  United  Statp?  «.  The  Bank  of  the  Metropolis,  15  Peters'  Rep.  877. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  SOI 

Acceptance. 

thougli  it  does  his  ability  to  indorse,  (z)  and  if  such  a  bill  purport 
to  be  drawn  and  indorsed  by  procuration,  it  admits  only  the  for- 
mer procuration,  not  the  latter,  (a) 

There  is  a  peculiar  species  of  acceptance  called  Acceptance  for 
Honor.  This  happens  when,  in  order  to  promote  the  negotiation 
of  the  bill,  or  save  the  credit  of  the  drawer  or  some  other  party 
thereto,  in  a  case  where  the  drawee  is  not  to  be  found,  or  cannot  or 
will  not  accept,  or  after  he  has  accepted,  absconds,  or  becomes 
bankrupt,  a  stranger  thinks  fit  to  accept  the  bill  for  the  honor  of 
some  one  of  the  parties  thereto,  which  acceptance  will  inure  to  the 
benefit  of  all  the  parties  subsequent  to  him  for  whose  honor  it  was 
made  (6)  and  whose  name  it  generally  specifies ;  if  it  do  not,  it  is 
considered  to  be  for  the  honor  of  the  drawer,  (c)  A  bill  accepted 
for  the  honor  of  some  one  of  the  parties  to  it,  may  be  again  accepted 
for  the  honor  of  another,  {d)  In  saying  that  this  kind  of  acceptance 
is  by  a  stranger^  I  mean  by  a  person  not  acting  in  the  character  of 
drawee,  or  in  compliance  with  the  drawer's  order,  for  the  drawee 
himself  may  accept  for  the  honor  of  an  indorser.  (e)  But  in  no  case 
is  the  holder  obliged  to  take  an  acceptance  for  honor.  (/)* 


•who  signed  for  the  drawer.  Cooper  v.  Meyer,  10  B.  k  C.  468.  Quaere  as  to  the  case 
where  the  drawer  is  not  a  fictitious  person,  but  his  name  is  forged,  and  the  indorse- 
ment in  the  same  handwriting.     Beeman  v.  Duck,  11  M.  <fe  "W.  251. 

(z)  Taylor  v.  Croker,  4  Esp.  18*7.     Bass  v.  Clive,  4  M.  <fe  S.  13. 

(a)  Robinson  v.  Yarrow,  7  Taunt.  455. 

(6)  Bayle}',  5th  ed.  176;  Beawes,  83;  Marius,  21.  Ex  ■parte  "Wackerbarth,  5 
Ves.  574. 

(c)  Beawes,  39. 

\d)  Beawes,  42 ;  2  Camp.  448,  n. 

\c)  Bayley,  5th  ed.  177. 

(/)  Mitford  z>.  Walcot,  12  Mod.  410;  Ld.  Raym.  575;  Beawes,  37.  Gregorys 
Walcup,  Com.  76.     Pillans  v.  Van  Mierop,  Burr.  1663. 


*  The  right  of  a  stranger  to  constitute  himself  the  creditor  of  another,  by  paying 
his  debt  without  his  concurrence,  is  unknown  to  the  common  law.  It  is  allowed  by 
the  law  merchant  for  the  benefit  of  trade,  and  cannot  be  recognized  unless  the  form 
of  proceeding  sanctioned  by  mercantile  usage  is  subsequently  pursued.  The  bill 
Bhould  be  paid,  not  before,  but  after  protest ;  and  the  payment  should  be  evidenced 
by  a  notarial  acfe,  showing  why  and  for  whom  the  payment  was  made ;  and  of  all 
this  the  parties  intended  to  be  charged  should  have  notice.  Wood  v.  Pugh,  7  Ohio 
Rep.  488.    As  an  accommodation  acceptor,  without  effects,  would  not  be  liable  to 


302  MERCANTILE  CONTRACTS. 


Acceptance. 


Such  an  acceptance  is  a  conditional  undertaking  to  pay,  if  tlie 
drawee  do  not :  it  is  equivalent  to  saying  to  the  holder,  "  Keep  the 
bill ;  do  not  return  it ;  and  when  the  time  arrives  at  which  it  ought 
to  be  paid,  if  it  be  not  paid  by  the  party  on  whom  it  is  drawn, 
come  to  me  and  you  shall  have  the  money."  In  order,  therefore, 
to  complete  the  liabihty  of  the  acceptor  for  honor,  the  bill  must  be 
presented,  for  payment  when  it  falls  due,  notwithstanding  the  former 
refusal  of  the  drawee,  who  may  possibly  at  the  same  time  have  re- 
ceived assets,  (g)  This  presentment  must,  according  to  Mr.  Chitty,  (h) 
be  made  in  cases  of  bills  payable  after  date,  on  the  day  on  which 
thev  would  fall  due  according  to  their  date ;  but  in  that  of  a  bill 
payable  after  sight,  upon  the  day  on  which  it  would  fall  due, 
reckoning  from  the  acceptance  for  honor,  and  adding  the  three 
days  of  grace,  (i)  Notice  of  the  non-payment  must  also  be  given 
within  due  time  to  the  acceptor  for  honor,  otherwise  he  will  be  dis- 
charged, {j)  Statute  6  &  7  Wm.  4,  cap.  58,  reciting  that  bills  are 
occasionally  accepted  supra  protest  for  honor,  or  have  a  reference 
thereon  in  case  of  need,  and  that  doubts  have  arisen  when  bills  have 
been  protested  for  want  of  payment,  as  to  the  day  on  which  they 
should  be  presented  for  payment  to  the  acceptor  or  acceptors  for 
honor,  or  referee  or  referees  in  case  of  need ;  enacts,  that  it  shall 
not  be  necessary  to  present  them  to  such  acceptor,  &c.,  until  the  day 
following  that  on  which  they  became  due,  and  that  if  the  place  of 
address  on  such  bill  of  such  acceptor,  &c.,  be  in  any  city,  town,  or 
place  other  than  that  wherein  such  bill  shall  be  therein  made 
payable,  then  it  shall  not  be  necessary  to  forward  it  for  present- 


(c/)  "Williams  v.  Germaine,  7  B.  <fe  C.  468.    Hoare  v.  Cazenove,  16  East,  S91.    Mitchell 
V.  Baring,  10  B.  &  G.  4;  1  M.  &  M.  3S1.     See  Brunetti  v.  Lewin,  Lutw.  896. 
(/t)  Chitty  on  Bills,  8th  ed.  380. 
(i)  Williams  v.  Germaine,  supra, 
(j)  Williams  v.  Germaine,  Mitchell  v.  Baring,  tibi  supra. 


the  drawer,  he  -would  not  be  liable  to  one  who  paid  for  honor  of  the  drawer. 
Gassara  v.  Armstrong,  3  Dana's  Rep.  554.  So  where  a  bill  is  paid  sicpra  protest,  at 
the  request  of  the  drawee,  for  the  honor  of  the  indorser,  the  same  defence  may  be 
made  by  tlie  party  who  is  sued  for  tlie  amount  so  paid,  which  could  be  made  if  the 
bill  had  been  paid  and  the  suit  brought  by  the  drawee  himself.  Konig  v.  Bayard, 
I  Peters,  250. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  303 

Presentment. 

ment  for  payment  to  such  acceptor,  &c.,  till  the  day  following  that 
of  its  becoming  due ;  and  if  the  day  follovring  that  on  which  it 
shall  become  due  happen  on  Sunday,  Good  Friday,  Christmas-day, 
or  any  day  of  solemn  fast,  or  thanksgiving,  then  it  need  not  be  pre- 
sented or  forwarded  till  the  day  following  such  Sunday,  &c.  An 
acceptance  for  honor  made  after  the  bill  has  been  protested,  is 
called  an  acceptance  supra  protest,  and  care  must  be  taken,  at  least 
in  the  case  of  a  foreign  bill,  that  such  protest  be  made  jDrevious  to 
either  acceptance  or  payment  for  honor.  (Z;)  The  nature  of  a  j3?*ote5f 
will  be  hereafter  explained. 

The  acceptor  for  honor  has  his  remedy  against  the  party  for 
whose  honor  he  accepts,  and  all  whom  that  party  might  have 
sued,  (Z)  and  therefore  against  the  drawee,  if  he  had  accepted. 

Unless  for  honor,  there  can  be  no  acceptance  by  a  stranger,  (m) 
nor  can  there  be  a  second  acceptance :  if  such  a  one  be  written  on 
the  bill,  it  is  a  guaranty,  {n)  Indeed,  if  the  drawee  of  a  foreign 
bill  accept  two  sets,  he  may  perhaps  be  sued  by  the  holder  of  each 
of  them,  (o) 


Section  V. — Presentment* 

Every  holder  of  a  bill  or  note  ought  to  present  it  in  due  time, 
for  acceptance^  if  necessary ;  in  all  cases,  for  payment ;  and  to  give 

(/t)  Vandewall  and  another  v.  Tyrrell,  1  M.  <&  M.  87 ;  Bayley,  5th  ed.  180.  In 
the  preamble  of  stat.  6  <fe  7  "Wm.  4,  c.  58,  it  seems  to  be  taken  for  granted  that  all 
bills  having  an  acceptance  for  honor  or  reference  in  case  of  need  are,  when  not  paid, 
protested. 

(l)  Beawes,  47.  Smith  v.  Nissen,  1  T.  R.  269.  See  Fx  parte  Lambert,  13  Yes.  179. 
£!x  parte  Wackerbarth,  5  Ves.  574. 

(m)  Davis  v.  Clarke,  6  Q.  B.  16. 

(n)  Jackson  v.  Hudson,  2  Camp.  447. 

(o)  See  Holdsworth  v.  Hunter,  10  B.  &  C.  449.     Perreira  v.  Jopp,  there  cited. 


*  The  Editors  have  sought  to  bring  together,  in  the  order  of  the  text,  the  most 
'.mportant  American  decisions  on  the  points  which  are  considered  in  this  section. 

1.  When  presentment  for  acceptance  tmnecessary. — The  holder  of  a  bill  may  charge 
the  drawer,  without  presenting  it  for  acceptance,  wherever  the  relations  of  the 
drawer  and  drawee  were  such  as  to  render  the  drawing  of  the  bill  a  fraud  upon 


304  MERCANTILE  CONTRACTS. 

Presentment. 

notice,  if  it  be  dishonored,  to  every  party  wlio  would  be  entitled  to 
bring  an  action  on  it  after  paying  it.  If  lie  fail  in  any  of  these 
particulars,  such  parties  will   be  discharged.  (^)     The  maker  or 


(p)  If  it  have  been  presented  for  acceptance  and  dishonored,  notice  of  dishonor 
must  at  once  be  given  to  the  parties  whom  it  is  intended  to  charge,  and  the  Statute 
of  Limitations  runs  from  that  period.     Whitehead  v.  Walker,  M.  &  W.  506. 


the  holder.  What  circumstances  will  be  sufficient  to  impress  such  a  character  upon 
the  transaction,  will  be  considered  when  we  come  to  treat  of  the  cases  in  which  a 
notice  of  dishonor  is  unnecessary.  A  bill  payable  at  a  fixed  time  after  date,  need 
not  be  presented  for  acceptance  at  all.  Bank  of  Washington  v.  Ti'iplett,  1  Peters' 
S.  C.  R.  25. 

Where  a  hill  has  been  lost  or  destroyed. — Tender  of  indemnity  should  be  made  to 
both  maker  and  indorser  at  the  time  of  demand  and  notice ;  because,  as  the  former 
is  not  bound  to  make  payment  without  the  production  of  the  note  or  indemnity,  in 
case  of  loss,  for  that  very  reason  payment  ought  not  to  be  required  of  the  latter,  till 
the  proper  steps  have  been  taken  to  secure  his  immediate  recourse  against  his  prin- 
cipal. Besides,  the  indorser  is  entitled  to  indemnity  for  his  personal  liability  upon 
the  i^aper,  which  should  be  given  without  delay,  that  he  may  be  in  a  situation  to 
liquidate  the  demand  and  look  to  the  maker.     Smith  v.  Rockwell,  2  Hill's  Rep.  482. 

To  whom  bill  must  be  presented. — In  Harris  v.  Clark  and  another,  10  Ohio  Rep.  5, 
a  demand  upon  one  of  three  joint  and  several  makers  of  a  note,  was  held  to  be 
sufficient  to  charge  an  indorser.  The  decision  was  placed  mainly  upon  the  great 
inconvenience  which  would  result  from  requiring  a  demand  to  be  made  on  each 
maker,  when  residing  in  places  distant  from  each  other.  Chancellor  Kent  has  inad- 
vertently fallen  into  an  error  in  the  statement  of  this  case,  in  his  Commentaries,  vol. 
3.  p.  105,  n.  b.,  where  it  is  cited  as  sustaining  the  doctrine,  that  a  notice  of  the  dis- 
honor of  a  note  to  one  of  several  joint  indorsers,  not  partners,  was  sufficient  to  bind 
all.  The  point  which  was  ruled  in  the  case  from  Ohio,  arose  recently  in  the 
Supreme  Court  of  Massachusetts,  and  was  decided  differently.  Union  Bank  of 
WejTnouth  v.  Braintree,  8  Mete.  504. 

By  whom  presentment  is  to  be  made. — The  question  has  arisen  in  several  recent 
cases,  whether  a  notary  may  appoint  his  clerk,  or  other  third  person,  as  agent  to 
discharge  his  official  function  of  making  presentment  of  foreign  bills  for  acceptance 
or  payment.  Mr.  Chitty  in  one  of  the  earlier  editions  of  his  work  on  Bills,  intimated 
an  opinion  that  presentment  of  foreign  bills  should  be  made  by  a  notary  himself, 
because  he  was  a  public  officer,  to  whom  credit  as  such  was  given,  and  that  the 
authority  could  not  be  delegated  to  his  clerk.  This  suggestion  led  to  a  corres- 
pondence between  Mr.  Chitty  and  an  association  of  notaries  in  Liverpool,  from  which 
it  appeared  that  the  presentment  of  foreign  bills  both  for  acceptance  and  paj-ment, 
and  their  subsequent  protest,  by  notarial  clei'ks,  was  a  practice  fully  sanctioned  by 
commercial  usage  in  England.  Indeed,  it  was  urged  that  the  commercial  business 
of  the  kingdom  would  come  to  a  stand,  if  a  different  rule  prevailed;  because  it 
would  be  just  as  impossible  for  all  bills  to  be  presented  by  notai'ies  in  person,  as  bj 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  305 

Presentment. 

acceptor,  indeed,  is  not  entitled  to  a  presentment,  unless  the  instru- 
ment be  either  payable  at  or  after  sight,  or  be  made  payable  at  some 
particular  place.     Even  a  note  payable  on  demand  need  not  be  pre- 


bankers.  Mr.  Chitty,  in  bis  answer  to  the  letter  of  the  Liverpool  notaries,  maintained 
his  former  opinion,  both  upon  principle,  English  precedent,  and  continental  practice. 
In  the  ninth  edition,  however,  of  the  same  work,  although  he  still  commends  the 
prudence  of  a  presentment  by  the  notary  in  person,  he  evidently  recedes  from 
his  original  position  as  to  its  necessity.  In  New  York,  it  has  been  held  upon  the 
authority  .of  Chitty,  and  the  broad  language  of  their  Revised  Statutes,  that  this  duty 
must  be  performed  by  the  notary  himself,  and  cannot  be  delegated  to  his  clerk.  The 
Onondaga  County  Bank  v.  Bates,  3  Hill's  N.  Y.  R.  53.  In  Virginia  the  question  was 
discussed  in  the  case  of  Nelson  v.  Fotterall,  7  Leigh.  179,  but  the  Court  were  divided 
in  ojjinion  upon  it.  Judge  Brokenborough,  who  concurred  with  the  president, 
(Tucker,)  remarks:  "It  is  proved  that  there  is  a  custom  at  Liverpool  that  bills  may 
be  demanded  by  a  notary's  clerk.  I  do  not  see  why  this  may  not  be,  at  le.xst  with 
this  obvious  qualification,  that  though  the  authorized  clerk  of  the  notary  ma}-  present 
the  bill  for  acceptance,  and  though  a  refusal  to  pay  him  upon  demand  may  justify  a 
protest  by  the  notary,  yet  the  notary's  certificate  is  in  such  case  no  evidence  whatever 
of  the  facts  of  presentment  and  refusal,  but  they  must  be  proved  by  the  oaths  of  wit- 
nesses, as  any  other  facts  are."  In  Kentucky,  in  the  case  of  Chenowith  &,  Co.  v.  Cham- 
berlin,  6  B.  Monr.  61,  the  general  rule,  as  first  stated  by  Mr.  Chitty,  and  laid  down 
in  3  Hill,  was  followed.  S.  P.  Carmichael  v.  Bank  of  Pennsjdvania,  4  How.  Miss.  567. 
Sacrider  v.  Brown,  3  McLean,  48L  Carter  v.  Union  Bank,  7  Hump.  548.  But  in 
the  Bank  of  Kentucky  v.  Garey,  6  B.  Mon.  626,  a  distinction  was  taken  between  pre- 
sentation by  the  clerk,  and  by  the  deputy  of  the  notar}'.  "  Official  authority  may  be 
implied  in  a  deputy,  when  no  such  authority  would  be  implied  in  a  mere  clerk." 
And  in  consequence  of  the  practical  difficulty  which  in  a  great  commercial  city 
woxild  attend  the  presentation  of  all  drafts  and  notes  by  notaiues  in  person,  the 
Court  presumed  that  in  the  case  before  it,  (which  occurred  in  New  Orleans,)  the  pre- 
sentment by  deputy  was  justified  either  by  law  or  custom.  The  distinction  which  is 
drawn  by  the  Court  seems  too  nice  and  shadowy,  and  strongly  illustrates  the  necessity 
of  adopting  the  rule  as  declared  by  the  society  of  notaries,  and  which  seems  to  pre- 
vail at  this  time  in  England. 

Places  where  presentment  is  to  be  made. — The  English  doctrine  was  settled  by  the 
House  of  Lords,  in  1820,  in  the  great  case  of  Row  v.  Young,  2  Broderip  &  Bingham, 
164.  "The  principles  upon  which  this  decision  was  based,"  says  Mr.  Justice  Storj-,  in 
Picquet  v.  Curtis,  1  Sumn.  Rep.  481,  "strike  my  mind  as  irresistible."  The  American 
authorities,  however,  with  great  unanimity  establish  the  opposite  doctrine.  In  the 
case  of  The  Bank  of  the  United  States  v.  Smith,  11  Wheat.  Rep.  171,  the  Supreme 
Coui't  intimated  the  opinion  that  as  against  the  maker  or  acceptor  of  a  note  or  bill, 
no  averment  or  proof  of  demand  of  payment  at  the  place  designated,  was  necessary; 
and  in  Wallace  v.  McConnell,  13  Peters'  Rep.  136,  the  law  is  so  declared,  after  a 
very  elaborate  examination  of  the  cases.  To  the  same  effect  are  the  decisions  in 
Massachusetts,  New  Hamj^shire,  Connecticut,  New  York,  New  Jersey,  Maryland, 
Virginia,  Ohio,  Tennessee,  Alabama. 
20 


oQQ  MERCANTILE  CONTRACTS. 


Presentment. 


sented  in  order  to  charge  the  maker,  the  commencement  of  an  action 
against  him  being  considered  a  sufficient  demand  for  that  purpose,  {q) 
Presentment  also  is  not  necessary  in  order  to  charge  a  person  col- 

(q)  Norton  v.  Ellam,  2  M.  (feW.  461.     Consequentlj-  on  such  a  note  the  Statute  of 
Limitations  runs  from  the  date,  ibid. 


Payson  v.  Whitcomb,  15  Pick.  212;  Eastman  v.  Fifield,  3  N.  H.  333;  Eldred  v. 
Haines,  4  Conn.  465.  Caldwell  v.  Cassidy,  8  Cow.  271.  Haxtun  v.  Bishop,  3  "Wend 
13 ;  Green  v.  Goings,  7  Barb.  Sup.  C.  Rep.  652.  Irvine  v.  Withers,  1  Stew.  234. 
Weed  V.  Houton,  4  Halst.  N.  J.  R.  189.  Dowie  v.  Duvall,  1  Gill.  &  John.  175.  Wat- 
kins  V.  Crouch  &  Co.,  5  Leigh.  522  to  540.  Armistead  v.  Armistead,  10  Leigh.  512. 
Conn.  V.  Gano,  1  Ohio  R.  483.  McNairy  v.  Bell,  1  Yerg.  R.  502.  Mulhoven  v.  Hannum, 
2  Yerg.  81.     Contra,  Palmer  v.  Hughes,  1  Black.  329. 

The  rule,  however,  is  different  as  to  the  indorser,  and  even  if  the  maker  was  ready 
to  pay  at  the  time  and  place,  it  is  a  matter  of  defence  which  will  protect  him  against 
interest  and  costs,  on  his  bringing  the  money  into  court. 

The  general  rule  of  law  is,  that  when  a  negotiable  instrument  is  not  made  paj-a- 
ble  at  any  particular  place,  in  order  to  charge  the  indorser,  payment  must  be  de- 
manded of  the  maker  personally,  or  at  his  dwelling-house,  or  other  place  of  abode, 
or  at  his  counting-house  or  place  of  payment.  There  are  exceptions,  however,  to 
this  general  rule,  by  which  any  demand  may  be  dispensed  with.  They  are  enume- 
rated by  Judge  Beardsley  in  Taylor  v.  Snyder,  3  Denio  Rep.  151,  and  received  the 
sanction  of  the  Court  of  Appeals  of  New  York,  in  Spies  v.  Gilmore,  1  Comst,  R.  321. 
Time  when  presentment  must  be  made. — The  general  principles  stated  in  the  text, 
as  to  the  time  within  which  the  presentment  of  a  bill  for  acceptance  must  be  made, 
have  been  considered  and  approved  in  many  American  cases,  among  which  it  is  suf- 
ficent  to  cite  Robinson  v.  Ames,  20  Johns.  146;  Austin  v.  Rodman,  1  Hawks,  195; 
Aymer  v.  Beers,  7  Cow.  705;  Wallace  v.  Agrj',  4  Mass.  336;  Bachelor  v.  Priest,  12 
Pick.  399. 

The  allowance  of  days  of  grace,  in  the  absence  of  any  special  law  or  usage  to  the 
contrary,  is  now  universally  understood  to  enter  into  every  bill  or  note  of  a  mercan- 
tile character,  and  so  forms  a  part  of  the  original  contract.  The  same  rules  as  to  their 
number  and  mode  of  computation  generally  prevail  in  America  as  in  England.  The 
4th  of  July  is  treated  as  a  holiday.  Renner  v.  Bank  of  Columbia,  9  Wheat.  581.  Og- 
den  V.  Saunders,  12  Wheat.  213.  Bank  of  Washington  v.  Triplett  &■  Neal,  1  Peters' 
Rep.  30.  Cuyler  v.  Stevens,  4  Wend.  Rep.  560.  Ransom  v.  Mack,  2  Hill's  N.  Y.  R. 
587.  Lewis  v.  Burr,  2  Caine's  Cases  in  Error,  195.  Wood  v.  Corl,  4  Met.  203.  This 
statement  is  confined  to  bills  or  notes  on  time,  and  not  to  such  as  are  paj-able  on 
demand.  In  re  Brown,  2  Story,  503.  Whether  days  of  grace  are  allowed  on  bills 
payable  at  sight,  seems  yet  unsettled.  Mr.  Byles  expresses  the  opinion  that  in  Eng- 
land, the  weight  of  authority  inclines  to  their  allowance.     On  Bills,  162. 

When  protest  is  necessary. — In  the  case  of  the  dishonor  of  a  foreign  bill  of  ex- 
change, a  protest  is  said  to  be  a  part  of  its  constitution,  so  indispensable  has  it  been 
rendered  by  the  custom  of  merchants.     Of  course,  it  is  necessar}-,  in  the  absence  of 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  S07 

Presentment. 

laterally  liable,  e.  g.,  on  a  guaranty  for  the  payment  of  a  bill  or  note 
payable  on  a  clay  certain,  at  least  in  the  absence  of  proof  that  he 
has  sustained  damage  by  the  omission  to  make  it.  (r)     But  in  all 

(r)  Hitchcock  v.  Humfrey,  5  M.  &  Gr.  559.     Watson  v.  Mascall,  13  M.  &  W.  452. 


any  legislation,  in  the  case  of  a  bill  drawn  in  oi  e  state  of  the  Union,  upon  persons 
living  in  another,  such  a  bill  being  treated  as  foreign.  la  Ohio,  the  holder  of  a  bill 
drawn  in  one  state  upon  a  person  resident  in  another,  is  not  required  to  protest  it, 
except  for  the  purpose  of  obtaining  statutory  damages.  10  Ohio  R.  180,  Case  v. 
Heffner.  The  same  rule  has  prevailed  in  Missouri.  Robinson  v.  Johnson,  1  Miss 
Rep.  434. 

Although,  however,  a  written  protest  is  necessary  on  the  dishonor  of  a  foreign 
bill,  a  notice  unaccompanied  by  a  copy  of  the  protest  will  be  sufficient  to  charge  the 
indorser.  Wallace  v.  Agry  et  al.,  4  Mass.  C.  C.  R.  344.  Opinion  of  Judge  Woodbury, 
in  Mussen  et  al.  v.  Lake,  4  How.  S.  C.  R.  282. 

The  protest  of  an  inland  bill,  unless  required  by  statute,  is  neither  necessary,  nor 
evidence  of  the  facts  stated  in  it.  Union  Bank  v.  Hyde,  6  Wheat.  572 ;  Burke  v. 
McKay,  2  How.  Sup.  C.  R.  66.  But  it  is  a  practice,  which,  on  account  of  its  general 
convenience,  and  the  evidence  which  it  furnishes  in  the  event  of  the  death  of  the 
notary,  is  veiy  common  in  our  commercial  cities. 

Form  of  protest. — Brooke,  in  his  treatise  on  the  office  of  a  notary,  (73,)  expresses 
the  opinion  that  the  protest  of  a  notary  for  non-acceptance  or  non-payment,  should 
be  authenticated  by  a  seal.  This  opinion  seems  to  have  been  derived  from  his  ob- 
servation of  notarial  usage,  rather  than  from  any  examination  of  authorities.  Under 
the  civil  law,  and  according  to  continental  practice,  his  signature  alone  would  be 
sufficient.  There  is  some  doubt  as  to  whether  the  seal  was  necessary  or  not,  at  com- 
mon law.  The  protest,  however,  must  in  this  particular  conform  to  the  law  of  the 
place  where  the  protest  is  made  ;  the  protest  being  considered  as  a  part  of  the  con- 
stitution of  a  foreign  bill  of  exchange.  The  subject  is  discussed  in  the  case  of  the 
Bank  of  Rochester  v.  Gray,  2  Hill's  Rep.  227 ;  but  there  was  no  adjudication  on  the 
point.  See  also  Carter  v.  Beverly,  9  N.  Hamp.  558 ;  Duraont  v.  McCracken,  6  Black. 
355 ;  Bank  v.  Pursley,  3  Mon.  238 ;  Nelson  v.  Fotteral,  7  Leigh.  180.  In  the  recent 
case  of  Musson  et  al.  v.  Lake,  4  How.  S.  C.  R.  262,  it  was  decided  that  the  notarial 
certificate  of  the  dishonor  of  a  foreign  bill  of  exchange,  must  set  forth  the  fact  speci- 
fically, that  the  bill  was  presented  to  the  drawee,  at  the  time  when  demand  of  pay- 
ment was  made,  or  it  cannot  be  offered  in  evidence.  Justices  AVoodbury  and  McLean 
dissented  from  a  majority  of  the  Court,  and  their  opinions  are  sustained  by  the  prior 
case  of  Nott's  Executors  v.  Beard,  16  Louis.  Rep.  308. 

Effect  of  protest  of  a  foreign  bill. — Protest  of  a  foreign  bill  is  evidence  of  dishonor, 
but  tlie  facts  which  it  states  in  relation  to  the  dishonor  may  nevertheless  be  contro- 
verted by  other  evidence.  The  protest  is  prima  facie  not  conclusive  evidence  of  such 
facts.  Nelson  v.  Fotterall,  7  Leigh.  180.  The  general  rule  is  recognized  in  Nieholls 
V.  Webb,  7  Wheat.  333.  Townsley  v.  Sumrall,  2  Peters,  179.  Chanoine  v.  FoAvler,  3 
Wend.  173. 


308  MERCANTILE  CONTRACTS. 


Presentment. 


cases  in  whicli  it  is  souglit  to  charge  the  indorser  or  any  party  wlio 
would  have  a  right  to  bring  an  action  on  it  after  paying  it,  tlie  in- 
strument must  be  duly  presented  to  the  maker  or  drawee ;  and  tliis 


Who  must  give  notice.— A  notice  will  be  sufficient,  if  given  by  any  person  duly 
authorized  by  the  holder.  The  object  of  the  rule  requiring  notice  from  the  holder,  is 
simply  to  prevent  any  officious  stranger  from  fixing  a  responsibility  upon  the  indorser, 
•which  the  holder  may  be  willing  to  waive,  and  not  to  preclude  him  from  giving  no- 
tice by  an  agent.  Harris  v.  Robinson,  4  How.  S.  C.  R.  336.  He  who  accepts  or  pays 
supra  protest  must  give  the  same  notice,  in  order  to  charge  a  party,  which  is  required 
of  other  holders.     Konig  v.  Bayard,  1  Peters,  250.     Martin  v.  IngersoU,  8  Pick.  1, 

To  whom  notice  must  be  given. — In  Sayre  v.  Frick,  8  "Watts  &  Serg.  383,  it  was  held 
that  joint  owners  of  a  bill,  who  jointly  indorse  it,  do  not  thereby  constitute  them- 
selves partners,  qicoad  hoc,  so  that  notice  of  the  dishonor  of  a  bill  to  one  will  charge 
both :  it  is  but  a  joint  contract,  and  each  must  have  notice  in  order  to  charge  him. 
S.  P.  Willis  V.  Green,  5  Hill's  Rep.  232.     Shepherd  v.  Hawley,  1  Conn.  Rep.  368. 

Hoiv  the  notice  must  he  given. — When  the  party  entitled  to  notice  has  in  the  same 
city  or  town,  a  dwelling-house  or  place  of  business  within  the  compact  part  of  such 
city  or  town,  it  may  be  served  at  either  place.  But  where  the  parties  reside  in  the 
same  town,  notice  cannot  in  general  be  given  through  the  post-office.  Bowling  v. 
Harrison,  6  How.  S.  C.  R.  248.  Kramer  v.  McDowell,  8  Watts  &  S.  138.  Pierce  v 
Pendar,  5  Met.  352.  Pansom  v.  Mack,  2  Hill,  587.  K,  however,  a  party  actually 
receives  notice  in  due  time,  and  this  can  be  established,  he  will  not  be  permitted  to 
object  to  the  manner  in  which  it  has  been  conveyed  to  him.  So,  where  the  indorser 
resides  in  a  different  town  from  the  holder,  it  is  sufficient  to  send  the  notice  through 
the  mail.  If  the  town  is  not  a  post-town,  the  letter  should  ordinarily  be  directed  to 
the  post-office  nearest  to  his  residence.  Where  the  party  is  in  the  habit  of  receiving 
his  letters  at  variovis  post-offices,  to  suit  his  own  convenience  or  business,  it  may  be 
sufficient  to  send  it  to  either.  Bank  of  Columbia  v.  Lawi'ence,  1  Peters,  578.  Bank  of 
United  States  v.  Carneal,  2  Peters,  543.  Bank  of  Geneva  v.  Hewlett,  4  Wend.  328. 
Chouteau  v.  Webster,  6  Met.  1. 

Where  the  notary,  on  the  non-jjaj'ment  of  a  bill,  left  a  notice  for  the  indorser  at 
his  boarding-house  with  a  fellow-boarder,  requesting  him  to  deliver  it  to  the  indorser, 
who  was  not  within  at  the  time,  the  notice  was  held  sufficient.  Bank  of  United 
States  V.  Hatch,  6  Peters,  250.  "This,"  says  Judge  Story,  in  delivering  the  opinion 
of  the  Court,  "  is  not  like  the  case  of  a  public  inn,  and  a  delivery  to  a  mere  stranger, 
who  happens  to  be  there  in  transitu,  and  cannot  be  presumed  to  have  any  knowledge 
or  intercourse  with  the  party.  Boarders  at  the  same  house  may  be  presumed  to 
meet  daily,  and  to  feel  some  interest  in  the  concerns  of  each  other,  and  to  perform 
punctually  such  common  duties  of  civility  as  this.  In  our  large  cities  many  per- 
sons engaged  in  business  live  in  this  manner ;  and  it  is  not  always  easy  to  obtain 
access  to  the  master  of  the  house,  or  to  servants  who  may  be  safely  intrusted  with 
the  delivery  of  notices  of  this  character.  A  person  who  resides  in  the  house  upon  a 
footing  of  equality  with  the  guests,  may  well  be  supposed  to  feel  a  greater  intei'est 
in  such  matters  than  a  mere  servant,  whose  occupations  are  pressing  and  various,  and 
whose  pursuits  do  not  lead  him  to  place  so  high  a  value  upon  a  scrupulous  discharge 


BILLS  OF  EXCHAISTGE  AKD  PROMISSORY  NOTES.  30V) 

Presentment. 

presentment  must,  whether  it  have  been  previously  accepted  or 
have  not  been  presented  for  acceptance  at  all,  be  made  at  a  season- 
able hour  of  the  day  on  which  it  becomes  payable.     Indeed,  if  the 


of  duty.  We  think  that  a  stricter  rule  would  be  found  inconvenient,  and  tend  to 
subvert  rather  than  subserve  the  purposes  of  justice."  But  see  Bank  of  United  States 
V.  Corcoran,  2  Peters,  121.     Granite  Bank  v.  Aj-res,  16  Pick.  32. 

An  exception  to  the  general  rule,  that  where  the  holder  and  indorser  reside  in 
the  same  town,  tlie  notice  must  be  personal  or  at  the  place  of  business,  was  intro- 
duced in  the  recent  case  of  The  Eagle  Bank  v.  Hathaway,  5  Met.  212,  and  the  Court 
intimate  an  indisposition  to  extend  the  rule  bej^ond  the  cases  to  which  a  long  line 
of  judicial  decisions  and  the  established  course  of  mercantile  usage  have  applied  it, 
A  bill  of  exchange  was  made  payable  at  Philadelphia  to  the  defendant  or  his  order, 
who  resided  in  Providence ;  and  he,  for  a  valuable  consideration,  after  its  accept- 
ance, indorsed  it  to  the  plaintiff,  a  bank  in  Providence.  This  bank  indorsed  and 
transmitted  the  bill  to  a  bank  in  New  York  for  collection ;  which  bank  also  in- 
dorsed and  transmitted  it  for  collection  to  a  bank  in  Philadelphia ;  the  latter  bank 
caused  the  bill  to  be  presented  for  paj^ment  to  the  acceptor  at  maturity ;  and  pay- 
ment being  refused,  caused  written  notices  to  be  made  out  for  all  parties  to  the  bill, 
and  seasonably  sent  those  notices  to  the  bank  in  New  York,  which  bank  seasonably 
sent  notice  to  the  bank  in  Providence,  and  also  inclosed  to  that  bank  the  notice  to 
the  defendant,  the  first  indorser:  the  bank  in  Providence  immediately  placed  this 
notice  to  the  defendant  in  the  post-office  in  that  city.  The  Court  held,  that  as  the 
transaction  to  be  notified  to  the  defendant  took  place  in  Philadelphia ;  as  notice  to 
him  by  mail,  either  from  there  or  from  New  York,  when  the  draft  got  back  to  the 
indorser  there,  would  have  been  good ;  as  the  plaintiff  was  the  conduit  of  convey- 
ance, and  not  the  party  from  whom  the  notice  emanated;  as  tlie  defendant,  if  he 
were  looking  for  notice  of  dishonor  of  this  bill  of  exchange  paj'able  in  Pliiladelphia, 
would  naturally  look  to  the  post-office  for  that  notice ;  the  notice  through  the  post- 
office,  under  the  circumstfinces,  was  good. 

Where  the  giving  of  notice  at  either  the  domicile  or  place  of  business  of  the  party 
entitled  to  receive  it,  is  prevented  by  his  own  act,  as  by  his  absence  from  town,  and 
the  shutting  up  of  his  establishment,  the  holder  will  be  excused.  Williams  v.  The 
Bank  of  the  United  States,  2  Peters,  97. 

The  form  of  the  notice. — The  law  has  not  prescribed  any  fixed  form  of  notice, 
which  should  be  given  to  the  indorser  of  a  promissory  note,  of  its  dishonor.  The  ob- 
ject of  the  notice  is  simply  to  inform  the  indorser  that  the  maker  or  acceptor  has 
failed  or  refused  to  pay ;  that  he  is  considered  liable,  and  that  he  will  be  looked  to 
by  the  holder,  for  payment.  It  must  contain  enough  to  identify  the  note,  to  show- 
that  it  has  been  dishonored,  and  that  the  holder  looks  to  the  person  receiving  the 
notice  for  reimbursement  and  indemnity.  But  no  precise  or  formal  allegation  of 
these  matters  is  necessary:  it  is  sufficient  if  the  party  receiving  the  notice,  can  spell 
them  out,  as  it  were.  Mills  v.  Bank  of  the  United  States,  11  Wheat.  431.  Bank  of 
Alexandria  v.  Swann,  9  Peters,  33.  Bank  of  the  United  States  v.  Carneal,  2  Peters, 
552.     Opinion  of  Judge  Woodbur}-,  in  Musson  v.  Lake,  4  How.  S.  C.  R.  2S2.     Gilbert 


310  MERCANTILE  COIsTRACl'S. 


Presentment. 


maker  or  drawee  abscond,  or  the  house  at  which  the  bill  or  note 
was  drawn  payable  be  found  shut  up,  it  may  be  treated  as  dis- 
honored ;  {s)  but  care  must  be  taken  that  he  have  absconded,  not 

(s)  Anon.  Ld.  Raym.  743.     Hardy  v.  "Woodroffe,  2  Stark.  319.     Hine  v.  Allely,  4 
B.  &  Ad.  624. 


V.  Dennis,  3  Met.  495.  Cowles  v.  Harts,  Johnson  &  Co.,  3  Conn.  516.  Ranson  v. 
Mack,  2  Hill's  K  Y.  R.  587.  Miers  v.  Brown,  11  Exch.  372.  Cayuga  County  Bank 
V.  Warden,  1  Comst.  413.  Housatonic  Bank  v.  Laflin,  5  Cush.  546.  Tobey  v.  Len- 
nig,  14  Penn.  St.  Rep.  483. 

In  the  recent  case  of  Piatt  v.  Drake,  1  Douglas'  Michigan  Rep.  296,  it  was  held 
that  inasmuch  as  the  protest  of  a  promissory  note  "was  unnecessary,  a  notice  to  the 
indorser  that  the  note  had  been  "  protested  for  non-payment,  and  that  the  holders 
looked  to  him  for  payment  of  the  same,"  was  not  sufficient  evidence  of  dishonor. 
"Such  notice  must  contain  words  showing  directly,  or  by  necessary  construction, 
that  the  note  has  been  presented  for  payment,  and  payment  refused.  A  protest  is  a 
formal  instrument,  made  by  a  notary  public,  alleging  the  due  presentment  and  dis- 
honor of  the  bill,  and  declaring  that  the  notary  protests  the  same  for  non-acceptance, 
or  non-payment,  as  the  case  may  be ;  and  the  statement  that  a  bill  or  note  has  been 
protested,  refers  rather  to  the  making  by  the  notar}'  of  the  instrument  denominated 
a  protest,  than  to  the  acts  which  might  authorize  such  protest  to  be  made."  A  dif- 
ferent rule  was  declared  in  the  case  of  the  Housatonic  Bank  v.  Laflin,  5  Cush.  546, 
•where  notice  merely  informed  the  indorser  that  the  note  had  been  protested  for  non- 
payment, and  that  the  holders  looked  to  him  for  payment.  The  Court  held  that 
this  language  implied,  that  payment  had  been  demanded  and  refused,  and  thus  that 
the  note  had  been  dishonored  by  default  of  the  maker.  S.  P.  Smith  v.  Little,  10  N. 
Hamp.  526. 

What  is  due  diligence  in  giving  notice. — This  has  repeatedly  been  held  to  be  a 
question  of  law,  where  the  facts  are  ascertained.  Rhett  v.  Poe,  2  Howard  S.  C.  R. 
457.  The  Bank  of  Columbia  v.  Lawrence,  1  Peters'  S.  C.  R.  578.  Bank  of  Utica  v. 
Bender,  21  "Wend.  643.  Brown  &  Sons  v.  Ferguson,  4  Leigh.  50.  Brenser  v.  Wight- 
man,  7  Watts  &  Serg.  264.  Davis  v.  Herrick,  6  Ohio  Rep.  55.  This  subject  was 
considered  in  the  Supreme  Court  of  the  United  States,  in  the  case  of  the  Bank  of 
Alexandria  v.  Swann,  9  Peters,  33,  and  the  general  rule  stated  by  Mr.  Justice  Thomp 
son,  in  delivering  the  opinion  of  the  Court.  "Tlie  law  does  not,"  says  he,  "require 
the  utmost  possible  diligence  in  the  holder  in  giving  notice  of  the  dishonor  of  the 
note :  all  that  is  required  is  ordinary  reasonable  diligence ;  and  what  shall  consti- 
tute reasonable  diligence  ought  to  be  regulated  with  a  view  to  practical  convenience, 
and  the  usual  course  of  business."  In  that  case,  a  notice  was  esteemed  sufficient, 
given  under  the  following  circumstances.  Payment  of  the  note  on  which  suit  was 
brought,  had  been  demanded  at  the  Bank  of  Alexandria,  where  it  was  payable,  be- 
fore three  o'clock,  on  the  last  day  of  grace.  Notice  of  the  dishonor  was  put  into  the 
post-office  on  the  following  day,  directed  to  the  indorser,  who  resided  in  Washington. 
According  to  the  course  of  the  mail  from  Alexandria  to  the  city  of  Washington,  all 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  311 

Presentment. 

merely  removed,  (t)     Nor  is  his  bankruptcy,  insolvency,  or  stopping 
payment,  any  excuse  for  the  want  of  presentment  and  notice,  {u) 
It  has  indeed  been  held  that  if  the  drawer  have  no  assets  in  the 


(t)  Collins  V.  Butler,  Str.  1087. 

(m)  Russell  V.  LangstafFe,  Doug.  497,  515,  per  Lee,  J.  Esdail«  v.  Sowerby,  11 
East,  114.  Lafitte  ?;.  Slatter,  6  Bingh.  623;  Bayley,  5th  ed.  252.  Bowes  v.  Horn, 
5  Taunt.  80.  See  Rogers  v.  Langford,  1  C.  &  M.  637,  and  Camidge  v.  Allenby,  6  B. 
ife  C.  373.    See  Henderson  v.  Appleton,  3  Tyrwli.  660. 


letters  put  into  the  mail  before  half-past  eight  o'clock,  p.  m.,  at  Alexandria,  would 
leave  there  some  time  during  that  night,  and  would  be  delivered  in  "Washington  the 
next  day,  at  any  time  after  eight  o'clock,  a.  m.  It  was  urged  that  notice  should  have 
been  sent  upon  the  evening  of  the  day  when  the  note  was  dishonored ;  but  the  Court 
say  in  reply,  that  ■"  the  law,  generally  speaking,  does  not  regard  the  fractions  of  a 
day.  If  the  time  of  sending  notice  is  limited  to  a  fractional  part  of  the  day,  it  will 
alwa^'s  come  to  a  question  how  swiftly  the  notice  can  be  conve3'ed.  We  therefore 
think,  that  the  notice  sent  by  the  mail  the  next  day  after  the  dishonor  of  the  note, 
was  in  due  time." 

The  holder  of  a  note  may  prove  the  exercise  of  due  diligence  in  two  ways.  1. 
Bj'  showing  a  sufficient  protest  (whenever  it  was  necessary)  for  non-acceptance  or 
non-payment,  and  timely  notice  of  the  dishonor  given  or  forwarded  to  the  parties 
on  the  bills.  In  this  case  there  arises  a  legal  presumption  of  its  receipt  in  time.  2. 
By  proof  that  the  notice  actually  came  to  hand  in  time,  though  the  letter  was  not 
properly  directed,  nor  sent  by  the  most  direct  or  expeditious  route.  Dickens  v. 
Beal,  10  Peters,  572. 

What  will  excuse  failure  to  give  notice. — In  England,  when  a  bill  of  exchange 
comes  into  possession  of  the  crown,  the  neglect  of  its  officers  to  give  notice  of  the 
dishonor  will  not  discharge  the  drawer  or  indorsers.  But  in  the  case  of  The  United 
States  V.  Barker,  12  "Wheat.  559,  it  was  Iield  that  where  the  government  of  the 
United  States,  through  its  lawfully  authorized  agents,  becomes  the  holder  of  a  bill 
of  exchange,  it  is  bound  to  use  the  same  diligence  to  charge  the  indorsers,  as  would 
be  necessary  in  the  case  of  a  transaction  between  private  individuals. 

2.  An  indorser  who  unites  with  drawer  in  deceiving  holder,  by  representing  that 
a  bill  will  probably  be  accepted,  when  he  knows  that  it  will  not,  is  guilty  of  a 
fraud,  which  deprives  him  of  the  right  to  require  notice  either  of  non-acceptance  or 
non-payment.  The  Farmers'  Bank  v.  Vanmeter,  4  Rand.  553.  But  mere  knowledge 
by  the  drawer  or  indorser  that  a  bill  will  not  be  paid  at  its  maturity,  will  not 
dispense  witli  the  necessity  of  notice  of  dishonor.  Brown  &  Sens  v.  Ferguson,  4 
Leigh.  37.  Upon  the  same  principle,  an  indorser  who  has  transferred  a  note  upon 
which  nothing  is  due,  cannot  require  notice.  The  law  will  not  permit  him  to  derive 
any  advantage  from  the  fraud  which  he  has  practised  upon  the  holder.  Bissell  v. 
Bosman,  2  Dev.  Eq.  Rep.  162.  So,  a  payee  who  indorses  and  delivers  a  promissory 
note  which  he  knows  to  be  void  by  reason  of  usury,  is  liable  without  notice.  Copp 
V.  McDugall,  9  Mass.  1. 


J12  :mercaxtile  contracts. 


Presentment. 


«••- 


drawee's  hand,  nor  any  reason  to  expect  that  the  bill  will  be  paid, 

a  presentment  is,  for  the  purpose  of  charging  hirn,  unnecessary,  {v) 

\   But  nothing  short  of  this  will  do ;  even  a  declaration  by  the  drawee 

(v)  Terry  v.  Parker,  6  Ad.  &  E.  502. 


3.  Another  established  exception  to  the  general  rule  that  notice  must  be  gi^en  lo 
the  drawer  of  the  dishonor  of  a  bill,  is  where  he  has  no  funds  in  the  hands  of  the 
drawee.  The  rule  does  not  extend  to  an  indorser  who  has  no  concern  in  the 
accounts  between  the  drawer  and  the  drawee,  and  is  in  all  cases  entitled  to  notice. 
Indeed,  it  has  been  suggested  by  the  highest  aiithority,  that  it  would  have  been 
more  conducive'  to  the  interests  of  commerce,  to  have  precluded  the  holder  in  any 
case  from  giving  evidence  of  circumstances  to  excuse  the  want  of  notice.  The 
general  rule  with  its  exceptions  and  modifications  is  discussed  in  French  v.  The 
Bank  of  Columbia,  4  Cranch,  153;  Dickins  t,  Beal,  10  Peters'  S.  C.  E.  5'71; 
Farmers'  Bank  v.  Vanmeter,  4  Rand.  553 ;  Hansborough  v.  Gray,  3  Gratt.  356 ; 
Lewis  V.  Hanchman,  2  Barr's  Rep.  416;  Sherrod  v.  Rhodes,  5  Alab.  683;  Hopkirk 
V.  Page,  2  Brock.  C.  C.  Rep.  20.  Unless  the  circumstances  of  the  transaction  are 
such  as  to  place  it  beyond  the  pale  of  commercial  usage,  and  to  lead  to  the  pre- 
sumption of  fraud,  notice  will  be  required.  Thus,  notice  is  necessary  where  the 
drawer  has  made  or  is  making  a  consignment  to  the  drawee,  and  draws  before  the 
goods  have  been  received ;  or  where  he  draws  where  the  goods  are  in  transitu,  but 
the  bill  of  lading  has  not  been  sent  to  the  ccyisignee,  or  tbe  goods  are  lost ;  or  where 
the  drawer  has  any  funds  or  property  in  the  hands  of  the  drawee  ;  or  where  there 
is  a  fluctuating  balance  between  them,  or  a  running  account;  or  where  the  course 
of  dealing  between  the  parties  has  been  such  as  to  raise  a  reasonable  expectation 
that  the  bill  would  be  paid. 

4.  The  holder  of  the  note  is  not  relieved  from  the  necessity  of  giving  notice  of 
non-paj'ment  to  the  indorser  by  the  simple  fact  of  the  death  of  the  maker,  and  the 
grant  of  letters  of  administration  on  his  estate  to  the  indorser  before  the  maturity 
of  the  note.  The  undertaking  of  the  indorser  is  conditional.  The  use  of  due  dili- 
gence in  seeking  paj-ment  from  the  maker,  and  timely  notice  of  his  failure  to 
discharge  the  debt,  are  ctnditions  precedent,  upon  the  performance  of  which  the 
liability  of  the  indorser  depends.  There  is  nothing  in  the  fact  that  the  indorser  has 
become  the  personal  representative  of  the  maker,  to  warrant  a  departure  fi'om 
established  commercial  principles  and  usage,  or  to  show  that  demand  and  notice  of 
non-payment  would  be  wholly  useless.  It  is,  indeed,  possible  that  the  note  may 
have  been  paid  by  the  maker  before  it  fell  due,  or  that  assets  which  would  have 
been  applied  in  satisfaction  of  the  debt,  had  payment  been  demanded,  may  have 
received  a  different  direction.  Magruder  v.  Tiie  Union  Bank  of  Georgetown,  3 
Peters,  87. 

5.  Kor  is  the  holder  excused  from  giving  notice  to  the  indorser  because,  from 
Bome  reason,  he  is  unable  to  make  demand  of  the  maker  or  drawee.  Price  v.  Young, 
1  McCord's  Rep.  339. 

6.  Kor  is  the  absence  of  an  indorser  from  home,  any  excuse  for  failing  to  trans- 
m't  notice  to  him  of  the  dishonor  of  a  bill.     Lawrence  v.  Ralston,  3  Bibb,  102, 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  313 

Presentment. 

that  he  will  not  pay  it:  {w)  though  if  a  party,  having  full  knowl- 
edge that  he  is  discharged  by  non-presentment,  promise  to  liqui- 
date or  do  partly  liquidate  it,  as  against  him  it  will  be  treated  as 

(w)  Fx  parte  Bignold,  1  Deac.  728. 


Y.  Where  the  indorser  of  a  note  takes  from  the  maker  an  assignment  of  all  hia 
propertjr,  or  a  sufficient  portion  thereof  to  protect  himself  from  liability,  it  has 
been  regarded  as  a  waiver  of  his  legal  right  to  notice  of  dishonor.  Bend  v.  Farn- 
ham,  5  Mass.  1*70.  Prentiss  v.  Damelson,  5  Conn.  175.  Durham  v.  Rice,  5  Yerg. 
SOO.  Duvall  vir.*^arHfers' -Bank, -.g  Gill  &  J.  31.  Stephenson  v.  Primrose,  8  Porter, 
155.  Coddington  v.  Davis,  3  Deuio  16,  ib.  610.  But  a  partial  indemnity  does  not 
operate  to  dispense  with  notice.  Bronson  v.  Napier,  1  Yerg.  199.  Burrows,  Hall  & 
Co.  V.  Hannegan,  1  McLean,  309.  Spencer  v.  Harvey,  17  Wend.  489.  Kyle  v.  Green, 
14  Ohio,  495.     Denny  v.  Palmer,  5  Ired.  610. 

The  general  rule  was  qualified  in  the  case  of  Kramer  v.  Sandford,  4  Watts  and 
Serg.  328.  The  opinion  of  Chief  Justice  Gibson  contains  so  clear  and  forcible  an 
exposition  of  the  law,  that  we  liave  transferred  a  portion  of  it  to  our  pages.  "  An 
indorser  is  entitled  to  notice  whenever  it  is  necessary  for  his  protection:  for  he  is 
not  presumed  to  have  waived  it  to  his  detriment.  It  is  useless  to  him  where  he  has 
taken  a  general  assignment  of  tlie  maker's  effects,  and  thus  obtained  beforehand  all 
the  advantages  that  his  own  or  the  indorsee's  vigilance  could  give  him ;  and  it  has 
accordingly  been  held  that  he  assumes  the  maker's  debt  when  he  receives  his  means 
to  pay  it.  The  chance  of  the  maker's  acquiring  other  property,  to  which  he  might 
resort,  if  the  fund  in  his  hands  should  fall  short,  is  so  inconsiderable  as  to  fall  within 
the  maxim  de  mhwnis.  But  the  supposed  waiver  of  notice  in  consideration  of  a 
chose  in  action  given  as  a  collateral  security,  contingent  and  inadequate  to  produce 
perfect  safety,  as  every  chose  in  action  must  be,  stands  on  a  less  firm  foundation. 
The  acceptance  of  such  a  security  is  never  thought  to  be  a  waiver  by  the  parties 
themselves,  though  it  is  frequently  a  motive  for  the  act  of  indorsement.  Collateral 
security  is  cumulative  in  its  very  essence;  and  it  is  never  suffered  to  impair  tlie 
obligation  of  the  contract  immediately  between  the  parties.  It  may  be  accepted 
though  known  to  be  inadequate  at  the  time,  the  indorser  relying  for  tlie  rest  on  the 
maker's  other  means,  and  his  own  energy  of  pursuit,  when  warned  of  the  necessity 
of  exerting  it;  and  it  would  be  contrary  to  the  understanding  of  the  parties,  to 
make  the  acceptance  of  such  a  security  a  substitute  for  notice.  There  can  be  no 
presumptive  waiver  of  notice  where  there  has  been  no  waiver  of  recourse  to  the 
maker;  and  the  acceptance  of  a  security  is  not  such,  unless  it  has  been  taken  in 
satisfaction.  Notice  may  be  necessary  to  make  the  very  security  available  on  which 
the  indorser  is  supposed  to  have  relied,  but  which  he  may  have  reserved  for  the 
critical  moment."  The  learned  judge  concludes,  from  an  examination  of  the 
adjudged  cases,  that  "the  doctrine  of  waiver  iu  consideration  of  a  security  has  no 
footing  in  Westminster  Hall,"  and  that  the  principle,  that  an  indorser  is  not  entitled 
to  notice,  who  has  protected  himself  by  an  assignment,  or  collateral  security,  is  toe 
Droadly  laid  down  by  Chancellor  Kent.    "The  true  criterion  seems  to  be  the  obliga- 


314  MERCANTILE  CONTRACTS. 

Presentment. 


duly  presented,  {x)  and  a  promise  to  pay  subsequently  to  the  bill 
.  or  note  becoming  due  is,  as  against  the  party  making  such  promise, 
prima  facie  evidence  that  it  has  been  duly  presented,  [y) 

The  principal  circumstances  concerning  presentment,  are  the 
person  to  ivhom,  the  place  tvhere,  and  the  time  when  it  is  to  be  made. 

Generally  speaking,  the  presentment  should  be  to  the  'maker  or 
\  drawee  ;  but  if  a  bill  or  note  be  payable  at  a  particular  banker's,  a 
presentment  at  that  banker's  is  sufficient ;  (2;)  if  at  a  particular 
place,  a  presentment  at  all  the  banking-houses  in  that  place,  (a) 
If  the  maker  or  drawee  be  dead,  the  presentment  must  be  to  his 
personal  representative ;  (h)  if  he  be  absent,  and  the  bill  or  note  be 
made  or  accepted  by  agent,  to  that  agent,  (c)  Where  a  particular 
house  is  pointed  out  by  the  bill  as  the  acceptor's  residence,  he  is 
bound,  if  he  remove  from  that  house,  to  leave  sufficient  funds  to 
meet  the  bill,  and  a  presentment  to  any  inmate,  {d)  or,  if  the  house 
be  shut  up,  at  the  door,  (e)  Avill  be  sufficient.  By  the  usage  of 
bankers  in  London,  a  bill  or  check  held  by  a  banker  and  payable 
by  another  may  be  presented  at  the  Clearing-house.     As  to  the 

a-)  Iloply  V.  Dufresne,  15  East,  275.  Hodge  v.  Fillis,  3  Camp.  463.  See  Goodall 
V.  DoUey,  1  T.  R.  712. 

(y)  Croxon  v.  Worthen,  5  M.  &  W.  5.  See  on  the  principle  Miles  v.  Bough,  3  Q. 
B.  871. 

{£)  Saunderson  v.  Judge,  2  H.  BL  509.  Harris  v.  Parker,  3  Tywrh.  370.  See 
Bailey  v.  Porter,  14  M.  &  W.  44,  in  •which  the  fact  of  the  bankers  at  whose  bank  the 
bill  was  made  payable,  being  themselves  the  holders,  was  considered  equivalent  to 
presentment. 

(a)  Hardy  v.  Woodroflfe,  2  Stark.  319. 

(6)  Molloy,  b.  2,  c.  10,  s.  34. 

(c)  Phillips  V.  Astling,  2  Taunt.  20G;  Bayley,  5th  ed.  219. 

{(1)  Buxton  V.  Jones,  1  M.  &  Gr.  87. 

(e)  nine  v.  Allely,  4  B.  &  Ad.  624. 

tion  to  take  up  the  note.  "When  that  remains  with  the  maker,  it  continues  to  be 
the  duty  of  the  holder  to  apprise  the  indorser  of  his  default ;  where  it  has  devolved 
on  the  indorser  himself,  he  needs  no  notice."  The  conclusions  of  C.  J.  Gibson  are 
fully  sustained  by  the  Court  of  Appeals  of  Virginia,  in  the  case  of  Watkins  v. 
Crouch  &  Co.,  5  Leigh.  522,  where  the  judges  in  their  opinions  enter  upon  an  elabo- 
rate examination  of  the  question.  See  also  8  Leigh.  164.  The  student  will  find 
most  of  the  American  authorities  on  this  subject  reviewed  and  collated  in  the  notes 
of  the  American  Editors  of  Smith's  Leading  Cases  to  the  case  of  Biekerdike  « 
Bollman,  vol.  2,  p.  36. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  315 

Presentment. 

mode  of  sucli  presentment  and  the  degree  of  responsibility  which 
attaches  to  the  banker  on  whom  the  bill  is  drawn  while  it  remains 
in  his  possession,  see  Wcanuick  v.  liogers,  5  M.  &  G.  R.  340. 

With  respect  to  the  j^^'^f'C^  of  presentment,  we  have  already  seen 
that  if  the  bill  or  note  sjDccify  a  particular  place  for  payment,  it 
must  be  presented  there ;  (/)  and,  before  stat.  1  &  2  Geo.  4,  c.  78, 
s.  1,  if  such  place  had  been  pointed  out  by  the  acceptance,  a  pre- 
sentment there  would  have  been  necessary  to  charge  either  the 
drawer  or  acceptor.  (^)  By  stat.  1  &  2  Geo.  4,  c.  78,  s.  1,  "if  any 
person  shall  accept  a  bill  payable  at  the  house  of  a  banker,  or  other 
place,  without  further  expression  in  his  accej^tance,  such  acccDtance 
shall  be  deemed  to  all  intents  and  purposes  a  general  acceptance  of 
such  bill ;  but  if  the  acceptor  shall  in  his  acceptance  express  that 
he  accepts  the  bill  payable  at  a  banker's  house,  or  other  place  only, 
and  not  otherwise  or  elsewhere,  such  acceptance  shall  be  deemed  to  be 
to  all  intents  and  purposes  a  qualified  acceptance,  and  the  acceptor 
shall  not  be  liable  to  pay  the  said  bill,  except  in  default  of  payment, 
when  such  payment  shall  have  been  duly  demanded  at  such  banker's 
house  or  other  place." 

Since  this  statute,  it  has  been  decided  that  in  an  action  against 
the  acceptor  on  a  \)\\\.  payable  hy  the  language  of  the  hill  at  a  particular 
place,  a  presentment  at  that  place  need  not  be  averred  or  proved, 
the  statute  applying  equally  whether  the  bill  be  made  paya"ble  at  a 
particular  place  by  the  drawer  or  by  the  acceptor.  (A) 

But  that  where  the  drawer  directs  hy  the  hody  of  the  hill  that 
the  money  shall  be  payable  at  a  particular  place,  a  presentment  at 
that  place  must  be  proved  in  an  action  against  him;(i)  for  the 

(/)  If  it  be  payable  at  two  places,  the  holder  has  liis  option  at  which  to  present 
it.     Beeching  v.  Gower,  Holt,  313. 

(g)  Rowe  v.  Young,  2  B.  &  B.  165. 

(/()  Selby  V.  Eden,  3  Bingh.  611.  Fayle  v.  Bird,  6  B.  &  C.  531.  But  it  is  no  vari- 
ance to  describe  the  bill  as  payable  there.  Blake  v.  Beaumont,  4  M.  &  Gr.  1.  And 
if  it  be  described  in  pleading  as  payable  there,  it  will  not  be  necessary  to  aver  pre- 
lentment  at  that  place  unless  it  be  stated  to  have  been  payable  there  and  not  else- 
where, as  it  is  in  fact  payable  there.  Halstead  v.  Stevens,  6  Q.  B.  86.  But  this 
statute  does  not  extend  to  notes,  and  in  an  action  against  the  maker  on  a  note  made 
payable  at  a  particular  place  in  the  body  of  it,  a  presentment  there  must  be  averred 
and  proved.     Emblin  v.  Dartnell,  12  M.  &  W.  830. 

(*)  Gibb  V.  Mather,  in  Cam.  Scacc,  8  Bingh.  214. 


310  MERCANTILE  CONTRACTS. 

Presentment. 

statute,  to  use  the  words  of  Tindal,  0.  J.,  "neither  intended  to 
alter,  nor  has  in  any  manner  altered  the  liability  of  drawers  of 
bills  of  exchange,  but  is  confined  in  its  operation  to  the  case  of 
acceptors  alone." 

It  has  been  doubted  whether,  if  a  bill  be  accepted  payable  at  a 
particular  place,  the  indorsee  must  prove  a  presentment  at  that 
23lace  171  order  to  charge  the  drawer  or  indorser.  Some  of  the  words 
of  the  Chief  Justice  in  Gihh  v.  Mather  appear  to  warrant  that  conclu- 
sion. See,  on  the  other  hand,  the  expression  of"  Lord  Lyndhurst 
and  Bayley,  B.,  in  Walter  v,  CuUey^  {j)  where  an  alteration  had 
been  made  with  the  acceptor's  consent  after  the  bill  was  issued,  by 
changing  ^payable  at  Mr.  CiMey's,  King's  Road^  Chelsea,^  into  ^pay- 
able at  Mr.  Bland^s,  Surrey  Street,  Blackfriars.'' — Per  Lord  Lyndhurst, 
"  I  do  not  think  it  at  all  alters  the  contract ;"  and  per  Bayley,  B., 
"The  alteration  did  not  qualify  the  acceptance."  These  expres- 
sions, however,  were  probably  meant  to  apply  only  to  the  case 
before  the  Court  in  which  the  party  sued  was  the  acceptor.  In 
Park  V.  Edge  {Jc)  the  point  was  raised,  but  not  settled ;  that  case 
deciding  only  that  the  indorsee  need  not  aver  such  a  presentment 
in  his  declaration  against  the  drawer  or  indorser ;  but  may  prove 
it,  if  necessary,  under  the  allegation  of  a  general  presentment.  (Z) 
It  seems  to  have  been  taken  for  granted  in  that  case,  and  has  been 
expressly  held  at  N.  P.  (m)  that  a  presentment  at  the  place  named 
in  such  acceptance  is,  since  the  statute,  as  before,  sufficient  to 
charge  the  drawer  or  indorser:  supposing  it  to  be  so,  the  accept- 
ance must  still  be  prpved,  in  order  to  warrant  a  presentment  at  the 
place  therein  named,  instead  of  to  the  acceptor  personally,  or  at  his 
residence,  {a) 

The  time  for  presentment  must  be  considered  with  reference,  1st, 
to  a  presentment  for  acceptance ;  2dly,  to  one  for  payment. 

We  have  already  seen  the  nature  of  a  presentment  for  accej^t- 
ance :  it  is  necessary  in  all  cases  of  bills  or  notes  (o)  payable  at  or 

{j)  4  Tyrwh.  87  ;  2  C.  &  M.  151.  {k)  1  C.  &  M.  434. 

{I)  This  seems  to  have  been  forgotten  in  Lj-on  v.  Holt,  5  M.  &  W.  250,  -where  the 
C<'urt  granted  a  rule  nisi  in  arrest  of  judgment  for  omitting  such  averment, 
(m)  Harris  v.  Parker,  3  Tyrwh.  370. 
(w)  See  Smith  v.  Bellamy,  2  Stark.  223. 
(o)  Dixon  V.  Nuttall,  4  Tyrwh.  1013 ;  1  C.  M.  &  R.  307.    Holmes  v.  Kerrison,  2 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  817 

Presentment. 

after  sight ;  and  in  cases  of  other  bills,  although  not  necessary,  is 
usual  and  prudent,  since  the  holder,  if  he  succeed  in  obtaining  it, 
gains  the  additional  security  of  the  drawee,  while  if  he  fail,  his 
remedy  against  the  drawer  is  accelerated. 

Where  presentment  for  acceptance  is  necessary,  it  must  be  made 
within  a  reasonable  time ;  what  is  such  reasonable  time,  depends 
upon  the  circumstances  of  each  case.  (  j:))  No  delay  warranted  by 
the  ordinary  course  of  business  is  unreasonable ;  and  therefore  bills 
drawn  by  a  country  banker  upon  London,  may  by  the  course  of 
dealing  be  retainable,  as  part  of  the  circulating  medium  of  the 
country,  for  a  longer  period  than  they  would  if  drawn  under  other 
circumstances,  (q)  So  with  respect  to  bills  payable  abroad  after 
sight,  in  the  absence  of  any  positive  regulation,  general  usage,  or 
particular  course  of  trade,  the  rule  is,  that  they  must  be  forwarded 
to  their  destination  for  acceptance  within  a  reasonable  time :  what 
is  that  reasonable  time,  is  a  mixed  question  of  law  and  fact,  to  be 
decided  by  a  jury  acting  under  tlie  direction  of  a  judge  on  the  par- 
ticular circumstances  of  each  case,  and  who,  in  order  to  arrive  at 
its  determination,  should  not  take  into  their  consideration  the  situ- 
ation and  interests  of  the  drawer  only,  or  of  the  holder  only,  but  of 
both;  and  where  they  have  been  directed  to  act  thus,  and  have 
held  a  delay  of  four  months  and  twenty-one  days  not  unreasonable, 
their  decision  has  been  approved  of,  {r)  though  the  bill  was  not 
cu'culated  during  that  time.  If  the  bill  is  circulated  during  the 
interval,  greater  indulgence  is  allowed,  and  in  one  case,  Buller,  J., 
said  that  if  a  bill  at  three  days'  sight  were  kept  out  in  that  way  for 
a  year,  he  could  not  say  there  would  be  laches,  {s)  But  if  there  be 
a  wanton  or  careless  detainer  by  the  holder  even  of  such  a  bill,  the 
other  parties  are  discharged.  (;!)     On  a  presentment  for  acceptance, 


Taunt.  323.  A  presentment  of  notes,  payable  after  sight  with  interest,  for  payment 
of  interest  on  them,  is  a  sight,  and  the  Statute  of  Limitations  •will  run  from  such  pre- 
eentment.     Way  v.  Bassett,  5  Hare,  55. 

(p)  Fry  V.  Hill,  1  Taunt.  39Y. 

(q)  Shute  v.  Robins,  1  M.  &  M.  133. 

(j-)  Mellish  V.  Rawdon,  9  Bingh.  416.  Muilman  v.  D'Eguino,  2  H.  Bl.  564.  Stra^ 
ker  V.  Graham,  4  M.  <k  W.  721. 

(«)  Muilman  v.  D'Eguino,  2  H.  Bl.  265,  and  Goupy  v.  Harden,  1  Taunt.  ]  59. 

(<)  Muilman  v.  D'Eguino,  Mellish  v.  Rawdon.    Straker  v.  Graham,  4  M.  &  "VV.  721, 


518  MERCANTILE  CONTRACTS. 


Presentment. 


the  bill  must,  it  seems,  be  left  with  the  drawee  twenty-four  hours, 
unless  he  in  the  interim  accept  or  refuse  to  do  so.  (u) 

Though  &  presentme7it  for  payment  be  not  made  on  the  very  day 
when  the  bill  or  note  becomes  due,  the  maker  or  acceptor  will  not 
be  discharged ;  {v)  though,  if  it  were  payable  at  a  particular  place 
where  money  had  been  lodged  to  meet  the  expected  demand  and 
lost  in  consequence  of  the  holder's  delay,  the  rule  might  possibly 
be  different ;  (iv)  nor  if  it  be  presented  at  a  particular  banker's,  and 
dishonored,  need  notice  of  dishonor  be  given  to  the  maker  or 
acceptor,  for  the  bankers  are  his  agents,  and  dishonor  by  them  is 
dishonor  by  him,  {x)  But  the  drawer  and  all  the  indorsers  will  be 
discharged  if  a  presentment  be  not  made  upon  the  very  day,  or  if 
proper  notice  of  dishonor  be  not  given.  A  bill  or  note  payable  on 
demand  becomes  due  at  the  moment  of  presentment ;  but  this  pre- 
sentment must  be  made  within  a  reasonable  time  after  receiving 
it.  {p)  What  is  a  reasonable  time,  is,  in  the  absence  of  any  settled 
rule,  a  mixed  question  of  law  and  fact,  to  be  decided  in  the  same 
\vay  as  the  like  question  concerning  the  presentment  for  accept- 
ance (2)  of  bills  payable  at  or  after  sight ;  and  a  longer  time  for 
presentment  will  be  allowed  where  the  instrument  has  been  circu- 
lated, and  was  apparently  meant  for  circulation ;  (a)  but  any  delay 


(n)  Bayley,  5th  ed.  p.  231.  But  not  on  a  presentment  for  payment;  if  it  be,  the 
presentment  is  not  complete  till  the  money  is  called  for.  Haywood  v.  Bank  of  Eng- 
land, Str.  550.  If,  •while  the  bill  remains  with  the  drawee  for  acceptance,  it  be  lost 
through  his  carelessness,  he  will  be  responsible :  but  it  will  be  otherwise  if  the 
holder  or  his  agent  have  carelessly  allowed  a  third  person  to  learn  the  private 
marks  on  the  bill,  and  obtain  it  from  the  drawee  hj  describing  them.  Morrison  v. 
Buchanan,  ?  C.  &  P.  22.     See  "Warwick  v.  Rogers,  5  M.  &  Gr.  340. 

(v)  Rhodes  v.  Gent,  5  B.  &  A.  244. 

(w)  Rhodes  v.  Gent,  ante. 

(x)  Smith  V.  Thatcher,  4  B.  <fe  A.  200.  Treacher  v.  Hinton,  4  B.  &  A.  413 
Pearce  v.  Pemberthy,  3  Camp.  261. 

(_?/)  Ward  II.  Evans,  Ld.  Raym.  928.  Moor  v.  Warren,  Str.  415.  Fletcher  v. 
Sandys,  Str.  1248.  Turner  v.  Mead,  ibid.  416.  As  to  checks,  Moule  v.  Brown,  4 
Bingh.  N.  C.  266.     Alexander  v.  Burchfield,  7  M.  &  Gr.  1061. 

(«)  See  ante,  Shute  v.  Robins,  Muilman  v.  D'Eguino,  Mellish  v.  Rawdon,  Straker  v 
Graham. 

(a)  See  Barough  v.  White,  4  B.  &  C.  325 ;  2  C.  &  P.  S  Heywood  v.  Watson,  4 
Bingh.  496.  Gascoyne  v.  Smith,  M'Clell.  &  Y.  338.  Banks  v.  Colwell,  3  T.  R.  8L 
Camidgu  v.  Allenby,  6  B.  <fe  C.  873.     Rogers  v.  Langford,  1  C.  &  M.  637. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  319 

Presentment. 

beyond  what  the  common  course  of  business  warrants  is,  in  ordi- 
nary cases,  unreasonable.  The  course  of  business  formerly  was 
understood  to  be,  to  allow  the  party  to  keep  it,  if  payable  in  the 
place  where  it  was  given,  till  the  morning  of  the  next  business  day 
after  its  receipt ;  if  payable  elsewhere,  till  the  next  post,  {h)  Various-j 
contradictory  decisions  afterwards  took  place  upon  the  subject,  and  ■ 
the  established  rule  now  is,  that  if  the  instrument  be  payable  at  a 
banker's  and  in  the  place  where  a  party  receives  it,  it  suffices  to 
present  it  for  payment  at  any  time  during  banking  hours  on  the  day 
after  it  is  received,  (c)  If  it  be  payable  elsewhere,  it  suffices  to 
forward  it  by  the  regular  post  on  the  day  after  it  is  received ;  {d) 
and  the  party  receiving  it  by  post,  has  till  the  next  day  to  present 
it.  (e)  These  limits,  however,  must  not  be  transgressed,  (/)  save 
under  very  particular  circumstances,  as  where  a  servant  received 
the  notes  on  Friday  for  his  master,  who  was  then  absent,  and  did 
not  return  till  after  banking  hours  on  Saturday,  and  consequently 
could  not  present  the  notes  till  Monday,  (g)  In  the  case  of  a  check, 
any  delay  to  present  it  for  payment  does  not  exonerate  the  drawer, 
unless  the  banker  or  person  on  whom  it  was  drawn  has  failed  in 
the  interim,  and  the  maker  would  thus  sustain  a  loss.  (A) 

A  bill  or  note,  (i)  importing  in  its  terms  to  be  payable  within  a 
limited  time  after  a  certain  event,  ex.  gr.  after  sight,  or  on  a  par- 
ticular day,  or  at  sight,  is  not  really  payable  till  three  days  after- 


(6)  "Ward  v.  Evans,  Ld.  Raym.  928.  Moor  v.  "Warren,  Str.  415.  Fletcher  v. 
Sand^-s,  Str.  1248.  Turner  v.  Mead,  Str.  416.  Hoar  v.  Da  Costa,  Str.  910.  Man- 
waring  V.  Harrison,  Str.  608.    E.  I.  Company  v.  Chitty,  Str.  1175. 

(c)  Robson  V.  Bennett,  2  Taimt.  388.  Pocklington  v.  Silvester,  Chitty  on  Bills,  8th 
ed.  419.  See  Gillard  v.  "Wise,  6  B.  «fc  C.  134.  Camidge  v.  Allenby,  6  B.  &  C.  373. 
Boddington  v.  Schlenker,  1  Nev.  <fe  Mann.  640.  See  as  to  checks,  Moule  v.  Brown,  4 
Bing.  N.  C.  266.     Alexanders.  Birchfield,  7  M.  &  Gr.  1061. 

{d)  Rickford  v.  Ridge,  2  Camp.  537.     Darbyshire  v.  Parker,  6  East,  3. 

(e)  "Williams  v.  Smith,  2  B.  &  A.  496. 

(/)  Beeching  v.  Gower,  Holt,  N.  P.  C.  135.  Camidge  v.  Allenby,  6  B.  C.  37S. 
Moule  V.  Brown,  4  Bingh.  N.  C.  266,  case  of  a  check :  so  likewise  Alexander  v.  Burch- 
field,  7  M.  <fe  Gr.  1061. 

ig)  James  v.  Holditch,  8  D.  &  Ry.  40.    See  "Williams  v.  Smith,  2  B.  «fe  A.  496. 

{h)  Robinson  v.  Hawskford,  15  L.  J.  Q.  B.  377.  Serle  v.  Norton,  2  M.  &  Rob. 
401. 

(i)  A  note  paj-able  by  instalments  is  entitled  to  the  days  of  grace.  Oridge  v. 
Slierborne,  11  M.  &  "W.  374. 


320  MERCANTILE  CONTRACTS. 


Pi'esentment. 


wards,  (/)  unless  tlie  third  be  a  day  of  public  rest,  such  as  Sunday, 
Good  Friday,  Christmas-day,  or  some  day  appointed  by  proclama- 
tion for  a  solemn  fast  or  day  of  thanksgiving,  in  which  case  it  is 
payable  upon  the  second  day.  (A;)  The  surplus  days  are  called 
days  of  grace,  and  their  number  differs  in  different  countries.  (Z) 
In  France,  Genoa,  Leghorn,  Palermo,  Amsterdam,  Antwerp,  and 
Rotterdam,  there  are  none.  In  England,  as  has  been  said,  they 
are  three ;  and  as,  in  computing  the  time  a  bill  has  to  run,  the  day 
of  its  date  must  always  be  excluded,  so  must  the  day  on  which  it 
purports  to  fall  due,  in  computing  the  commencement  of  the  days 
of  grace,  (in)  upon  the  last  of  which  it  must  be  presented.  Thus 
if  a  bill  be  dated  2d  November,  1832,  and  payable  at  two  months 
after  date,  January  3,  1833,  will  be  the  first  day  of  grace,  and  on 
January  5,  1853,  the  bill  must  be  presented. 

"When  a  bill  is  drawn  at  a  place  using  one  style,  and  payable  at 
a  place  using  another,  the  rule,  as  stated  in  Bayley  on  Bills,  is  that, 
"  if  the  time  be  to  be  reckoned  from  the  date,  it  shall  be  computed 
according  to  the  style  of  the  place  at  which  it  was  drawn,  other- 
wise according  to  the  style  of  the  place  where  it  is  payable ;  and 
in  the  former  case,  the  date  must  be  reduced  or  carried  forward  to 
the  style  of  the  place  where  the  bill  is  payable,  and  the  time  reck- 
oned from  thence." 

When  a  bill  is  to  be  paid  so  many  days  after  the  happening  of 
a  particular  event,  as  after  sight,  the  day  on  which  that  event  hap  ■ 
pens  is  excluded,  (n)  Thus  a  bill  payable  six  days  after  sight,  if 
seen  upon  the  1st  of  January,  would  import  to  be  payable  upon  the 
7th,  and  would  be  payable  in  reality  upon  the  10th,  allowing  for 
the  days  of  grace. 


(j)  Coleman  v.  Sayer,  1  Barnard,  303.  Bro-wni).  Harradan,  4  T.  R.  148  ;  B.  N.  P. 
2*74.  J.  Anson  v.  Thomas,  Bailey,  5th  ed.  98.  Dehers  v.  Harriott,  1  ShoAV.  168 ; 
Kyd.  p.  10.  As  to  the  effect  of  a  note  payable  on  demand  at  sight,  see  Dixon  v.  Kutt- 
all,  6  C.  &  P.  320 ;  4  Tyrwh.  1013 ;  1  C.  M.  &,  R.  30Y. 

{k)  Tassell  v.  Lewis,  Lord  RajTn.  Y43  ;  39  &  40  Geo.  3,  c.  42  ;  7  &  8  Geo.  4,  c.  15, 
ss.  1  &  2. 

(?)  Beawes,  200,  1st  ed.  p.  449.  Goldsmith  v.  Shee,  and  Idem  v.  Bland,  Bayley, 
5th  ed.  246.     See  Chitty  on  Bills,  8th  ed.  407. 

(m)  Except  at  Hamburgh,  wliere  it  is  the  first  of  the  days  of  grace. 

(?i)  Bayley  on  Bills,  5th  ed.  250.     Coleman  v.  Sayer,  1  Barnard,  303. 


BILLS  OF  EXCHAJS^GE  AND  PROMISSORY  NOTES.  321 

Notice. 

A  foreign  bill  is  frequently  drawn  jDayable  at  so  many  usances^ 
as  in  the  form  above  given.  An  usance  signifies  the  time  in  which, 
during  the  infancy  of  bills,  all  bills  between  this  country  and  the 
place  on  or  at  which  the  instrument  is  drawn,  were  payable  :  (o) 
these  usances  are  calculated  exclusively  of  the  day  of  the  date  and 
of  the  days  of  grace.  Thus  an  usance  between  this  country  and 
Venice  being  three  calendar  months,  a  bill  drawn  on  Venice  at 
two  usances,  and  dated  on  the  1st  of  January,  purports  to  fall  due 
upon  the  1st  of  July  following.  But  at  Venice  six  days  of  grace 
are  allowed,  excluding  Sundays,  holidays,  and  days  on  which  the 
bank  is  shut ;  the  bill  therefore  must  not  be  presented  till  the  7th, 
and  if  such  a  day  intervene,  not  till  the  8th. 

In  computing  the  time  which  such  bills  have  run,  it  sometimes 
becomes  necessary  to  divide  a  month ;  thus  a  bill  drawn  on  Venice 
at  half  usance,  is  payable  at  one  month  and  a  half  from  date :  in 
such  cases  the  half  month  vnQimQ  fifteen  days,  {p) 

We  have  now  seen  on  what  day  a  bill  or  note  should  be  pre- 
sented, and  must  further  observe,  that  such  presenment  must  take 
place  at  a  seasonable  time  on  that  day.  Where,  by  the  known 
custom  of  a  particular  place  or  business,  the  presentment  ought  to 
be  made  within  certain  hours,  a  presentment  out  of  those  hours, 
ex.  gr.  to  a  banker  after  banking  hours,  is  unseasonable,  (q)  But  in 
other  cases,  eight  in  the  evening  is  not  an  unseasonable  hour,  (r) 

The  rules  which  regulate  the  presentment  of  a  bill  to  an  ac- 
ceptor for  honor  or  referee  in  case  of  need,  will  be  found  a^iie,  in 
Section  IV.,  on  Acceptance. 


Section-  VI. — Notice. 

When  a  bill  or  note  is  refused  acceptance  or  payment,  notice 
of  such  refusal  must  immediately  be  given  to  any  party  to  it,  to 

(o)  See  a  table  of  Usances,  Chitty  on  Bills,  8tli  ed.  405. 

{p)  Marius,  23. 

{q)  Parker  v.  Gordon,  7  East,  385.      Elford  v.  Teed,  1  M.  &  S.  28.     "Whittaker  v. 
Bank  of  England,  1  C.  M.  &  R.  744. 

(r)  Barclay  v.  Bailey,  2  Camp.  527.      "Wilkins  v.  Jadis,  2  B.  ife  Ad.  188.     Morgan 
i>  Davidson,  1  Stark.  114.    And  see  Startup  v.  Macdonald,  6  M.  &,  Gr.  593. 
21 


322  SIERCANTILE  CONTRACTS. 

Notice. 


whom  the  holder  wishes  to  have  recourse,  (s)  Notice  to  a  person 
not  a  party  to  the  bill,  but  only  collaterally  liable  as  upon  a  guaran- 
ty for  its  payment,  is  unnecessary :  (t)  if  he  have  died,  to  his  rep- 
resentatives;  if  he  have  become  a  bankrupt,  and  assignees  are 
chosen,  to  those  assignees,  (w)  Although  a  bill  may  not  require 
acceptance,  yet  if  it  be  presented  for  acceptance  and  refused,  and 
notice  be  not  given,  it  becomes  unavailable,  (v)  save  in  the  hands 
of  a  subsequent  indorsee  for  value,  who  was  not  aware  of  the  dis- 
honor, {iv) 

Notice  of  dishonor  does  not  mean  mere  knowledge,  and  a  party 
may  be  entitled  to  a  formal  communication  of  the  dishonor  of  a 
bill,  though  it  may  be  clearly  shown  that  he  knew  it  would  be  dis- 
honored, {x)  The  notice  may  however  be  by  parol,  {y)  or  even 
proved  by  circumstantial  evidence ;  as  where  the  day  after  the  dis- 
honor a  letter  had  been  sent  by  the  holder  to  the  defendant,  which 
was  not  produced,  though  notice  to  produce  it  had  been  given,  and 
the  defendant  (an  attorney)  afterwards  objected  that  the  bill  had 
not  been  presented,  but  said  nothing  about  the  want  of  notice  of 
dishonor,  the  jury  were  held  justified  in  drawing  the  inference  that 
the  letter  contained  a  sufl&cient  notice.  (2)  So  it  may  be  inferred 
from  a  promise  by  the  defendant,  after  its  dishonor,  to  pay  the  bill, 
or  a  part  payment,  or  an  admission  by  him  that  he  continues  liable 
upon  it.  (a) 

(s)  Lafitte  V.  Slatter,  6  Bingh.  623. 

(<)  Walton  V.  Mascall,  13  M.  &  W.  T2.  Hitchcock  v.  Humfrey,  6  M.  &  Gr 
559. 

(w)  Rhode  v.  Proctor,  4  B.  &  C.  5lY.     See  Ux  parte  Moline,  19  Ves.  216. 

{v)  Blesard  v.  Hurst,  Burr.  2670.  Goodall  v.  Dolley,  1  T.  R.  112.  Bartlett  v. 
Benson,  14  M.  A  W.  733. 

(w)  O'Keefe  v.  Dunn,  6  Taunt.  305.  Dunn  v.  O'Keefe,  5  M.  &  S.  282.  Unless  under 
peculiar  circumstances,  as  in  Goodman  v.  Harvey,  4  Ad.  <fe  E.  870. 

{x)  Burgh  V.  Legge,  5  M.  &  W.  418. 

{y)  Houlditch  v.  Cauty,  4  Bingh.  N.  C.  411. 

(z)  Curlewis  v.  Corfield,  1  Q.  B.  814. 

(a)  Lundie  W.Robertson,  7  East,  231.  Gibbon  v.  Coggon,  2  Camp.  188.  Paterson 
V.  Becher,  6  Moore,  319.  Horford  v.  "Wilson,  1  Taunt.  12.  Wilkins  v.  Jadis,  1  M.  4 
Rob.  41.  Brownell  v.  Bonney,  1  Q.  B.  39.  Croxon  v.  Worthen,  5  M.  &  W.  5. 
Campbell  v.  Webster,  2  C.  B.  258.  In  the  last  case  even  a  conditional  promise  was 
held  evidence,  not  only  of  due  notice  of  protest,  but  also  of  the  fact  of  the  bill  haT- 
ing  been  duly  protested. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  323 

Notice. 

The  notice  must  come  from  the  holder,  or  some  person  entitled, 
or  who,  as  party  to  the  bill,  j^robably  will  be  entitled,  to  call  for 
payment  or  reimbursement,  {b)  Notice  from  the  acceptor  has  been 
held  sufficient ;  (c)  however,  as  a  learned  author  remarks,  he  proba- 
bly acted  in  that  case  as  agent  for  the  holder.  (cZ)  But  a  notice  _ 
given  by  the  holder,  or  any  other  party,  inures  to  the  benefit  of  all 
who  stand  between  that  party  and  the  person  receiving  it ;  (e)  and  a 
notice  given  by  one  party  to  another,  and  communicated  without 
laches,  by  that  other  to  prior  parties,  renders  them  liable  to  him 
who  gave  the  first  notice.  (/)  It  has  also  been  decided  that  a  party 
to  the  bill  may,  immediately  on  its  dishonor,  give  notice  to  those 
prior  to  him,  though  he  is  not,  at  the  time,  the  holder,  and  he  will, 
on  afterwards  becoming  holder,  be  permitted  to  avail  himself  of  that 
notice,  (g)  The  notice  need  not,  however,  state  on  whose  behalf  it 
is  given  ;  (A)  but  if  it  purports  to  do  so,  and  by  mistake  the  name 
of  another  party  to  the  bill  be  mentioned,  the  notice  will  not  be 
void.  The  only  effect,  it  seems,  will  be  to  entitle  the  person  to 
whom  it  is  addressed  to  avail  himself  as  against  the  party  on  whose 
behalf  it  is  actually  given,  of  any  defence  he  would  have  against 
the  party  whose  name  is  used,  (i) 

Though  there  is  no  particular  form  of  notice,  yet  it  must  import 
in  express  terms  or  by  necessary  implication,  that  the  bill  or  note 
has  been  dishonored;  and  it  was  long  thought,  on  the  authority  of 
the  judgments  in  Tindal  v.  Broion,  and  Solarte  v.  Palmer,  that  it 
must  likewise  import  that  the  party  receiving  the  notice  is  con- 
sidered liable  and  expected  to  discharge  it.  {j) 


(6)  Chapman  v.  Keane,  3  Ad.  &,  E.  193.  Ex  parte  Barclay,  7  Ves.  597.  Jameson 
V.  Swintou,  2  Taunt.  224.     Wilson  v.  Swabey,  post.     See  Stewart  v.  Kennet,  2  Camp. 

m. 

(c)  Rosher  v.  Kieran,  4  Camp.  87. 

{d)  Bayley  on  Bills,  5th  ed.  254. 

(e)  Wilson  v.  Swabey,  1  Stark,  34.  Chapman  v.  Keane,  3  Ad.  &,  E.  193,  overruling 
as  to  this  pointy  Tindal  v.  Brown,  1  T.  R.  167  ;  2  T.  R.  186.  And  Ex  parte  Barclay,  7 
Ves.  597.     Harrison  v.  Ruse,  15  M.  &  W.  231. 

(/)  V7ilson  V.  Swabey,  1  Stark,  34.     Jameson  v.  Swinton,  2  Camp.  373. 

(</)  Chapman  v.  Keane,  3  Ad.  <fe  E.  193. 

(Ji)  "Woodthorpe  v.  Lawes,  2  M.  <fc  W.  109. 

(i)  Harrison  v.  Ruscoe,  15  M.  &  W.  231. 

(;■)  Tindal  v.  Brown,  1  T.  R.  167,  186.    Hartley  v.  Case,  4  B.  <k  C.  339.    Solarte  o 


324  MERCANTILE  CONTRACTS. 


Notice. 


In  Solarte  v.  Palmer,  a  notice  conceived  in  the  following  terms 
was  held  insufficient. 

17  DecW,  1825 

Gentlemen, 

A  bill  for  683Z.  drawn  bj  Mr.  Joseph  Keats  upon  Messrs. 
Daniel,  Jones  &  Co.,  and  bearing  your  indorsement,  has  been  put 

Palmer,  7  Bingh.  530.  S.  C.  in  Dom.  Proct.,  1  Bingh  N.  C.  194.  See  "Woodtliorpe  v. 
Lawes,  2  M.  &  "W".  109.  In  Boulton  v.  Welsli,  3  Bingh.  N.  C.  688,  the  G.  P.  held  the 
following  notice  insufficient : 

"33  Northampton  Square,  22rf  October,  1836. 
"Sir,  the  promissory  note  for  200/.  drawn  by  H.  H.,  dated  18th  July  last,  payable 
three  mouths  after  date,  and  indorsed  by  you,  became  due  yesterday,  and  is  returned 
to  me  unpaid.     I  therefore  give  you  notice  thereof,  and  request  you  will  let  me  have 

the  amount  forthwith. 

"W.  L  Boulton." 

In  Houlditch  v.  Cauty,  4  Bingh.  N.  C.  412,  where  the  notice  was  eked  out  by  parol 
evidence,  the  L.  C.  J.  said  "he  saw  no  reason  for  saying  the  decision  in  Boulton  v. 
Welsh  was  not  law;  nevertheless,  if  it  were  necessary,  he  should  be  ready  to  recon- 
sider it,  provided  he  was  not  called  on  to  alter  the  principle  laid  down." 
"Dear  Sir, 

"  To  ray  surprise  I  have  received  an  intimation  from  the  Birmingham  and 
Midland  Comities  Bank  that  your  draft  on  A.  B.  is  dishonored,  and  I  have  requested 
them  to  proceed  on  the  same."  Held  sufficient  Shelton  v.  Braithwaite,  7  M.  and 
W.  436. 

In  Housego  v.  Cowne,  2  M.  &  W.  348,  the  plaintiff  sent  a  person  to  the  drawee's 
house,  who  saw  his  wife,  and  said  "he  had  brought  back  the  bill  which  had  been 
dishonored."  The  Court  of  Exchequer  held  this  sufficient.  In  the  King's  Bench,  in 
Grugeon  v.  Smith,  cited  2  M.  &  W.  802,  and  now  reported  6  Ad.  &  E.  499.  "Your 
bill  due  this  day  has  been  returned  with  charges,  to  which  we  request  3"our  immediate 
attention."     Held  sufficient. 

In  Hedger  v.  Stevenson,  2  M.  &  "W.  799,  "  Sir,  I  am  desired  by  Mr.  H.  to  give  you 
notice  that  your  note  for  98?.  18s.  payable  'o  your  order  two  months  after  date,  be- 
came due  yesterday,  and  has  been  returnc  i  unpaid,  and  I  have  to  request  you  will 
please  remit  the  amount  thereof,  with  Is.  &d.  noting,  free  of  postage,  per  return  of 
post.    I  am,  &e.,  Jones  Spyer."    Held  sufficient. 

In  Strange  v.  Price,  10  Ad.  &  E.  125,  2  Per.  &D.  278 ;  notice  was— 

"Swindon,  Dec.  29,  1836. 
"  Messrs.  Strange,  Strange  &  Co.  inform  James  Price  that  Mr.  John  Ballerton'a 
acceptance  of  875/.  is  not  paid.    As  indorser,  Mr.  Price  is  called  upon  to  pay  the 
money,  which  will  be  expected  immediately."     Held  insufficient. 
In  Messenger  v.  Southey,  1  M.  <fe  Gr.  7  6. 

"1839.     Stokenchurch,  6  August. 
"Sir, — ^This  is  to  inform  you  that  the  bill  I  took  of  you,  15/.  12s.  6J.  is  not  took 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  305 

Notice. 

into  our  hands  by  the  assignees  of  Mr.  J.  E.  Alzedo,  with  direc 
tions  to  take  legal  measures  for  the  recovery  thereof,  unless  imme 
diately  paid  to,  Gentlemen, 

Yours,  &c., 

J.  &  S.  Pearce. 


np,  and  4s.  6d  expense,  and  the  money  I  must  pay  immediately.  My  son  will  be  it 
London  on  Friday  morning.     Wm.  Messenger."     Held  sufficient. 

In  Lewis  v.  Gompertz,  6  M.  &  W.  399. 

"  Mr.  G. — The  bill  of  exchange  for  250^.  drawn  by  S.  R.  on  and  accepted  by  C.  S 
and  bearing  j-our  indorsement,  has  been  presented  for  payment  to  the  acceptor 
thereof,  and  returned  dishonored,  and  now  lies  overdue  and  unpaid  with  me  as  above, 
of  which  I  hereby  give  you  notice."     Held  sufficient. 

In  Cooke  v.  French,  10  Ad.  &  E.  131.  "D.'s  acceptance  for  200^.  drawn  and  in- 
dorsed by  you,  due  31st  of  July,  has  been  presented  for  payment  and  returned,  and 
now  remains  unpaid."    Held  sufficient. 

In  Furze  v.  Sharwood,  2  Q.  B.,  388,  six  notices  of  dishonor  were  held  insufficient: 
each  of  them  stated,  with  the  addition  of  immaterial  circumstances,  that  the  bill 
was  unpaid. 

The  first — "  Sir, — A  bill  for  29^.  iTs.  3cZ,  drawn  by  Ward  on  Hunt,  due  yesterday, 
Ls  unpaid;  and  I  am  sorry  to  say,  the  person  at  whose  house  it  is  payable,  don't 
6peak  very  favorably  of  the  accej^tor's  punctuality.  I  should  like  to  see  you  upon  it 
to-day.     Yours,  J.  F." 

The  second  was — 

"This  is  to  give  you  notice  that  a  bill  drawn  by  you  and  accepted  by  Josias 
Bateman  for  47/.  6s.  9c?.,  due  July  9th,  1835,  is  unpaid,  and  lies  due  at  Mr.  J.  F.'s,  65 
Fleet  Street." 

Th ;  third  was — 

"  W.  II. 's  acceptance  for  21/.  4s.  Ad.,  due  on  Saturday,  is  unpaid.  He  has 
promised  to  pay  it  in  a  week  or  ten  days.  I  shall  be  glad  to  see  you  on  it  as  early 
as  possible." 

The  fourth,  fifth,  and  sixth,  with  difference  of  amount  only — 

"Sir, — This  is  to  give  you  notice  that  a  bill  for  1*76/.  5s.  6J.,  drawn  by  S.  Maine, 
and  accepted  by  George  Clisby,  dated  May  7th,  1835,  at  4  months,  lies  due  and 
unpaid  at  my  house.     I  am,  sir,  your  most  obedient  servant,  J.  F." 

They  were  all  held  bad,  because,  "  Consistently  with  all  that  is  set  forth,  the 
plaintiff,  either  from  ignorance  or  inadvertence,  or  because  he  may  have  really 
looked  to  another,  may  have  abstained  altogether  from  presenting  one  of  these 
bills." 

In  King  v.  Bickley,  2  Q.  B.  419. 

"I  hereby  give  notice,  that  a  bill  for  60/.,  at  three  months  after  date,  drawn  by 
A.  upon  and  accepted  by  B.,  and  indorsed  by  you,  lies  at  (fee.  dishonored^  Held 
sufficient. 

In  Robinson  v.  Curlewis,  2  Q.  B.  421. 

"Your  draft  upon  C.  for  t^l.  due  3d  March,  is  returned  to  us  unpaid,  and  if  not 


326  MERCANTILE  CONTRACTS. 


Notice. 


This  case  having  been  decided  first  by  Lord  Tenterden  at  N.  P., 
then  on  a  bill  of  exceptions  by  the  Exchequer  Chamber,  and  at 
last  by  the  House  of  Lords,  was  of  course  an  authority  not  to  be 
directly  struggled  with,  and  accordingly  in  the  subsequent  cases, 
the  chief  of  which  will  be  found  in  the  subjoined  note,  the  endeavor, 
it  will  be  perceived,  has  been  to  distinguish  the  terms  of  the  notice 
from  those  of  Solarte  v.  Palmer,  in  applying  which  case,  it  will  be 
found  that  the  Common  Pleas  has  used  the  greatest,  the  Exchequer 
the  least,  strictness. 

The  most  important  case,  however,  since  Solarte  v.  Palmer,  ap- 
pears to  have  been  that  of  Furze  v.  Sharwood,  2  Q.  B.  888,  on  account 
of  the  endeavor  which  the  Court  of  Queen's  Bench  there  made,  to 
lay  down  some  principle  of  construction  applicable  to  this  class  of 
cases ;  and  the  endeavor  was  so  far  successful  that  the  Court  suc- 
cessfully demonstrated,  by  a  comparison  of  the  notice  of  dishonor 
with  the  protest  in  place  of  which  it  comes,  that  there  could  be,  on 
principle,  no  necessity  for  its  showing  that  the  holder  looked  to  the 
person  to  whom  the  notice  is  addressed  for  payment,  further  than 
that  is  to  be  implied  from  the  fact  that  a  notice  of  dishonor,  which 
can  be  for  no  other  purpose  useful  to  the  party  sending  it,  is  given 
to  him.  (A;)    And  it  was  also  shown  that  such  necessity,  asserted  in 
terms  in  the  judgments  in  some  of  the  cases,  and  particularly  in 
Solarte  v.  Palmer,  was  not  invoked  in  those  decisions ;   and  the 
opinion,  thus  expressed  by  the  Court,  was  in  King  v.  BicUey,  2  Q.  B. 
421,  confirmed  by  the  other  judges,  after  a  conference  with  whom, 
Lord  Denman  stated  the  rule  to  be  "  that  it  is  not  necessary  in  express 
terms  to  inform  the  party  ivhom  it  is  intended  to  charge  that  he  will  he 
looked  to  for  payment,  and  that  the  sending  notice  of  dishonor  is,  in 
itself,  sufficient  for  that  purposed     The  notice  required,  therefore,  is 
of  dishonor,  and  this  involves  two  facts ;  1st,  that  the  bill  has  been 

taken  up  this  day,  proceedings  will  be  taken  against  you,  for  the  recovery  thereof." 
Held  sufficient. 

lu  Bailey  v.  Porter,  14  M.  &  W.  44,  -where  the  bankers  at  -whose  house  the  bill 
•was  made  payable  -were  the  holders  of  it,  notice  that  "James  Court's  acceptance, 
due  this  day,  is  unpaid,  and  I  request  your  immediate  attention  to  it,"  -was  held 
sufficient. 

(A:)  But  it  has  been  suggested  that  there  is  a  distinction  bet-ween  notice  from  the 
holder  and  the  party  not  being  the  holder.     East  v.  Smith,  16  L.  J.  Q.  B.  202. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  yo^ 

Notice. 

duly  presented ;  2d,  tliat  it  has  not  been  paid ;  and  on  referring  to 
the  late  decisions,  the  true  rule  of  construction  will,  I  think,  be 
found  to  be  that  the  mere  statement  that  the  bill  is  unpaid  will  not 
suf&ce,  because  that  fact  in  no  manner  involves  'presentment;  but 
if,  in  addition  to  the  fact  of  non-payment,  something  be  stated 
which  could  only  result  from  presentment,  for  instance,  as  in  Hedger 
V.  Stevenson,  a  charge  for  noting,  that  will  convert  the  notice  of 
non-payment  into  one  of  dishonor.  That  the  word  dishonored  is 
sufficient  to  support  the  notice,  seems,  after  the  decision  in  King  v. 
Bickley,  to  be  indisputable.  {I) 

The  notice  should  ascertain  the  instrument ;  but  an  inaccuracy 
in  the  description  of  it,  by  which  the  party  cannot  be  misled  as  to 
the  bill  intended,  is  immaterial ;  {m)  and  so  is  an  error  as  to  the 
place  where  the  bill  is  lying,  (n) 

A  foreign  bill  dishonored,  should  be  protested,  and  information 
of  the  ^jro/es^  sent  with  the  notice,  (o)  It  was  once  thought  that  a 
CO}')!]  of  the  protest  must  have  been  sent,  unless  indeed  in  the  case 
of  a  person,  who  having  drawn  or  indorsed  a  bill  abroad,  came  to 
this  country  and  received  the  notice  here,  {p)  It  is  now,  however, 
settled  that  it  is  suflicient  to  send  information  that  the  bill  has  been 
protested,  without  any  copy  of  the  protest,  {q)  With  respect  to  in 
land  bills,  they  require  no  protest,  but  are  usually  noted  for  non- 
payment, a  ceremony  which  is,  however,  qaite  unnecessary,  (r) 

A  protest  is  a  minute  of  the  non-acceptance,  accompanied  by  a 
solemn  declaration  on  the  part  of  the  holder  against  any  loss  to  be 
sustained  thereby:  {s)  it  is  made  out  by  a  notary  public,  who,  at  a 
seasonable  hour  in  the  course  of  the  ?ame  day  in  which  the  bill  has 


{I)  Sea  Miers  v.  Brown,  11  M.  &  W.  372.  Rowlands  v.  Springett,  U  M.  & 
W.  7. 

(?«)  Stockman  v.  Parr,  11  M.  &  "W".  809.  Bromage  v.  Vaughan,  16  L.  J 
Ex.  10. 

(n)  Rowlands  v.  Springett,  14  M.  &  W.  Y. 

(o)  Rogers  v.  Stephen,  2  T.  R.  713.  Gale  v.  Walsh,  5  T.  R.  239.  Brough  v.  Par- 
kins, Ld.  Raym.  993. 

{p)  Cromwell  v.  Hynson,  2  Esp.  511.  Robins  v.  Gibson,  3  Camp.  334 ;  1  M.  &  & 
288;  B.  N.  P.  271. 

{q)  Goodman  v.  Harvey,  4  Ad.  &  E.  870. 

(r-)  See  the  subject  discussed,  Chitty  on  Bills,  8th  ed.  pp.  500,  501 

(s)  See  the  form,  Chitty  on  Bills,  8th  ed.  p.  497. 


328  ilERCANTILE  CONTRACTS. 

Notice. 

been  dishonored,  again  presents  or  causes  it  {t)  to  be  presented,  and, 
if  payment  be  again  refused,  makes  a  minute,  consisting  of  his  ini- 
tials, the  day,  month,  and  year,  and  reason,  if  assigned,  of  non-pay- 
ment :  this  minute,  the  making  of  which  is  termed  noii7ig  the  bill, 
is  a  mere  memorandum,  from  which  the  notary  may  afterwards 
draw  up  a  protest  at  his  leisure,  {a)  but  per  se,  it  is  of  no  legal 
effect.  {vY  The  process  must,  in  this  country,  be  stamped,  accord- 
ing to  Stat.  55  Geo.  3,  c.  184. 

In  ordinary  cases  the  bill  is  protested  for  non-acceptance  or  non- 
payment, in  the  place  where  acceptance  or  payment  was  refused,  {w) 
By  Stat.  2  &  3  Wm.  4,  cap.  98,  it  is  enacted,  that  a  bill  made  pay 
able  by  the  drawer  at  any  other  place  than  the  place  therein  men- 
tioned by  hini  to  be  the  residence  of  the  drawee,  and  which  shall 
not  be  accepted  on  presentment,  shall  or  may  be,  without  farther 
presentment,  protested  for  non-payment  in  the  place  where  it  has 
been  made  payable,  unless  the  amount  shall  have  been  paid  to  the 
holder  on  the  day  when  it  would  have  become  payable  if  duly 
accepted. 

As  to  the  time  at  which  the  notice  must  be  given,  notice  upon 
the  very  day  on  which  a  bill  was  presented  for  payment  and  dis- 
honored, has  been  held  not  too  soon ;  {x)  but  it  will  be  too  late  if 


{t)  The  question  whether  the  notary  must  not  present  in  person  seems  as  yet  un- 
decided.    See  Leftly  v.  Mills,  4  T.  R.  170,  and  Chitty  on  Bills,  8th  ed.  493. 

(w)  See  Ctaters  v.  Bell,  4  Esp.  48. 

{v)  Leftly  V.  Mills,  4  T.  R.  ITO.  Rogers  v.  Stephens,  2  T.  R.  713.  Gale  v.  Walsh, 
5  T.  R.  239 ;  B.  N.  P.  271.     Orr  v.  Maginnis,  7  East,  359. 

{w)  See  Mitchell  v.  Baring,  10  B  <fe  C.  4. 

{x)  Burbridge  v.  Manners,  3  Camp.  193.  Ex  parte  Moline,  19  Yes.  21G.  lime  v. 
Allely,  4  B.  <fe  Ad.  624. 

*  When  the  fact  recorded  on  a  protest  has  taken  place,  and  been  duly  entered  by 
a  notary  in  his  book  at  the  time  of  the  transaction,  it  is  sufficient  if  the  formal  pro- 
test be  drawn  up  afterwards,  though  even  after  action  brought.  Bailey  v.  Dozier,  6 
How.  S.  C.  R.  23.  An  exception  was  supposed  at  one  time  to  be  established  to  this 
general  rule  in  the  case  of  a  paj-ment  supra  protest  for  the  honor  of  a  party  to  the  bill, 
where  it  was  thought  not  to  be  sufficient  that  the  facts  recorded  in  the  protest  should 
have  taken  place,  but  that  a  formal  instrument  of  protest  must  also  be  drawn  up  or  ex- 
tended before  the  payment  for  honor.  The  case  of  Vandewall  v.  Tyrrell,  M.  <fe  M.  87,  was 
su^^posed  to  sustain  this  positi  )n.  The  question  was  recently  raised  in  Geralopulo  v.  Wie- 
lei,  10  C.  B.  R.  690,  and  the  go  leral  rule  declared  to  be  uniform  and  without  exception 


BILLS  OF  EXCHANGE  AND  PROMISSORY  XOTES.  329 

Notice. 

not  given  by  the  holder  to  parties  who  reside  in  the  place  where 
the  presentment  was  made,  by  the  expiration  of  the  day  following 
the  refusal ;  to  other  parties,  by  the  post  of  that,  or,  if  there  be  no 
post  on  that,  of  the  next  post  day ;  {y)  each  party,  however,  has  a 
day  for  giving  notice.  Thus,  if  A.  draw  a  bill  in  favor  of  B.,  whc 
indorses  it  to  C,  and  the  bill  is  refused  payment  on  Monday,  C 
has  all  Tuesday  to  give  notice  either  to  A.  or  B,,  and  if  he  give 
notice  to  B.  on  that  day,  B.  has  all  Wednesday  to  give  notice  to  A. 
And  Sundays,  days  of  public  rest,  and  days  to  which  a  man's  pe- 
culiar creed  gives  the  same  sanctity  as  that  of  Sunday,  are  excluded 
from  the  computation  altogether,  [z)  A  banker  presenting  a  bill  or 
note  for  his  customer,  has  the  same  time  to  give  notice  to  his  cus* 
tomer  as  if  he,  the  banker,  were  the  holder  for  his  own  benefit ;  and 
the  customer  has  the  same  time  as  if  such  had  been  the  case  to 
transmit  the  notice  to  former  parties,  (a)  And  a  person  who  pays  a 
bill  for  the  honor  of  an  indorser,  holds  as  upon  a  transfer  from  him, 
and  has  a  right  to  take  advantage  of  any  notice,  of  which  the  per- 
son for  whom  he  made  the  payment  could  have  availed  himself,  (h) 
It  sometimes  happens  that  the  person  holding  the  bill  or  note  at  the 
time  of  dishonor  is  ignorant  of  the  residence  of  previous  parties 
thereto  ;  in  such  a  case  it  has  been  decided  that  if  he  received  it 
from  his  traveller,  he  may  give  notice  to  that  traveller,  notice  from 


(y)  Bayley,  8tli  ed.  268.  Bray  v.  Hadwen,  5  M.  &.  S.  68.  "Wriglit  v.  Shawcross, 
2  B.  &  A.  501.  Jameson  v.  Swinton,  2  Taunt.  224.  Geill  v.  Jeremy,  1  M.  &  M.  61. 
Where  the  notice  is  to  be  sent  by  j)Ost  he  is  entitled  to  the  whole  of  the  day,  after 
he  receives  the  notice,  though  a  post  go  out  during  that  day.  Hawkes  v.  Salter,  4 
Bingh.  'TIS.  Where  the  parties  both  live  -within  the  limits  of  the  twopenny  post,  the 
notice,  if  sent  by  post,  must  be  shown  to  have  been  put  in  time  enough  to  be  delivei'ed 
before  the  expiration  of  the  day  following  the  dishonor.  Fowler  v.  Hendon,  4  Tyrwh. 
1002. 

(2)  Hawkes  v.  Salter,  4  Bingh.  VI 6.  Smith  v.  Mullet,  2  Camp.  208.  Haynes  v. 
Birks,  3  B.  <fe  P.  599.  Scott  v.  Lifford,  9  East,  347.  Lindo  v.  Unsworth,  2  Camp. 
602.  Tassell  v.  Lewis,  Lord  Raym.  743 ;  39  <fe  40  Geo,  3,  c.  42,  and  V  &  8  Geo.  4, 
c.  15. 

(a)  Haynes  v.  Birks,  3  B  &  P.  599.  Scott  v.  Lifford,  9  East,  347.  Langdalo  v. 
Trimmer,  15  East,  291.  Poole  v.  Dicas,  1  Bingh.  K  C.  640.  See  Boyd  v.  Emmer- 
son,  2  Ad.  &  E.  184.  In  case  of  a  bill  liaving  passed  through  several  branch  banks, 
each  branch  is  to  be  considered  as  an  independent  holder,  and  entitled  to  notice  and 
the  time  to  transmit  it.     Clode  v.  Bajdey,  12  M.  <fe  W.  51. 

(6)  Goodall  V.  Polhill,  1  C.  B.  233. 


j;]()  ilERCANTILE  COKTRACTS. 


Notice. 


whom  to  those  parties  will  be  sufficient,  (c)  If  he  is  forced  to 
employ  an  attorney  to  find  out  their  i^sidences,  the  attorney  has  a 
day  after  he  has  obtained  the  necessary  information  to  apprise  his 
client  thereof,  and  receive  his  directions;  (c?)  and  in  general,  when 
it  is  not  known  where  a  party  resides,  due  diligence  to  find  him  out 
will  be  sufficient,  (e)  If  the  party  to  whom  notice  is  to  be  given 
have  himself,  by  his  mode  of  drawing  or  indorsing,  thrown  diffi- 
culty in  the  way  of  the  holder,  the  time  allowed  the  latter  will  be 
extended,  as,  for  instance,  where  the  drawer  wrote  his  name  so 
badly  that  the  holder  mistook  the  spelling  of  it,  (/)  and  the  letter 
containing  the  notice  consequently  miscarried.  A  party's  time  for 
giving  notice  will  not  be  enlarged  by  the  circumstance  of  his  hav- 
ing received  his  own  sooner  than  he  had  a  right  to  it,  or  of  his 
having  given  it  within  the  time  in  which  it  might  have  been  trans- 
mitted from  himself  to  the  defendant,  through  all  the  intervening 
parties,  [g] 

The  notice  need  not  be  in  writing ;  Qi)  it  may  be  sent  to  the 
party's  counting-house,  (i)  if  he  be  a  merchant ;  if  a  private  person, 
to  his  dwelling-house,  where  he  is  bound  to  have  some  one  to  re- 
ceive it.  (j)  If  dispatched  by  the  post,  that  is  sufficient,  though  it 
be  not  received :  Qc)  nay,  where  the  drawer  dated  a  bill  generally, 
"Manchester,"  a  letter  addressed  "Manchester"  was  held  suffi- 
cient, (Z)  the  jury  thinking  that  it  reached  the  drawer;  and  so  too, 
where  the  bill  was  dated  "  London."  (wi)  But  jprima  facie^  such  a 
direction  is  too  general,  (n)     If  there  be  no  post,  it  is  enough  to 

(c)  Baldwin  v.  Richardson,  1  B.  &  C.  245. 

{d)  Firth  V.  Thrush,  8  B.  &  C.  387. 

(e)  Bateman  v.  Joseph,  12  East,  433.  Beveridge  v.  Burgis,  3  Camp.  262.  Brown- 
ing V.  Kinnier,  Gow.  81.     Frith,  v.  Thrush,  ante. 

(/)  Hewitt  V.  Thompson,  1  M.  &  Rob.  543.     See  Siggers  v.  Browne,  ibid.  520. 

{g)  Turner  v.  Leech,  4  B  &  A.  451. 

(A)  Goldsmith  v.  Bland,  Bayley,  5th  ed.  2*76.     Housego  v.  Cowne,  2  M.  &  W.  343. 

(i)  Cross  V.  Smith,  1  M.  &  S.  545.  Bancroft  v.  Hall,  Holt,  4'76.  See  Shelton  v. 
Braithwaite,  M.  &  "W.  252,  where  it  was  sent  to  a  place  where  one  of  the  firm  had 
gone  on  business. 

(_;■)  Housego  v.  Cowne,  2  M.  &  W.  348. 

{k)  Sanderson  v.  Judge,  2  H.  Bl.  509.    Woodcock  v.  Houldsworth,  16  L.  J  Ex.  49 

{I)  Mann  v.  Moss,  1  R.  &  M.  249. 

(m)  Clarke  v.  Sharpe,  3  M.  &  W.  166. 

\n)  Walter  v.  Haynes,  1  R.  &  M.  149. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  33] 

Notice. 

use  the  ordinary  method  of  conveyance ;  for  instance,  in  the  case 
of  a  foreign  bill,  the  first  regular  ship,  (o)  But  though  it  is  in  all 
cases  sufficient  to  send  notice  by  the  ordinary  conveyance,  it  is  not 
absolutely  necessary  to  do  so ;  the  employment  of  a  private  agent 
will  suffice,  provided  that  he  actually  give  the  notice,  or  take  due 
steps  for  that  purpose,  (^j)  In  some  cases,  under  very  peculiar 
circumstances,  notice  is  excused;  ((7)  thus,  though  the  drawer  O'  \^ 
indorser,  if  he  partly  liquidate,  or  promise  to  liquidate,  a  bill,  in 
ignorance  that  he  has  been  discharged  by  want  of  proper  notice,  is 
not  precluded  from  insisting  upon  such  discharge  when  he  dis- 
covers it ;  if)  yet  if  he  had  full  knowledge  of  the  circumstanee,  he 
will  be  precluded.  (5)*  It  has  also  been  held  that  if  a  bill  has 
been  accepted  for  the  accommodation  of  the  drawer,  who  had  not 


(0)  Muilman  v.  D'Eguino,  2  H.  Bl.  563. 

(p)  Bancroft  v.  Hall,  Holt,  476. 

{q)  Whether  facts  that  excuse  notice  can  be  proved  under  a  declaration  averring 
notice,  was  a  mooted  point.  See  Corey  v.  Scott,  3  B.  tt  A.  619,  cited  as  to  this  question 
in  Bayley  on  Bills,  5th  ed.  406.  Firth  v.  Thrush,  8  B.  «i;  C.  Z%1.  The  practice  is  to 
plead  the  facts  excusing  notice  especially.  (See  for  the  mode  of  pleading  them,  Fitz- 
gerald V.  Williams,  6  Bingh.  N.  C.  68.  Kemble  v.  Mills,  9  Dowl.  451 ;  1  M.  tk  Gr. 
'75'?.  Legge  v.  Thorpe,  12  East,  171.  Carter  v.  Flower,  16  L.  J.  Ex.  199.)  And  it 
has  been  held  that  an  express  dispensation  of  notice  micst  be  pleaded.  Burgh  v, 
Legge,  5  M.  &,  W.  418,  where  Baron  Parke  said  that  his  ojjinion  always  was  that 
want  of  effects  must  be  pleaded  specially  as  an  excuse  for  notice.  Limdie  v.  Robert- 
son, 1  East,  231.     See  Watson  v.  Minchin,  1  Jones  Jr.  Rep.  583,  and  Carter  v.  Flower. 

(r)  Blesard  v.  Hirst,  Burr.  2670.  Goodall  v.  DoUey,  1  T.  R.  712.  Pickin  v.  Gra- 
ham, 1  C.  &  M.  725.  See  particularly  Hicks  v.  The  D.  of  Beauford,  4  Bingh.  N.  C. 
229.  Houlditch  v.  Cauty,  ibid.  411,  where  the  Court  of  Common  Pleas  seem  to  have 
been  of  opinion  that  the  subsequent  promise  to  pay  was  only  available  as  presump- 
tive evidence  that  the  person  receiving  it  had  had  a  previous  regular  notice.  See 
Brownell  v.  Bonney,  1  Q.  B.  43.     Croxen  v.  AVorthen,  5  M.  &  W.  5. 

(s)  Vaughan  v.  Fuller,  Str.  1246.  Gunson  v.  Metz,  1  B.  <fe  C.  193.  Horford  v. 
Wilson,  1  Taunt.  12.  Lundie  v.  Robertson,  7  East,  231.  Gibbon  v.  Coggon,  2  Camp. 
188.  Greenway  v.  Hindley,  4  Camp.  52.  Hodge  v.  Fillis,  3  Camp.  463.  Wood  v. 
Brown,  1  Stark.  217.  Potter  v.  Ray  worth,  13  East,  417.  Rogers  v.  Stephens,  2  T. 
R.  713.     Wilkes  v.  Jacks,  Peake,  202,  B.  N.  P.  276 :  see  the  case  ante,  note. 


*  A  promise  to  pay  by  an  indorser  who  has  been  discharged  by  the  laches  of 
the  holder,  will  only  be  binding  upon  him  if  made  with  full  knowledge  of  the  facts. 
Jones  V.  Savage,  6  Wend.  608.  Warder  v.  Tucker,  7  Mass.  449.  Gai  land  v.  Salem 
Bank,  9  ib.  408.     Kennon  v.  McRea,  7  Porter,  175. 


332  MERCANTILE  CONTRACTS. 


Notice. 


the  least  reason  to  expect  that  it  would  be  paid,  he  will  not 
be  entitled  to  notice  of  its  dishonor,  {t)  since  the  reason  for 
notice  is,  that  the  drawer  may,  without  delay,  withdraw  his  effects 
from  the  drawee's  hands,  which  reason,  of  course,  cannot  apply 
when  he  has  none  there  *  But  it  is  dangerous  to  rely  on  this 
excuse,  for  the  drawer  is  entitled  to  notice,  if,  on  taking  up  the 
bill,  he  could  sue  the  acceptor,  or  any  other  party,  (u)  or  if  he 
had  effects  on  their  way  to  the  drawee,  (y)  or  had  effects  in  the 
drawee's  hands  at  the  time  when  the  bill  was  drawn,  (w)  or  when 
it  was  presented  for  acceptance,  (x)  or  afterwards,  but  before  it  be- 
came due,  (y)  though  the  effects  were  less  than  the  amount  of  the 
bill,  and  the  drawer  was  indebted  to  the  acceptor  in  a  larger 
amount  than  their  value:  (a)  in  a  woid,  if  he  have  any  reasonable 
,  ground  to  expect  that  the  bill  will  be  paid,  he  is  entitled  to  no- 
tice, (a)  Neither  will  the  destruction  of  the  bill,  coupled  with  the 
drawer's  refusal  to  give  a  new  one,  according  to  stat.  9  &  10  Wm. 
8,  c.  7,  {h)  the  insolvency  of  the  acceptor,  (c)  or  the  fact  of  his 


(t)  Sharp  V.  Bailey,  9  B.  &  C.  44.  Rogers  v.  Stephens,  2  T.  R.  713.  Biekerdike 
V.  BoUman,  1  T.  R.  405.  Goodall  v.  Dolley,  1  T.  R.  712,  per  BuUer,  J.  Legge  v- 
Thorpe,  12  East,  171.  Claridge  v.  Dalton,  4  M.  &  S.  226.  Kemble  v.  Mills,  9  Dowl. 
P.  C.  446 ;  1  M.  &  Gr.  757.     FitzgeraM  v.  Williams,  6  Bingh.  N.  C.  68. 

(m)  Ex  parte  Heath,  2  Ves.  &  B.  240;  2  Rose,  141.  Corey  v.  Scott,  3  B.  <fe  A.  619. 
Nortoa  v.  Pickering,  8  B.  <fc  C.  610.  So  in  the  case  of  an  indorser  Carter  v.  Flower, 
16  L.  J.  Ex.  199. 

{v)  Rucker  v.  Hiller,  3  Camp.  217  ;  16  East,  43. 

(w)  Orr  V.  Maginnis,  7  East,  359. 

{x)  Blackhan  v.  Doren,  2  Camp.  503. 

(y)  Hammond  v.  Dufresne,  3  Camp.  145.     Thackray  v.  Blackett,  3  Camp.  164. 

(z)  Thackray  v.  Blackett,  ubi  sup.     Blackhan  v.  Doren,  2  Camp.  503. 

(a)  Lafitte  v.  Shatter,  6  Bingh.  623. 

(6)  Thackray  v.  Blackett,  ubi  sup. 

(c)  Ibid.     Dennis  v.  Morrice,  3  Esp.  158. 


*  The  general  doctrine  that  an  accommodation  drawer  or  indorser  is  entitled  to 
notice,  inasmuch  as  they  have  a  right  to  presume  that  the  instrument  will  be 
honored  by  the  party  primarily  liable  on  its  face,  and  should  therefore  have  an 
opportunity  of  providing  for  their  own  safety  if  it  be  not,  has  been  established  by 
numerous  decisions  in  this  country.  Frencli's  Execution  v.  Bank  of  Columbia,  4 
Cranch,  141.  Smith  v.  McClean,  2  Taylor's  N.  C.  R.  73.  Shirley  v.  Fellowes,  9 
Porter,  300.     Holland  v.  Turver,  10  Conn.  308.     Reed  v.  Morrison,  2  Watts  &  S.  401 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  333 

Notice. 

having  told  the  drawer  that  he  would  not  pay  the  bill,  and  having 
given  him  part  of  the  amount  to  assist  him  in  doing  so,  {d)  or 
indeed  any  circumstances  other  than  those  hereinbefore  stated,  be 
sufficient  to  excuse  the  want  of  notice,  (e)  It  was  once  held  that 
where  A.,  knowing  the  maker's  insolvency,  became  payee  of  a 
note  for  his  accommodation,  he  could  not  complain  of  the  want  of 
due  presentment  and  notice.  (/)  But  inasmuch  as  A.  in  such  case, 
could,  upon  payment  of  the  note,  have  sued  the  maker,  he  was, 
according  to  the  rule  above  laid  down,  clearly  entitled  to  notice. 
That  case,  therefore,  seems  not  to  be  law,  and  has,  in  fact,  been  ,/ 
virtually  overruled  by  subsequent  decisions ;  (g)  if  indeed  A.  had 
taken  effects  from  the  maker  to  answer  the  note,  the  case  would 
be  different,  for  then  he  could  not  expect  the  maker  to  take  it 
up,  and  would  have  no  action  against  any  one  on  payment  of  it.  (A) 

It  has  been  held  that  where  two  indorsers  were  discharged  by 
the  holder's  neglecting  to  give  them  notice  of  a  refusal  to  accept, 
and  one  of  them,  in  ignorance  of  his  discharge,  paid  the  bill  when 
it  became  due,  he  could  not  recover  its  amount  against  the  other 
whose  liability  could  not  be  revived  by  the  plaintiff's  ignorance  of 
his  own  discharge.  (^) 

Immediately  upon  receiving  {j)  the  notice,  the  party  to  whom 
it  is  given  becomes  liable  to  an  action  at  the  suit  of  the  holder, 
unless  the  money  due  upon  the  bill  or  note  be  then  paid.  If,  in- 
deed, after  the  notice,  and  before  a  writ  actually  issue  against  him, 
he  promptly  and  directly  makes  a  tender,  that  perhaps  would  con- 
stitute a  defence.  But  the  tender,  to  be  thus  available,  must,  at  all 
events,  be  made  within  a  reasonable  time  (generally  twenty-foui- 
hours)  after  the  receipt  of  the  notice,  {k) 

{d)  Baker  v.  Birch,  3  Camp.  lOY.     See  Pickin  v.  Graham,  1  C.  M.  '725. 

(e)  See  Clegg  v.  Cotton,  3  B.  &  P.  239.  Staples  v.  Okines,  1  Esp.  332.  Prideaux 
V.  Collier,  2  Stark.  57.  Leach  v.  Hewit,  4  Taunt.  YSL  Free  v.  Hawkins,  8  Taunt. 
92.     Pickin  v.  Graham,  1  G.  &  M.  125. 

(/)  De  Berdt  v.  Atkinson,  2  H.  Bl.  336. 

(cr)  Nicholson  v.  Gouthit,  2  H.  Bl.  609.  Smith  v.  Becket,  13  East,  187.  Brown  v. 
Maffrey,  15  East,  216. 

{h)  Corney  v.  Da  Costa,  1  Esp.  302. 

(i)  Roscow  V.  Hardy,  12  East,  434.  (j)  Castrique  v.  Bernabo-,  6  Q.  B  490. 

(^•)  Walker  v.  Barnes,  5  Taunt.  240 ;  1  Marsh,  36.  Siggera  v.  Lewis,  4  Tyrwh, 
847  ;  2  Dowl.  681 ;  1  C.  M.  &  R.  370. 


334  MERCANTILE  CONTRACTS. 


Payment. 


Section  VII. — Payment 

The  payment  must  of  course  be  to  the  holder  or  his  represent- 
ative. (?)  Where  money  is  paid  into  a  bank  on  the  joint  account 
of  persons  not  partners  in  trade,  the  bankers  are  not  discharged  by 
payment  of  the  check  of  one  of  those  persons  drawn  without  the 
authority  of  the  others,  (m)  There  are  some  rules  of  which  it  is 
proper  to  take  notice,  respecting  payment  of  a  forged  note  or  bill. 
Though  the  drawer's  signature  be  forged,  the  drawee,  if  he  accepts 
the  biU,  is  bound  to  pay  it,  provided  it  be  in  the  hands  of  a  holder 
bona  fide  and  for  value,  in)  for  the  drawee's  acceptance  admits  the 
drawer's  handwriting  to  be  genuine.  If  he  have  not  accepted,  yet 
if  he  pay  it,  he  cannot  recover  his  money  back  from  such  a  holder ; 
at  all  events,  not  unless  he  discover  the  forgery,  and  give  notice 
of  it  that  very  day.  (o)  And  the  same  diligence  is  incumbent  on 
one  who  pays  for  the  honor  of  a  person  whose  signature  has  been 
forged.  (^)  Nor  will  he  who  pays  a  forgery  have  any  remedy 
against  the  person  whose  signature  has  been  forged,  {g)  unless  that 
person  have,  by  his  gross  negligence,  facilitated  the  commission  of 
the  forgery ;  in  which  case  he  will  have  to  bear  the  loss  thereby 
occasioned.  Thus  where  Hall  drew  upon  his  banker  for  three 
pounds,  and  the  bearer  of  the  check  altered  the  3  into  200,  the 
banker  having  paid  it  in  that  state,  was  forced  to  bear  the  loss,  (r) 
But  where  a  check  for  £50  25.  3cZ.  was  drawn  so  carelessly  that  the 
agent  who  presented  it,  and  who  had  previously  filled  it  up,  was 


(I)  It  seems  that  if  the  drawer  of  a  check  write  across  it  the  name  of  the  banker 
of  the  party  to  whom  he  pays  it,  it  will  be  at  the  drawee's  peril,  if  he  pay  an}'-  one 
except  that  banker.  Stewart  y  Lee,  1  M.  &  iL  158.  Boddington  v.  Schlenker,  1 
Nev.  &  Mann.  540 ;  4  B.  &  Ad.  Yo'i. 

(ill)  Innes  v.  Stephenson,  1  M.  &  Rob.  145. 

(«)  Smith  V.  Chester,  1  T.  R.  654,  per  Buller,  J.  Sanderson  v.  CoUman,  4  M.  h 
Gr.  209. 

(o)  Price  v.  Neale,  Burr.  1354,  Bl.  390.  Smith  v.  Mercer,  6  Taunt.  76.  Cocks  •, 
Masterman,  9  B.  &  C.  902.     See  Wilkinson  v.  Johnson,  3  B.  &  C.  428. 

(p)  Wilkinson  v.  Johnson,  vhi  supra. 

(q)  Johnson  v.  Windle,  3  Bingh.  N.  C.  225. 

(r)  Hall  V.  Fuller,  5  B.  <fe  C.  750. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES  335 

Payment. 

enabled  to  introduce  a  figure  of  3  before  the  figures  50,  and  the 
words  '■'■Three  hundred  and'^  before  the  word  ^'' Fifty ^'''  it  was  held 
that  the  drawer,  not  the  banker,  who  paid  it  in  its  altered  state, 
should  be  the  sufferer.  (5)  Where  any  of  the  signatures  through 
which  the  holder  claims  are  by  procuration,  the  party  paying  must 
ascertain  the  sufiiciency  of  the  f  rocuration  at  his  peril,  {t)  He 
must  also  take  care  that  there  be  no  restrictive  indorsement,  (w) 
and  it  is  dangerous  to  pay  before  the  instrument  is  due.  {v) 

Payment  supra  protest. — After  a  foreign  bill  has  been  protested, 
any  person  may  pay  it  for  the  honor  of  the  drawer  or  indorser, 
and  will  have  his  remedy  against  the  party  for  whose  honor  he 
paid,  and  all  others  who  are  liable  to '  him.  {w)  But  before  he  so 
pays,  he  must  take  care  that  the  bill  is  protested,  (x)  Such  a  pay- 
ment is  usually  made  immediately  upon  dishonor,  and  at  any  rate, 
if  it  be  proposed  to  be  made  afterwards,  it  is  quite  optional  with, 
the  holder  to  take  it  or  not.  {y) 

How  enforced. — Payment  of  a  bill  or  note  may  be  enforced  by 
action  (2)  against  the  drawee,   if  he  have  accepted  ;   against  the 

(s)  Young  V.  Grote,  4  Bingh.  253.     See  Momson  v.  Buchanan,  6  C.  &  P.  18. 

{t)  E.  L  Compy.  v.  Tritton,  3  B.  &  C.  280. 

(',.)  Sigourney  v.  Lloyd,  8  B.  (fe  C.  622;  5  Bingh.  525.  Ancher  v.  Bank  of  England, 
Dougl.  615,  63Y.     See  Stewart  v.  Lee,  1  M.  &  M.  150. 

((')  DaSilvai;.  Fuller,  Chitty,  148;  Bayley,  5th  ed.  326;  Marius,  31. 

(w)  Beawes,  pi.  50;  Baylej',  5th  ed.  325.  See  Mertens  v.  Winnington,  1  Esp.  112. 
Ex  parte  Lambert,  13  Ves.  179.  As  to  the  character  in  which  he  holds  and  his 
rights,  see  Goodall  v.  Polhill,  1  C.  B.  233. 

(.t)  Vandewall  v.  Tyrrel,  1  M.  &  M.  87.  If  an  inland  bill,  it  must  be  due.  Deacon 
V  Stodhart,  2  M.  &  Gr.  317. 

(y)  Per  Cur.  in  Rotton  v.  Inglis,  2  Q.  B.  685. 

{z)  The  remedy  is  facilitated  by  stat.  3  <fe  4  "Wra.  4,  c.  42,  s.  12,  which  allows  the 
plaiKtifF  in  his  affidavit  to  hold  to  bail,  process  and  declaration,  to  describe  parties 
by  the  initial  letter,  or  a  contraction  of  their  Christian  names,  if  they  are  so  desig- 
nated in  the  bill  or  note.  But  this  only  applies  to  parties  to  the  suit.  Applemans  v. 
Blanche,  14  M.  &  W.  154.  If  other  parties  to  the  bill  use  initials,  that  fact  should  be 
stated  as  an  excuse  for  inserting  them  in  the  declaration.  Esdaile  v.  Maclean,  15  M. 
&  W.  277.  As  to  the  form  of  action,  debt  lies  wherever  there  is  a  privity  of  contract. 
Cloves  V.  "Williams,  3  Bingh.  N.  C.  808.  Compton  v.  Taylor,  4  M.  &  W.  138,  and 
whether  the  words  value  received  (which  were  once  thought  essential  to  support 
that  form  of  action)  be  used  or  not.     Hatch  v.  Trayes,  11  Ad.  &  E.  702.    It  is,  there- 


336  MERCANTILE  CONTRACTS. 


Payment. 


drawer  and  indorsers,  if  the  bill  have  been  dishonored  either  by 
Qon-acceptance  or  non-payment:  all  these  parties  may  be  sued 
either  at  the  same  time  or  successively ;  but  if  they  be  sued  at  the 
same  time,  the  Court  will  stay  proceedings  on  payment  of  the  bill 
and  costs,  (a)  In  general,  the  drawer  or  indorser  of  a  bill  to  whom 
it  has  been  re-indorsed  has  no  remedy  upon  it  against  any  interme- 
diate parties,  because  he  would  be  liable  over  to  them,  {h)  Yet  if 
it  were  indorsed  by  them  under  circumstances  excluding  their 
rio-ht  to  have  recourse  to  him,  for  example,  as  sureties  to  him  for 
the  acceptor,  he  may  sue  them  upon  it.  (c)  A  drawer,  indorser, 
acceptor  for  honor,  or  the  bail  of  such  a  party,  or  any  one  who  has 
discharged  the  bill  on  his  account,  becomes  on  payment  a  holder. 
He  does  not,  however,  hold  as  on  a  transfer  from  the  person  to 
whom  he  has  made  the  payment ;  but,  if  a  party  to  the  bill,  as  in 
his  original  capacity,  {d)  if  not,  as  on  a  transfer  from  the  person  in 
whose  behalf  he  made  the  payment,  (e)  in  whose  precise  situation 
he  stands ;  so  that  when  that  party  could  not  sue  on  the  instru- 
ment, he  cannot.  (/) 

What  recoverable. — The  holder  is  generally  entitled  to  recover 
the  money  expressed  to  be  payable  in  the  instrument,  with  interest, 
(which,  however,  unless  it  be  reserved,  the  jury  are  not  absolutely 
bound  to  give,)  {g)  and  all  incidental  expenses  occasioned  by  non- 
acceptance  or  non-payment.    If  interest  be  expressly  reserved,  it  is 


fore,  maintainable  between  an  indorsee  and  his  immediate  indorser.  Watkins  v. 
Wake,  T  M.  &  W.  490,  but  not  against  an  indorser  in  blank,  by  a  person  to  whom  it 
has  been  handed  by  an  intermediate  holder.  Lewin  v.  Edwards,  9  M.  &  W.  720. 
Assumpsit  may  be  maintained  in  all  cases. 

(a)  Smith  v.  "Woodcock,  4  T.  R.  691,  which  decision  must  now  be  read  along  with 
the  general  rule  of  Trinity  Term,  1838. 

(6)  Bishop  V.  Hayward,  5  T.  R.  208. 

(c)  Wilders  v.  Stevens,  15  M.  &  W.  208. 

{d)  Louviere  v.  Laubrey,  10  Mod.  36.  Simonds  v.  Parmenter,  1  "Wills.  185 ;  4  Bro. 
P.  C.  604. 

(e)  Mertens  v.  "Winnington,  1  Esp.  112.  Hall  t).  Pitfield,  Bayley,  5th  ed.  329. 
Goodall  V.  Polhill,  1  C.  B.  233. 

(/)  Bishop  V.  Hayward,  4  T.  R.  470.     JEx  parte  Lambert,  13  Ves.  179. 

{(j)  Du  Belloix  v.  Lord  Waterpark,  1  D.  &  R.  16.  See  Brooke  v.  Coleman,  1  C.  & 
M.  621.  Latraille  v.  Hoepfner,  10  Bingh.  334.  If  it  be  reserved,  it  forms  part  of  tha 
debt,  and  is  recoverable  as  such.    Hudson  v.  Faucett,  7  M.  &  Gr.  348. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  337 

Resistance  against  Payment. 

computed  from  the  date,  (/i)  if  not,  from  tlie  time  at  which,  the  bill 
or  note  is  payable,  (^)  provided  it  was  then  duly  presented,  as,  if  it 
be  payable  on  demand,  from  the  time  of  demand.  It  is  generally 
computed  up  to  the  time  when  final  judgment  may  be  signed ;  (j) 
but  if  there  have  been  a  tender,  to  the  time  of  tender  only,  (k)  It 
is  clear  that,  notwithstanding  stat.  3  &  4  Anne,  c.  9,  s.  5,  interest 
may  be  recovered  against  drawers  and  indorsers  of  inland  bills, 
though  not  protested ;  (Z)  the  object  of  that  act  being  to  give  new 
rights,  not  destroy  old  ones.  But  the  expenses  of  noting  and 
postage  incurred  on  the  return  of  an  inland  bill,  are  not  recover- 
able unless  specially  laid  as  damage  in  the  declaration,  and  proved 
accordingly,  (m)  On  a  foreign  bill  re-exchange  is  also  recoverable ; 
and,  though  the  bill  be  returned  through  ever  so  many  hands,  the 
drawer  will  be  liable  for  the  re-exchange  on  each  return,  (n)  It 
has  been  said  that  the  acceptor  is  not  liable  for  re-exchange ;  (0) 
but  this  is  doubtful. 


SECTioisr  YIII. — Resistance  against  Payment. 

If  the  person  sued  upon  a  bill  or  note  think  proper  to  defend 
himself,  he  either  denies  that  he  was  ever  liable,  or,  admitting  his 
liability  to  have  existed,  contends  that  it  has  been  determined. 

First. — If  he  deny  that  he  was  ever  liable,  he  may  rely  upon 
the  absence  of  any  of  those  circumstances  which  are  above  shown 


(A)  Kennerly  v.  Nash,  1  Stark.  452.  Hopper  v.  Richmond,  1  Stark.  507.  Denman 
V.  Dibdin,  1  R.  &  M.  380.     Roffey  v.  Greenwell,  10  Ad.  &  E.  222. 

{i)  Blaney  v.  Bradley,  Black.  761.  Bayley,.  5th  ed.  348.  Phillips  v.  Franklin, 
Gow,  196.     Pierce  v.  Fothergill,  2  Bingh.  N,  G.  167. 

{j)  Robinson  v.  Bland,  Burr.  1077. 

{k)  Dent  v.  Dunn,  3  Camp.  296. 

(I)  Windle  v.  Ajidrews,  2  B.  «&  A.  696. 

(hi)  Kendrick  v.  Lomax,  2  Tyrwh.  447 ;  2  C.  <fe  J.  405.  Indeed,  in  Dickenson  v. 
Hatfield,  1  M.  &  Rob.  141,  the  postage  -was  recovered  under  the  count  for  money 
paid,  but  there  the  defendant  had  expressly  directed  the  plaintiff  to  charge  him 
with  it. 

(«)  Mellish  V.  Simeon,  2  H.  Bl.  378.     De  Tastet  v.  Baring,  11  East,  265. 

(0)  Napier  v.  Schneider,  12  East,  420.     But  see  Bayley,  5th  ed.  353.     Francis  v 
Rucker,  Ambl.  672. 
22 


338  MERCANTILE  CONTRACTS. 


Resistance  against  Payment. 


to  be  essential  to  the  holder's  right  to  recover,  the  presence  of 
which  he  has  not  by  his  own  act  admitted ;  {p)  or  on  the  insuffi- 
ciency or  illegality  of  the  consideration  for  his  liability. 

Insufficiency  of  Consideration.^ — Contrary  to  the  general  rule 
which  prevails  respecting  other  simple  contracts,  a  bill  or  note  is 
always  7;?-f?na  facie  presumed  to  have  been  given  for  a  sufficient 
consideration.  This  presumption  is,  however,  open  to  rebuttal, 
and  the  defendant  may  show  that  he  has  received  no  consideration, 
or  no  sufficient  consideration,  for  his  liability :  (q)  the  former  of 

(p)    Vide  ante. 

(q)  Bell  V.  Gardiner,  4  M.  &  Gr.  11,  where  a  note  had  been  given  m  renewal  of  a 
bill  satisfied  by  alteration.  Abbott  v.  Hendricks,  1  M.  &  Gr.  794.  Spincer  v.  Spincer, 
2  M.  &  Gr.  295.    Jeffries  v.  Austen,  Str.  647.     Jackson  v.  "Warwick,  V  T.  R.  121. 


*  A  bill  of  exchange  or  promissory  note  always  imports  prima  facie  a  considera- 
tion. "Where  it  has  gone  into  the  hands  of  a  bona  fide  holder  for  value,  without 
notice  of  any  defect,  and  in  the  due  course  of  trade,  before  its  maturity,  this  presump- 
tion cannot  be  rebutted.  This  rule  is  founded  upon  the  policy  of  encouraging  the 
free  circulation  of  commercial  paper,  and  thereby  facilitating  the  great  business  of 
exchange.  The  holder  is  supposed  to  take  the  instrument  in  these  cases,  on  an  inde- 
pendent title  by  the  indorsement,  and  will  not  be  affected  by  any  payment,  set-off, 
fraudulent  consideration,  or  other  matters  of  defence,  which  the  acceptor  or  promi- 
sor might  have  had  against  any  previous  holder  or  prior  pai'ty.  He  is  not  in  privity 
with  such  prior  partj'',  does  not  claim  under  him,  and  is  not  bound  by  his  acts, 
frauds,  or  admissions.  Opinion  of  Shaw,  C.  J.,  Fisher  v.  Leiand,  4  Cush.  Rep.  456. 
"Where,  however,  a  negotiable  note  is  found  in  circulation  after  it  is  due,  it  carries 
suspicion  on  its  face,  and  although  it  does  not  give  an  indorsee  notice  of  any  specific 
matter  of  defence,  it  puts  him  upon  inquiry,  and  he  takes  only  such  title  as  the 
indorser  himself  has.  The  note  does  not  cease  to  be  negotiable ;  the  indorsee  takes 
a  title,  and  may  sue,  but  he  is  so  far  in  privity  with  his  indorser  that  he  takes  only 
his  title.  Ibid.  Eyre,  C.  J.,  in  Collins  v.  Martin,  1  Bost.  Poll.  651.  Howard  v.  Ames, 
8  Met.  308.  The  entire  absence  of  consideration  between  the  original  parties,  will 
not  impose  upon  the  holder  the  burden  of  showing  that  he  is  a  bona  fide  pur- 
chaser ;  but  it  is  otherwise,  where  the  defendant  can  show  that  the  note  was 
obtained  through  fraud,  or  is  affected  with  illegality.  Tliese  facts  raise  a  presump- 
tion that  the  guilty  party  will  dispose  of  the  instrument,  and  place  it  in  the  hands 
of  some  other  person  to  bring  suit :  and  this  presumption,  it  has  been  held,  ought  to 
impose  upon  the  holder  the  obligation  of  proving  that  he  is  a  bona  fide  purchaser. 
Bailey  v.  Bid  well,  13  Mees.  &  W.  75.  Munroe  v.  Cooper,  5  Pick.  412.  Rogers  v. 
Morton,  12  'Wend.  412.  Holme  v.  Karsper,  5  Binney,  469.  Knight  v.  Pugh,  4  "Watta 
&  S.  445.  Vathir  v.  Zane,  6  Gratt.  246.  Thompson  v.  Armstrong,  1  Alabara.  256. 
McClintick  v.  Cummins,  2  McLean,  98.     Thomas  v.  Newton,  2  Carr  &,  P.  606. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  339 

Resistance  against  Payment. 

whicli  circumstances  may  be  a  defence  in  Mo ;  {7-)  the  latter  ^jro 
tanto,  provided  the  deficiency  of  consideration  can  be  estimated,  for 
otherwise  the  remedy  is  by  cross  action,  (s)  He  may  also  protect 
himself  on  the  ground  that  his  signature  was  obtained  by  duress,  {t) 
or  fraud,  {u)  or  that  the  bill  or  note  has  been  lost,  improperly  con- 
verted, or  stolen,  (v) 

These  defences  may  be  rebutted  by  the  fact  that  the  holder 
himself,  or  some  intermediate  party,  took  the  bill  or  note  bona  fide, 
and  paid  a  valuable  consideration  for  it ;  {iv)  and  where  that  is  the 


Barber  v.  Backhouse,  Peake,  61.  Darnell  v.  Williams,  2  Stark.  166.  HoUiday  v.  At- 
kinson, 5  B.  &  C.  501.  Jones  v.  Hibbert,  2  Stark.  304.  Thompson  v.  Clubley,  1  M. 
&  W.  212.  Sparrow  v.  Chisman,  9  B.  &  C.  241.  Thomas  v.  Newton,  2  C.  <fe  P.  606. 
Solly  V.  Hinde,  4  Tyrwh.  306 ;  2  C.  &  M.  516.  A  gift  of  a  bill  would  not  be  such  a 
consideration  as  would  sustain  an  action  on  it  against  the  giver.  Easton  v.  Pratchett, 
4  Tyrwh.  4Y2 ;  1  C.  M.  &  R.  V98.  See  Burkett  v.  Ransom,  2  Coll.  395.  But  the  debt 
of  a  deceased  person  is  a  sufficient  consideration  for  a  note  from  the  executor  or 
administrator,  or  even  from  a  person  entitled  to  administration,  unless  there  be  no 
assets.  Ridout  v.  Bristow,  1  Tyrwh.  84;  C.  <fe  J.  231.  Serle  v.  Waterworth,  4  M.  &  W. 
9;  reversed  in  error,  4  M.  &  W.  796,  but  the  above  rule  is  not  shaken.  A  judgment 
debt  is  a  good  consideration  for  a  note  payable  at  a  future  day,  as  it  is  evidence  of 
an  agreement  to  suspend  the  remedy.     Bailey  v.  Walker,  14  M.  &  W.  455. 

(r)  Wells  V.  Hopkins,  5  M.  &  W.  1.     Spincer  i\  Spincer,  2  M,  &  Gr,  295. 
Wells  V.  Hopkins,  the  bill  was  given  for  hops  to  be  supplied  according  to  sample.    In- 
ferior hops  having  been  supplied,  the  bill  falls  to  the  ground.    In  Jones  v.  Jones,  6  M. 
&  W.  84,  a  plea,  that  the  bill  was  the  price  of  an  estate  bought  without  writing,  was 
held  bad,  unless  it  also  state  a  refusal  to  convey. 

(s)  Morgan  v.  Richardson,  1  Camp.  40,  in  notis.   Flemming  v.  Simpson,  ibid.   Solo- 
mon V.  Turner,  1  Stark.  51.     Tye  v.  Gwj-nne,  2  Camp.  346.     Moggeridge  v.  Jones,  14 
East,  486.     Spiller  v.  Westlake,  2  B.  &  Ad.  155.     Richards  v.  Thomas,  1  0.  M.  &  R.  . 
'772.     Day  v.  Nix,  9  B.  Moore,  159.     See  Tricky  v.  Larne,  6  M.  &  W.  278,  where  the 
difficulty  in  estimating  the  deficiency  was  occasioned  by  the  form  of  pleading. 

(t)  Duncan  v.  Scott,  1  Camp.  100. 

(m)  Heath  v.  Samson,  2  B.  &  Ad.  291.  Rees  v.  Marq,  of  Ileadford,  2  Camp.  574. 
Ledger  v.  Ewer,  Peake,  216. 

{v)  Grant  v.  Vaugham,  Burr.  1516.  Peacock  v.  Rhodes,  Dougl.  Gil,  633.  Gill  v. 
Cubitt,  3  B.  <fe  C.  466.     See  cases  collected,  ante,  sect.  3. 

(w)  Robinson  v.  Reynolds,  in  error,  2  Q.  B.  196.  In  tliat  case,  to  an  action  by  the 
indorsee  the  acceptors  pleaded  that  they  had  accepted  in  consideration  of  a  bill  of 
lading,  which  the  drawer  knew  to  be  forged,  and  handed  to  the  indorsee  with  tlie 
acceptance,  in  order  that  he  miglit  deposit  it  with  the  defendants,  which  he  did,  and 
obtained  their  acceptance  on  the  faith  of  such  deposit.  The  plea  was  held  bad,  non 
obstante  veredicto,  on  the  ground  that  it  admitted  the  indorsee  to  have  become  so  foi 
value,  and  showed  no  knowledge  on  his  part  of  the  forgery.     Rothschild  v.  Corney. 


340  MERCANTILE  CONTRACTS. 

Resistance  against  Payment. 

case,  it  will  be  no  defence  that  the  bill  was  originally  accommoda* 
tion-paper,  and  known  by  the  holder  so  to  be.  {x)  And  as  every 
indorsement  prima  facie  im^Dorts  consideration,  the  holder  will  be 


9  B.  <fe  C.  388.  Down  v.  Hailing,  4  B.  &  C.  330.  Morris  v.  Lee,  Bayley,  500 ;  B.  K  P. 
274.  De  Bras  v.  Forbes,  1  Esp.  117.  Bosauquet  v.  Dudman,  1  Stark.  1.  See  Ex  parte 
Bloxam,  8  Ves.  63.  Heywood  v.  "VVatson,  4  Bingli.  496.  If,  on  recovering  the  amount, 
he  would  hold  part  only  of  the  money  beneficially,  and  the  rest  as  a  trustee,  he  never- 
theless may  recover  all.  Reid  v.  Furnival,  1  C.  &  M.  538.  Cole  v.  Creswell,  11  Ad.  & 
E.  661.  Brown  v.  Rivers,  Dougl.  455,  S.  P.  It  has  been  doubted  by  some  persons  of 
eminence  whether  the  extinguishment  of  a  pre-existent  debt,  due  from  the  indorser 
to  the  indorsee,  would  be  a  valuable  consideration  within  the  meaning  of  this  rule. 
I  think  it  would  be  so  held ;  the  exj^ressions  of  Parke,  B.,  in  Percival  v.  Prampton,  2 
C.  M.  &  R.  180,  3  Dowl.  750,  are  strongly  to  that  effect.  See  also  the  judgment  in 
Foster  v.  Pearson,  5  Tyrwh.  264,  1  C.  M.  &  R.  849.  The  case  principally  relied  on  in 
support  of  the  contrary  opinion  is  De  la  Chaumette  v.  Bank  of  England,  9  B.  &  C 
208.* 

{x)  Pearce  v.  Champneys,  3  Dowl.  277.     Smith  v.  Knox,  3  Esp.  46.     Charles  v 
Marsden,  1  Taunt.  224.     But  quaere  if  the  latter  case  be  well  decided. 


*  "Whether  the  payment  of  an  antecedent  debt  by  the  transfer  of  a  bill  of  ex 
change  before  its  maturity,  is  to  be  deemed  a  valuable  consideration  in  the  sense  of 
the  law  merchant,  so  as  to  protect  the  holder  from  any  equities  existing  between  thf 
previous  parties,  does  not  seem  to  have  been  positively  adjudicated  in  England,  al 
though  the  weight  of  judicial  opinion  probably  inclines  to  the  affirmative  of  the 
proposition.  It  has  been  suggested  that  a  distinction  may  exist  between  the  cases, 
where  an  instrranent  is  taken  payable  on  demand,  and  where  it  is  payable  at  a  fu 
ture  day.  In  the  latter  case,  the  remedy  on  the  previous  debt  being  suspended  till 
the  maturity  of  the  bill,  the  holder  is  to  be  regarded  in  the  same  light  as  if  he  had 
made  fresh  advances  upon  the  bill.  Byles  on  Bills,  28,  96.  In  the  decisions  of  the 
American  courts,  a  great  diversity  of  judicial  opinion  has  prevailed.  It  may  pro- 
bably be  laid  down  both  upon  principle  and  the  great  weight  of  authority,  that  where 
the  consideration  for  the  transfer  of  a  negotiable  instrument  not  due,  is  \h.Q 'payment 
of  an  antecedent  debt,  or  the  suspension  of  a  previous  right  of  action,  or  the  relin- 
quishment of  any  security,  the  holder  will  be  regarded  as  a  purchaser  for  value. 
Baker  v.  Walker,  14  Mees.  <&  Wels.  465.  Swift  v.  Tyson,  16  Peters,  1.  Williams  v. 
Little,  11  K  H.  66.  Blanchard  v.  Stevens,  3  Cush.  162.  Bank  of  St.  Albans  v.  Gil- 
liland,  23  Wend.  31.  Brush  v.  Williams,  11  Conn.  388.  Appleton  v.  Donaldson,  3 
Barr,  381.  Carlisle  v.  Wishart,  11  Ohio,  172.  Bostwick  v.  Dodge,  1  Doug.  414. 
Reddick  v.  Jones,  6  Ired.  107.  Bank  of  Mobile  et  als.  v.  Hall,  6  Alab.  639.  Bond  v.  Cen- 
tral Bank  of  Georgia,  2  Kelly,  93.  Woomley  v.  Lowry,  1  Hump.  470.  Bramhall  v. 
Becket,  21  Maine,  S05.  In  Swift  v.  Tyson,  Judge  Story  held,  delivering  the  opinion 
of  the  majority  of  the  Court,  that  this  rule  equally  obtained,  where  the  negotiable 
instrument  was  given  merely  as  a  collateral  security  for  a  precedent  debt.  Mr.  Justice 
Catron  dissented  from  this  portion  of  the  opinion,  on  the  groimd  that  the  point  was 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  34 1 

Resistance  against  Payment. 

presumed  to  have  acquired  his  interest  bona  fide  and  for  value, 
until  some  suspicion  has  been  cast  upon  his  title,  which  it  becomes 
incumbent  on  him  to  clear  up ;  {y)  therefore,  where  to  a  declaration 
bj  the  indorsee  against  the  acceptor,  the  defendant  pleaded  that  he 
had  no  consideration  for  his  acceptance  from  the  drawer,  the  plea 
was  held  bad,  for  it  was  to  be  presumed,  in  the  absence  of  any  aver- 
ment to  the  contrary,  that  the  plaintiff  was  an  indorsee  for  value, 
and  the  plea  contained  no  mention  of  him,  and  consequently  threw 


(y)  Mills  V.  Barber,  1  M.  &  "W.  425.     Jacob  v  Lungate,  1  M.  &  Rob.  445.      Ed- 
munds V.  Groves,  2  M.  &  W.  642. 


not  essential  to  the  decision  of  the  case,  (as  it  clearly  was  not,)  that  it  had  not  been 
argued,  and  that  he  was  not  prepared  to  adjudicate  it.  Chancellor  Kent,  in  his  Com- 
mentaries, has  sanctioned  the  doctrine  of  Judge  Story.  3  Kent's  Comm.  80  6th  ed. 
The  same  views  were  taken  by  Judge  McLean  in  Riley  v.  Van  Amringe,  2  McLean, 
589,  and  by  the  courts  of  Ohio,  Massachusetts,  Connecticut,  Maine,  and  Georgia, 
in  the  cases  cited.  The  courts  of  New  York,  New  Hampshire,  Pennsylvania,  Ten- 
nessee, and  Kentucky  have  adhered  to  the  old  doctrine  as  laid  down  in  Coddington 
V.  Bay,  20  Johns.  Rep.  637,  viz. :  that  a  person  receiving  a  negotiable  instrument  before 
its  maturity,  as  security  merely  for  an  antecedent  debt,  and  who  relinquishes  no  pre- 
vious security,  nor  parts  with  any  new  value  upon  its  credit,  is  not  to  be  regarded 
as  a  bona  fide  holder  for  a  valuable  consideration.  In  Stalker  v.  McDonald,  6  Hill's 
Rep.  93,  Chancellor  Walworth  elaborately  examines  the  question,  and  reviews  the 
English  authorities,  for  the  purpose  of  showing  that  they  do  not  sustain  the  conclu- 
sions of  the  Supreme  Court  in  Swift  v.  Tyson.  See  Kirkpatrickw.  Muirhead,  16  Pa.  St. 
Rep.  123.  Petrie  y.  Clark,  11  Serj.  <fe  Rawl.  37*7.  Mickles  v.  Colvin,  4  Barb.  Sup.  C. 
R.  304,  and  also  1  Hump.  468.  Where  a  note  is  transferred  as  collateral  security  by 
a  holder,  who  is  a  bona  fide  purchaser,  the  last  holder  will  not  be  affected  by  any 
equities  which  could  not  have  been  established  against  the  previous  holder.  Pren- 
tice &  Weisiger  v.  Zane,  2  Gratt.  262. 

The  general  question  is  very  fully  and  ably  discussed  in  the  American  Leading 
Cases,  vol.  1,  p.  844,  vol.  2,  p.  120.  It  seems  to  the  annotator,  that  the  principle  ia 
clearly  established,  that  an  existing  indebtedness  will  not^er  se  support  a  new  pro- 
mise to  the  creditor  or  any  third  person,  Hopkins  v.  Logan,  5  Mees.  &  W.  242  •  and 
that  therefore  the  mere  transfer  by  a  debtor  to  his  creditor,  of  a  negotiable  security 
will  not,  by  reason  of  the  antecedent  liabibty,  communicate  to  the  transfer  any  effect 
which  it  would  not  otherwise  have  possessed.  It  would  follow,  that  the  holder  of 
a  negotiable  instrument  which  has  been  received  simply  as  a  collateral  securit-^-  and 
who  is  under  no  legal  obligation  to  forego  the  pursuit  of  any  existing  remedy,  and 
who  in  no  other  form  has  parted  with  any  value,  acquires  no  greater  rights  than  if 
the  instrument  had  been  the  subject  of  gift,  and  is  therefore  exposed  to  the  equitiee 
of  prior  parties  attaching  on  it. 


K 


342  MERCANTILE  CONTRACTS. 


Resistance  against  Payment. 


no  suspicion  upon  his  title.  (2)  So  also  where  the  defendants 
pleaded  that  the  acceptance  on  which  they  were  sued  was  fraudu- 
lently made  by  their  partner,  the  plea  was  bad,  for  the  Court  said 
they  must  presume  that  the  plaintiff,  an  indorsee,  was  a  holder 
bona  fide  and  for  value,  (a)  And  it  is  not  sufficient,  for  the  purpose 
of  casting  such  a  suspicion  on  the  holder's  title  as  would  call  on 
him  to  prove  that  he  had  given  value,  to  show  that  the  bill  was  an 
accommodation  bill,  or  even  that  it  was  accepted  to  raise  money 
for  the  acceptor,  which  money  was  appropriated  by  the  payee  to 
his  own  use :  for  that  purpose,  it  should  be  shown  that  the  bill  was 
obtained  from  the  acceptor,  or  some  person  between  him  and  the 
holder,  fraudulently,  (i)  and  that  by  evidence,  not  by  a  mere  admis 
sion  on  the  record  by  not  traversing,  (c) 

It  will  be  recollected,  that  when  a  bill  or  note  is  taken  by  the 
holder  overdue,  he  takes  it  subject  to  whatever  equities  it  may  have 
been  incumbered  with  while  in  the  hands  of  the  person  from  whom 
he  received  it,  provided  that  those  equities  are  such  as  naturally 
arise  out  of  the  bill  transaction,  and  are  not  merely  collateral,  {d) 

Illegality. — Another  ground  of  defence  is  the  illegality  of  the  con- 
sideration :  (e)  as  that  the  bill  or  note  was  given  for  signing  a  bank- 
rupt's certificate ;  (/)  for  joining  in  the  acceptance  of  a  composition ;  (g) 

(2)  French  v.  Archer,  3  Dowl.  130.  Lowe  v.  Chiffney,  1  Bingh.  K  C.  267.  See 
Heath  v.  Sansom,  2  B.  A  Ad.  29L  Patersou  )■.  Ilardacre,  4  Taunt.  114.  Wyatt  v. 
Campbell,  1  M.  &  M.  80.  Mann  v.  Lent,  10  B.  &  C.  87Y.  Whitaker  v.  Edmunds,  1 
Ad.  &  E.  638.    Percival  v.  Frampton,  2  C.  M.  &  R.  180 ;  3  Dowl.  749. 

(a)  Bramah  v.  P.oberts,  1  Bingh.  K  C.  469. 

{b)  Jacob  V.  Hun^'ate,  1  M.  &  Rob.  445,  et  notas. 

(c)  Edmunds  v.  Groves,  2  M.  &  W.  642.  But  see  Bingham  v.  Stanley,  2  Q.  B. 
in. 

{d)  Brown  v.  Davis,  3  T.  R.  80.  Barrough  v.  "White,  6  D.  <t  R.  379 ;  4  B.  <fe  C, 
325.      Vide  tamen  Goodall  v.  Ray,  4  Dowl.  76. 

(e)  Knight  v.  Hunt,  5  Bingh.  432.  Britten  v.  Hughes,  5  Bingh.  460.  Blogg  v. 
Pinker,  1  R.  &  M.  125.  Haywood  v.  Chambers,  5  B.  &  A.  753.  Bryant  v  Christie, 
1  Stark.  329.  Leicester  v.  Rose,  4  East,  372.  See  Young  v.  Timmins,  1  Tyrwh 
237. 

(/)  Stat.  6  Geo.  4,  c.  16,  s.  125  ;  5  &  6  Vict.  cap.  122. 

{g)  Vide  cases  as  above,  note  (e),  and  Hawley  v.  Beverly,  6  M.  &  G.  221.  Bel- 
cher V.  Samboiirne,  6  Q.  B.  414.  But  a  security  for  the  early  paj-ment  of  his  compo- 
sition to  a  creditor  who  has  accepted  one  is  not  illegal.  Feise  v.  Randal,  6  T.  R.  146 
And  see  on  the  subject  of  further  securities  given  by  a  debtor  to  one  of  his  creditors  in 
respect  of  a  debt,  for  which  a  composition  Aas  been  accepted  jointly  with  other  credi 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  343 

Resistance  against  Payment. 

for  prostitution ;  {h)  to  secure  the  present  payment  of  a  sum 
certain  for  the  future  expenses  of  a  bastard  child ;  {i)  for  stock- 
jobbing differences ;  (j)  for  dropping  a  criminal  prosecution  ;  (Z,-) 
for  ransom  or  money  lent  to  enable  the  proprietor  to  obtain 
the  ransom  of  a  British  vessel,  or  goods,  except  in  certain  cases ;  {I) 
for  recommendation  to  an  oflEice  in  the  King's  household ;  {m) 
in  pursuance  of  a  smuggling,  usurious,  or  stock-jobbing  con- 
tract ;  (n)  for  money  lost  by  gaming  (except  in  a  royal  palace,  in 
which  the  king  is  actually  residing,  the  freeiiold  and  inheritance 
of  which  is  in  the  Crown,  and  which  is  not  in  lease) ;  or  betting  on 
the  sides  of  persons  so  gaming ;  money  knowingly  lent  for  sucb 
gaming  or  betting,  or  lent  at  the  time  and  place  of  such  play,  to 
any  person  then  gaming  or  betting,  or  who  shall,  during  the  play, 


tors,  Tuck  V.  Tooke,  9  B.  &  C.  437.  In  Brix  v.  Braliam,  1  Bingh.  281,  an  indorse- 
ment bona  fide  given  in  pajment  of  a  debt  antecedent  to  the  bankruptcy,  by  a  bank- 
rupt to  his  creditor,  between  bankruptcy  and  certificate,  was  held  good.  Hut  contra 
of  an  acceptance  where  the  creditor  was  petitioning  creditor  and  assignee.  Rose  v. 
Main,  1  Bingh.  N.  C.  So? ;  and  see  6  Geo.  4,  c.  16,  s.  8.  Davis  v.  Holding,  1  M.  &  W. 
159.  Davis  v.  Holding,  11  Ad.  &  E.  710.  A  curtailment  of  the  usual  term  of  im- 
prisonment by  the  Court  in  favor  of  a  defendant,  who  has  agreed  to  pay  a  sum  of 
money  to  the  prosecutor,  is  not  an  illegal  consideration.  Beeley  v.  "Wingfield,  11  East, 
46.  Kirk  V.  Strickwood,  4  B.  &  Ad.  421.  Nor,  where  there  have  been  both  civil  and 
criminal  proceedings,  a  compromise  of  the  latter.  Harding  v.  Cooper,  1  Stark,  467. 
Nor  the  liquidation  of  excise  penalties  with  the  consent  of  tlie  commissions.  Pilk- 
ington  V.  Green,  2  B.  <fe  P.  51.     Sugars  v.  Brinkwerth,  4  Camp.  46. 

(fi)  Walker  v.  Parkins,  Burr.  1568.  Past  seduction  is  not  an  illegal  consideration. 
Annandale  v.  Harris,  2  P.  "Wms.  232.  Cray  v.  Rooke,  Forrest,  153.  But  for  past  co- 
habitation has  been  said  to  be  a  good  consideration.  Turners.  Vaughan,  2  Wils.  339, 
per  Bathurst,  J.  But  it  certainly  is  not  a  sufficient  consideration  to  support  an  agree- 
ment. Beaumont  v.  Reeves,  15  L.  J.  Q.  B.  141,  and  quare  -whether  it  would  support 
a  bill  or  note.     . 

(i)  Cole  V.  Gower,  6  East,  110. 

{j)  Armory  v.  Merry  weather,  2  B  <fe  C.  578.  See  Day  v.  Stuart,  6  Bingh. 
109. 

(Ar)  Collins  v.  Blantern,  2  Wils.  347.  Keir  v.  Leeman,  6  Q.  B.  308 ;  and  see  Fivaz 
V.  Nicholls,  2  C.  B.  501. 

(Z)  45  Geo.  3,  c.  72.     See  Webb  v.  Brooke,  3  Taiint.  6. 

(m)  Harrington  v.  Duchatel,  Bro.  Cha.  C.  114. 

(n)  See  Day  v.  Stuart,  6  Bingh.  109.  Guichard  v.  Roberts,  Bl.  445.  Banks  v.  Col- 
well,  cited  3  T.  R.  81 ;  12  Anne,  stat.  2,  c.  16  ;  stat.  7  Geo,  2,  c.  8.  Faikney  v.  Rey- 
nous.  Burr.  2069.  Petrie  v.  Hannay,  3  T.  R.  418.  Steers  v.  Lashley,  6  T.  R.  6L 
Brown  v.  Turner,  7  T.  R.  630.     See  Turner  v.  Vaughan,  2  Wills.  339. 


344  MERCANTILE  CONTRACTS. 


Resistance  against  Payment. 


play  or  bet ;  (o)  for  the  amount  of  a  wager,  upon  any  branch  ol 
the  public  revenue;  Q^)  or  for  spirituous  liquors  sold  in  small  quan- 
tities contrary  to  stat.  24  Geo.  2,  c.  40,  s.  12.  {q) 

Where  the  consideration  of  a  bill  or  note  is  partly  illegal,  the 
security,  being  entire,  becomes  void  in  toto;{r)  though  the  plaintiff 
may  still,  without  using  the  bill  or  note,  recover  that  part  of  the 
consideration  which  is  good,  (s)  If  a  bill  or  note  given  for  an 
>  illegal  consideration  be  renewed,  the  new  instrument  is  also  void,  {t) 
though  not  if  it  be  so  reformed  as  to  exclude  that  part  of  the  con- 
sideration which  was  objectionable,  (w) 

Formerly,  in  some  cases  of  illegality,  the  bill  was  void  even  in 
the  hands  of  a  holder  lona  fide  and  for  value :  these  were,  where 
the  consideration  was,  either  wholly  or  in  part,  for  signing  a  bank- 
rupt's certificate ;  {v)  for  money  lost  or  applied  in  any  of  the  modes 
of  gaming  above  enumerated ;  {w)  for  ransom,  or  money  lent  in 
order  to  ransom,  {x)  Money  lent  on  a  usurious  contract  was  at 
first  within  this  class ;  {y)  but  by  stat.  58  Geo.  3,  c.  93,  no  bill  or 
note  given  on  a  usurious  condition  is  to  be  void  in  the  hands 


(o)  Anne,  c.  14.  See  Lloyd  v.  Gurdon,  2  Swants.  180.  Jeffreys  v.  Walter,  1 
Wils.  220.  Lynall  v.  Longbotliam,  2  Wils.  36.  Shillito  v.  Theed,  V  Bingh.  405.  A 
bill  in  equity  lies  to  discover  the  consideration  of  a  gaming  security.  Andrews  v. 
Berry,  3  Anst.  634.  This  was  the  state  of  the  law  up  to  August  8th,  1845,  when  the 
statute  8  &  9  Viet.  c.  109,  was  passed,  which  repealed  the  statutes  o  16  Chas.  2,  c.  7, 
9  Anne,  c.  14,  and  declared  that  all  contracts  or  agreements,  whether  hy  parol  or  in 
Rrriting,  shall  be  null  and  void,  and  that  no  suit  shall  be  brought  in  any  court  of  law 
cr  equity  for  recovering  any  sum  of  money  or  valuable  thing  alleged  to  be  won  upon 
any  wager,  or  which  shall  have  been  deposited  in  the  hands  of  any  person  to  abide 
the  event  on  which  any  wager  shall  have  been  made;  with  the  exception  of  contri- 
butions or  subscriptions  to  any  plate,  prize,  or  sum  of  money,  to  be  awarded  to  the 
winner  of  any  lawful  game,  sport,  pastime,  or  exercise. 

{p)  Shirley  v.  Sankey,  2  B.  <fe  P.  130.     Atherfoldi'.  Beard,  2  T.  R.  610. 

{q)  Scott  V.  Gillmore,  3  Taunt.  226. 

(r)  Scott  V.  Gillmore,  3  Taunt.  226.     See  Cruikshank  v.  Rose,  1  M.  &  Rob.  100. 

(s)  Robinson  v.  Bland,  Burr.  1077.      Wood  t;.  Benson,  2  Tyrwh.  93 ;  2  C.  <fe  J.  94 

{t)  Chapman  v.  Black,  2  B.  &  A.  588.  Wynne  v.  Cullandar,  1  Russ.  2C3.  Preston 
V.  Jackson,  2  Star.  237. 

(m)  See  Preston  v.  Jackson,  ubi  sup.     Hubner  v.  Richardson,  Bayley,  5th  ed.  516i 

(y)  Stat.  6  Geo.  4,  c.  16,  s.  125. 

{w)  Bowyer  v.  Bampton,  Str.  1155. 

(a;)  45  Geo.  3,  c.  72,  ss.  16,  17.    See  AYebb  v.  Brooke,  3  Taunt.  6. 

(y)  12  Anne,  stat.  2,  c.  16.     Lowe  v.  Walter,  Dougl.  708,  736. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  345 

Resistance  against  Payment. 

of  an  indorsee  for  valuable  consideration,  if  lie  were  ignorant  of 
the  usury  at  the  time  he  took  the  bill  or  gave  the  consideration. 
And  Stat.  5  &  6  Wm,  4,  c.  41,  has  enacted  that  no  bill  or  note 
shall  be  absolutely  void  on  any  of  the  above  grounds,  but  that  any 
bill  or  note  that  would  have  been  void  on  any  of  the  above  grounds 
shall  be  deemed  to  have  been  drawn,  accepted,  made,  or  taken  for 
an  illegal  consideration ;  (z)  and  that  if  any  person  shall  make, 
draw,  give,  or  execute  any  such  note  or  bill,  and  shall  j)ay  to  any 
indorsee  or  holder  thereof  the  money  thereby  secured,  or  any  part 
thereof,  such  money  shall  be  deemed  to  have  been  paid  for  and  on 
account  of  the  person  to  whom  such  bill  or  note  was  originally 
given  upon  such  illegal  consideration  as  aforesaid,  and  shall  be  a 
debt  due  from  such  last-mentioned  person  to  the  person  who  shall 
so  have  paid  the  money.  By  stat.  3  &  4  Wm,  4,  c.  98,  s.  7,  bills 
or  notes  payable  within  three  months  after  date,  or  not  having 
more  than  three  months  to  run,  were  exempted  from  the  usury 
laws  altogether,  (a)  Stat.  1  Vict.  c.  80,  has  extended  this  exemp- 
tion to  twelve  months  ;  the  latter  act  was  limited  to  expire  in  1840. 
As  few  bills  have  a  longer  period  than  twelve  months  to  run,  the 
effect  of  this  enactment  was  practically  almost  to  abolish  the  laws 
of  usury  as  far  as  negotiable  instruments  are  concerned.  And  it 
has  since  been  continued,  and  its  operation  considerably  extended, 
by  2  &  3  Yict.  c,  37,  and  8  &  9  Vict.  c.  102,  the  former  of  which 
statutes  will  be  found  in  the  Chapter  on  "  Contracts  of  Debt." 


(z)  See  Hitchcock  v.  "Way,  6  Ad.  k  E.  943. 

(a)  See  King  v.  Bradden,  10  Ad.  &  E.  675.  It  has  been  held  that  where  a  bill  \z 
exempted  from  the  operation  of  the  usury  laws  by  this  act,  a  warrant  of  attorney 
given  to  secure  the  payment  thereof  is  so  also.  Connop  v.  Meaks,  2  Ad.  &  E.  326. 
But,  where  money  was  advanced  on  deposit  of  a  lease  and  a  warrant  of  attorney,  and- 
a  promissory  note  was  given  as  a  collateral  security,  it  was  held,  that  the  case  was 
not  within  the  statute.  Berrington  v.  Collis,  5  Bingh.  N.  C.  332.  A  note  payable 
within  the  limited  time,  but,  by  agreement,  to  be  renewed,  was  held  good  by  the 
Exchequer  in  opposition  lo  a  decision  of  the  Court  of  Bankruptcy.  Holt  v.  Miers,  5 
M.  &,  "W.  168.  The  deposit  of  a  lease  or  other  real  security  given  for  the  amount  of 
bills  then  due  and  interest,  on  the  original  discounting  of  which  more  than  5  per 
cent,  interest  had  been  agreed  for,  is  not  invalid,  if  nothing  is  said  at  the  time  as  to 
its  being  a  security  for  further  interest  at  the  same  rate,  and  it  will  not  be  invali 
dated  by  the  subsequent  receipt  of  bills  for  the  debt  at  a  greater  rate  of  interest. 
Bell  V.  Coleman,  2  C.  B.  268. 


346  MERCANTILE  CONTRACTS. 


Resistance  against  Payment. 


When  the  illegality  Avas  such  as  to  make  the  instrument  void 
in  the  hands  even  of  a  hona  fide  indorsee,  yet  if  it  were  not  origi- 
nally made  on  that  consideration,  such  illegality  in  the  consideration 
'  on  which  it  was  afterwards  transferred,  was  no  defence  against  such 
indorsee,  if  he  was  not,  in  making  out  his  title,  bound  to  state  or 
prove  the  signature  of  the  person  who  made  the  illegal  transfer ;  {b) 
the  authorities  were  contradictory  upon  the  question  whether  such 
illegality  was  a  defence,  when  he  was  bound  to  state  the  signature 
and  prove  it.  (c) 

As  to  gaming  securities,  it  was  never  any  objection  to  an  action 
against  the  indorser  that  the  bill  or  note  was  made  on  a  gaming 
consideration  ;  for  though  the  statute  directed  that  they  should  be 
void  to  all  intents  and  purposes,  that  meant  only  so  far  as  was 
necessary  to  further  the  purposes  of  the  act ;  and,  to  exempt  an  in- 
dorser from  suit  might  have  assisted  a  winner,  whom  the  statute 
meant  to  punish,  not  to  protect,  (c?) 

Again,  the  defendant  may  admit  his  former  liability,  but  con- 
tend that  it  has  been  determined  by  the  suspension^  extinguishment^ 
I  satisfaction,  or  discharge,  of  the  holder's  right  of  action.  We  will 
say  a  few  words  concerning  each  of  these  grounds  of  defence. 

1st.  Of  Suspension. — If  the  holder  renew  the  bill  or  note,  that  is, 
if  he  take  another  bill  or  note  from  the  defendant  in  continuation 
of  it,  his  right  of  action  on  the  first  bill  or  note  is  susj^ended  (e)  till 
he  has  satisfied  the  defendant  that  he  has  no  claim  against  him  on 
the  second,  ex.  gr.  by  delivering  it  up.  There  may,  after  a  hill  o^t 
note  has  been  made,  be  a  binding  verbal  promise  for  valuable  consid- 


(6)  Daniel  v.  Cartony,  1  Esp.  2H. 

(c)  Parr  v.  Eliason,  1  East,  92.  Daniel  v.  Cartony,  uhi  supra.  Lowes  v.  Mazza 
redo,  1  Stark.  385. 

{d)  Edwards  v.  Dick,  4  B.  <fe  A.  212. 

(e)  Kendrick  v.  Lomax,  2  Tyrwli.  445 ;  2  C.  &  J.  405.  See  Ex  parte  Barclay,  T 
Ves.  597.  Bishop  v.  Rowe,  3  M.  &  S.  362.  Dillon  v.  Rimmer,  1  Bingh.  100.  See 
Lumley  v.  Musgrave,  and  Luraley  v.  Hudson,  4  Bing.  N.  C.  9.  Maillard  v.  Duke  of 
Argyll,  6  M.  &  Gr.  40.  But  the  receipt  of  bills  accepted  by  a  third  person,  which 
are  not  negotiable  by  the  party  giving  them,  will  not  suspend  the  remedy.  Jamea 
V.  Williams,  13  M.  &  W.  828.  As  to  the  requisites  of  a  plea  setting  up  this  defence, 
see  Price  v.  Price,  16  L.  J.  Ex.  98. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  347 

Resistance  against  Payment. 

eration  to  renew  it  when  due ;  (/)  but  the  defendant  who  relies  on 
such  a  promise  must  show  that  he  took  proper  steps  to  obtain  the 
renewal ;  [g)  and  such  a  promise  must  not  be  contemporaneous  with 
the  drawing  of  the  bill  or  note,  or,  if  it  be  made  to  an  indorser, 
with  his  indorsement ;  if  it  be,  the  law  will  not  enforce  it ;  for,  to 
do  so,  would  be  to  incorporate  with  a  written  contract  an  incongru- 
ous parol  condition,  which  is  contrary  to  first  principles,  {h) 

2dlj.  Extinguishment. — The  defendant's  liability  on  the  bill  or 
note  will  be  extinguished,  if  the  plaintiff  obtain  from  him  a  security 
of  a  higher  description,  ex.  gr.  a  judgment  upon  it  against  him.  {%) 
But  such  a  judgment  is  not  per  se  a  satisfaction  of  the  debt,  nor  will 
it,  until  satisfaction,  prevent  the  holder  from  proceeding  on  the  bill 
or  note  against  any  other  distinct  party  to  it.  (y)* 

(/)  Hoare  v.  Graham,  3  Camp.  58,  per  Lord  Ellenborougli.  See  Gibbon  v.  Scott, 
2  Stark.  286. 

{g)  Gibbon  v.  Scott,  uhi  S2ipra. 

(h)  Hoare  v.  Graham,  3  Camp.  57.  Free  v.  Hawkins,  8  Taimt.  92.  Woodbridge 
V.  Spooner,  3  B.  &  A.  233.  Ridout  v.  Bristow,  1  Tyrwh.  84;  1  C.  &  J.  231.  Rawson 
V.  Walker,  1  Stark.  361.  Moseley  v.  Hanford,  10  B.  &  C.  729.  Campbell  v.  Hodson, 
Gow,  74.  On  the  same  principle,  proof  cannot  be  received  of  a  consideration  dif- 
ferent from  that  named  in  the  instrument,  Ridout  v.  Bristow ;  or  of  a  parol  agree- 
ment contemporaneous  with  the  making  of  the  note,  to  the  effect  that  it  shall  not  be 
paid  if  a  certain  event  happen.  Foster  v.  Jolly,  1  C.  M.  tfe  R.  703,  See  Richards  v. 
Thomas,  ibid.  774.     Adams  v.  Wordley,  1  M.  &  W.  374. 

(^■)  Siddall  v.  RawclifFe,  1  C.  &  M.  487  ;  3  Tyrwh.  441. 

{j)  Bac.  Abr.  Extinguishment ;  D.  Claxton  v.  Swift,  2  Shower,  441.  494 ;  Lutw.  882. 
Hayling  v.  Mulhall,  Bl.  1235.  See  Letchmere  v.  Fletcher,  1  C.  &  M.  623;  3  Tyrwh. 
450,  iibi,  per  Bayley,  B.,  "  Suppose  that  on  a  joint  and  sei)eral  note,  you  sue.  one  and 
get  judgment,  you  may  sue  the  other."  S.  C.  p.  634.  "  It  may  be,  where  you  sue 
and  recover  judgment  against  one  debtor  only,  upon  a  contract  which  is  joint  and 
not  several,  that  your  right  to  sue  on  the  joint  contract  is  destroyed ;  that,  if  so, 
would  be  so  merely  on  the  ground  of  the  difficulty  to  which  the  form  of  action  would 
give  rise,  because  the  defendant  would  have  a  I'ightto  plead,  that  he  made  no  con- 
tract, except  with  the  other  defendant,  against  whom  the  judgment  was  entered,  and 
he  could  not  be  joined."  And,  in  conformity  with  these  observations,  it  has  recently 
Deen  held  that  a  judgment  against  one  contractor  on  a  simply  joint  contract,  not 
withstanding  stat.  3  &  4  "Wm.  4,  c.  42,  s.  10,  affords  a  good  answer  to  an  action  against 
any  other  of  the  joint  contractors.     King  v.  Hoare,  13  M.  <k  W.  494. 


*  Whether  the  taking  of  a  higher  security  for  the  same  debt  extinguishes  the  lower 
security,  is  treated  in  many  of  the  cases  as  a  question  of  intention.     Gardiner  v. 


348  ]Aercantile  contracts. 

Resistance  against  Payment. 

3dly.  Satisfaction. — Satisfaction  is  by  actual  payment  of  the  bill 
or  note,  or  what  is  equivalent  to  payment,  and  this  releases  all  the 
13arties ;  for  though  the  holder's  claim  may  be  extinguished  as  to 


Hurt,  2  Richard,  601.  Tlie  Betsy  and  Rlioda,  Da  vies  Rep.  112.  Steamboat  Char- 
lotte V.  Hammond,  9  Miss.  59.  Butler  v.  Miller,  5  Deni.  159.  It  is  impossible  to  re- 
concile the  different  eases,  but  the  distinction  taken  by  C.  J.  Gibson,  in  Jones  v. 
Johnson,  3  "Wall.  <feSerg.  276,  appears  to  be  just.  "There  is  a  substantial  distinction 
which  I  have  not  seen  particularly  noticed,  between  cases  of  extinguishment  by 
merger  of  the  security,  and  eases  of  extinguishment  by  satisfaction  of  the  debt.  These 
classes,  althoii-gh  depending  upon  different  principles,  have  usually  been  confounded ; 
and  hence  a  perceptible  want  of  pi'ccision  in  the  language  of  those  who  have  written 
or  spoken  of  them.  In  the  first  of  them  the  original  security  is  extinguished,  but  the 
debt  remains ;  in  the  second,  the  debt  as  well  as  the  security  is  extinguislied  by  the 
acceptance  of  another  debt  in  payment  of  it.  Extinguishment  by  merger  takes  place 
between  debts  of  different  degrees,  the  lower  being  lost  in  the  higher;  and  being  by 
act  of  law,  it  is  dependent  on  no  particular  intention  :  extinguishment  by  satisfaction 
takes  place  indifferently  between  securities  of  tlie  same  degree  or  of  different  degrees; 
and  being  by  act  of  the  parties,  it  is  the  creature  of  their  will.  No  expression  of  in- 
tention would  control  the  law,  which  prohibits  distinct  securities  of  different  degrees 
for  the  same  debt ;  for  no  agreement  would  prevent  an  obligation  from  merging  in 
a  judgment  on  it,  or  passing  in  rem  judicatmn.  Neither  would  an  agreement,  how- 
ever explicit,  prevent  a  promissory  note  from  merging  in  a  bond,  given  for  the  same 
debt  by  the  same  debtor  ;  for  to  allow  a  debt  to  be  at  the  same  time  of  different  de- 
grees, and  recoverable  by  a  multiplicity  of  inconsistent  remedies,  would  increase  liti- 
gation, unsettle  distinctions,  and  lead  to  embarrassment  in  the  limitation  of  actions 
and  the  distribution  of  assets.  But  as  the  existence  of  a  promissory  note  as  a  con- 
current security  for  a  book  debt  produces  no  such  consequences,  it  operates  no  extin- 
guishment by  act  of  law ;  and  it  depends  on  the  consent  of  parties,  tacit  or  explicit, 
whether  the  new  evidence  of  the  debt  is  accepted  in  discharge  of  the  old  one.  The 
diflference  on  the  whole  consists  in  this,  that  in  a  case  of  merger  there  is  a  change 
only  of  the  security ;  but  in  a  case  of  satisfaction  by  substitution,  there  is  a  change 
of  the  debt."  The  views  of  Judge  Gibson  are  sustained  by  the  late  case  of  Price  et  als. 
V.  Moulton,  10  C.  B.  561,  where  it  was  decided,  that  a  bond  or  covenant  given  to 
secure  an  existing  debt,  would  operate  in  law,  irrespectively  of  the  intention  of  the 
parties,  as  a  merger  of  the  remedy  on  the  simple  contract. 

It  is  held  in  Massachusetts,  that  when  the  party  bound  to  the  payment  of  a 
simple  contract  debt,  gives  his  own  negotiable  note  for  it,  the  law  presumes  such 
note  to  have  been  accepted  in  satisfaction  and  discharge  of  the  pre-existing  debt,  be- 
cause the  party  receiving  it  relinquishes  no  security,  but  has  the  same  responsibility 
for  payment  that  he  had  before,  with  more  unequivocal  evidence  of  the  debt,  and  a 
more  simple  remedy  for  recovering  it,  and  with  power  also  by  indorsement  to  trans- 
fer the  whole  interest  in  it  to  another.  But  this  is  a  presumption  of  fact  only,  and 
may  be  rebutted  by  evidence  that  such  was  not  the  intention  of  the  parties.  Mel- 
ledge  V.  Boston  Iron  Company,  5  Cushing,  158,  reviewing  the  cases  where  a  specialty 


BILLS  OF  EXCHANGE  AND  PROMISSOR'i   NOTES.  34*^ 

Resistance  against  Payment. 

some  and  not  as  to  others,  yet  if  satisfied  as  to  any,  it  is  satisfied  as 
to  all.  (Z:)*  But  payment  of  the  bill,  even  at  maturity,  by  a  stranger, 
who  had  improperly  discounted  the  bill,  and  pays  in  order  to  obtain 
it  from  the  holder,  will  not  discharge  the  acceptor.  (?)  The  taking 
of  a  man  in  execution,  and  discharging  him  on  a  letter  of  license, 
is  no  satisfaction  as  to  antecedent  parties ;  (m)  nor  if  he  be  so  taken, 
and  afterwards  discharged  as  an  insolvent,  will  that  protect  Mm 
against  any  party  except  that  one  at  whose  suit  he  was  taken,  {n) 
There  may  be  a  satisfaction  j^iro  tanto^  as  by  part  payment,  or 
the  receipt  of  dividends  under  a  commission  of  bankruptcy.  (0) 

Any  material  alteration  {jo)  of  a  bill  or  note,  after  it  has  been.  ^ 


(it)  Ex  parte  ^il^mau,  2  Ves.  115.  Windham  v.  Withers,  Str.  515.  Gillard  v. 
Wise,  5  B.  &  C.  134.  As  to  "wliat  may  operate  as  a  satisfaction,  see  Sard  v.  Rhodes, 
1  M.  <fe  W.  153.     Sibree  v.  Tripp,  15  M.  &  W.  23. 

{I)  Deacon  v.  Stodhart,  2  M.  &  Gr.  317. 

(»i)  Hayling  v.  Mulhall,  BI.  1235.  M'Donald  v.  Bovington,  4  T.  R.  825.  See  this 
subject  discussed,  Michael  v.  Mj'ers,  6  M.  &  Gr.  702.  These  two  cases  seem  referable 
to  the  next  head,  viz.,  Discharge. 

{n)  M'Donald  v.  Bovington,  4  T.  R.  825.  This  case  was  decided  on  the  peculiar 
wording  of  32  Geo.  2,  c.  28,  now  repealed  by  1  &  2  Vict.  c.  110,  which  would  appear 
to  have  a  more  extensive  operation. 

(0)  Bacon  v.  Searles,  1  H.  BI.  88.  Pierson  v.  Dunlop,  Cowp.  571.  See  Johnson  v. 
Reunion,  2  Wils.  262. 

(p)  Sometimes  an  alteration,  which  would  otherwise  be  material,  is  prevented 
from  being  so  by  the  form  of  pleading,  ex.  gr.,  in  Sibley  v.  Fisher,  7  Ad.  &  E.  444,  an 
^Iteration  in  the  date  was  not  allowed  to  be  insisted  on,  issue  having  been  taken  on 
iie  indorsement  only.  So  in  Parry  v.  Nicholson,  13  M.  &  W.  778,  under  an  issue  on 
the  acceptance,  and  in  Mason  v.  Bradley,  11  M.  &  W.  500,  the  removal  of  the  name 
of  a  joint  maker  from  a  note,  was  held  not  to  be  available  as  an  objection  under  a 
traverse  of  the  making.    See  Heming  v.  Trenery,  9  Ad.  &  E.  926. 


security  is  given  in  place  of  a  simple  contract  security,  the  latter  will  be  extinguished 
if  the  remedy  given  by  the  former  will  be  co-extensive  with  that  which  the  creditor 
held  upon  the  latter.  This  is  not  the  case  according  to  the  English  authorities, 
where  only  one  of  two  makers  of  a  joint  and  several  promissory  note  has  executed 
the  specialty,  inasmuch  as  the  new  remedy  is  confined  to  one  of  the  original  debtors. 
Ansell  V.  Baker,  15  Adol.  &  Ell.  N.  S.  20. 

*  A  payment  under  circumstances  which  show  a  want  of  good  faith  on  the  part 
of  the  acceptor  will  be  wholly  nugatory.  Nor  would  payment  before  maturity  pro- 
tect an  acceptor  against  a  holder,  who  subsequently,  and  prior  to  its  maturity',  ao- 
quired  the  bill  bona  fide  and  for  a  valuable  consideration. 


350  MERCANTILE  CONTRACTS. 

Resistance  against  Payment. 

issued,  unless  satisfactorily  accounted  for,  operates  as  a  satisfaction 
thereof;  (q)  and  even  though  the  parties  consent  to  such  an  altera- 
tion, the  instrument,  though  unimpeachable  by  them,  is  a  new  con- 
tract, and  the  old  stamp  will  not  suffice,  (r)  unless  such  alteration 
were  made  to  correct  a  mistake,  and  render  the  bill  what  it  was 
originally  meant  to  have  been,  (s)  Alteration  in  the  date,  sum,  or 
time  for  payment,  or  the  insertion  of  words  authorizing  transfer, 
expressing  the  value  received  to  be  on  a  particular  account,  or  an 
unwarranted  place  for  payment,  {t)  or  adding  a  new  maker  or 
drawer,  {u)  are  material.     But  the  insertion  of  a  mere  memoran- 


(q)  Alderson  v.  Langdale,  3  B.  <fe  Ad.  660.  Master  v.  Miller,  4  T.  R.  320.  The 
latter  of  these  cases  decides,  that  no  action  can,  after  such  alteration,  be  maintained 
on  the  bill;  the  former,  that  such  an  alteration  made  by  the  plaintiff  operates  as  a 
satisfaction,  not  only  of  the  bill  but  of  the  debt  for  which  it  was  given.  In  Alderson 
V.  Langdale,  the  debtor  was  the  drawer  of  the  bill ;  but  in  Atkinson  v.  HaAvden,  2 
Ad.  &  E.  628,  where  he  was  the  acceptor,  and  so  would  have  no  remedy  over  on  the 
bill,  the  alteration  was  held  to  be  no  satisfaction  of  the  original  debt.  So  where  an 
agent  of  both  parties  altered  it  before  it  had  been  delivered  to  the  plaintiff.  Sloman 
V.  Cox,  5  Tyrwh.  175 ;  1  C.  M.  &  R.  471.  An  alteration,  even  by  a  stranger  in  a 
material  point,  will  vitiate  the  instilment,  as  it  was  the  laches  of  the  holder  in  not 
keeping  it  safely.  See  the  principle  laid  down  and  explained,  Cam.  Scacc.  Davidson 
V.  Cooper,  13  M.  &  W.  343. 

(r)  Bowman  v.  Kichol,  5  T.  R.  537. 

(s)  Byrom  v.  Thompson,  11  A.  <fe  E.  31.  Kershaw  v.  Cox,  3  Esp.  246.  Jacob  v. 
Hart,  6  M.  &  S.  142.     Clark  v.  Blackstock,  Holt,  474. 

{t)  Walton  V.  Hastings,  4  Camp.  223  ;  1  Stark.  215.  Outhwaite  v.  Luntley,  4  Camp. 
179.  Bowman  v.  Nichol,  5  T.  R.  537.  Cardwell  v.  Martin,  9  East,  190.  Kershaw 
V.  Cox,  3  Esp.  246.  Knill  v.  Williams,  10  East,  431.  Clark  v.  Blackstock,  Holt,  474. 
Alderson  v.  Langdale,  3  B.  &  Ad.  660.  Tidraarsh  v.  Grover,  1  M.  &  S.  735.  Cowie 
V.  Halsall,  4  B.  <&  A.  197.  R.  v.  Treble,  2  Taunt.  328.  Mackintosh  v.  Haydon,  1  R. 
&  M.  362.  See  Taylor  v.  Moselj-,  6  C.  <fe  P.  278.  In  these  two  cases,  and  also  in  Cal- 
vert V.  Baker,  4  M.  &  W.  416,  the  alteration  consisted  in  the  insertion  of  a  place  of 
payment  in  the  acceptance,  without  adding  tlie  words  prescribed  by  stat.  1  <fe  2  Geo. 
4,  c.  78,  after  which  statute  both  cases  occurred :  both  actions  were  against  acceptors. 
See  Heming  v.  Trenery,  9  Ad.  &  E.  926,  and  Crotty  v.  Hodges,  4  M.  &  Gr.  561.  In 
neither  case,  however,  was  the  addition  made  with  the  acceptor's  consent.  In  Wal- 
ter V.  Cubley,  4  Tyrwh.  87,  2  C.  <fe  M.  151,  a  similar  alteration  was  made  with  the  ac- 
ceptor's concurrence,  and  in  an  action  against  him  was  held  to  be  immaterial.  Both 
these  points  are  recognized  in  Desbrowe  v.  Wetherby,  1  M.  &  Rob.  438. 

{u)  Sed  vide  Cattlin  v.  Simpson,  3  Nev.  &  Per.  348.  See  tliis  question  discussed, 
Gould  V.  Coombs,  1  C.  B.  543.  And  it  would  seem  the  removal  of  the  name  of  a 
joint  maker  from  a  note  to  which  it  was  originally  stipulated  he  should  be  a  party, 
would  be  a  material  alteration.     Parry  v.  Nicholson,  13  M.  &  W.  778. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  351 

Resistance  against  Payment. 

dum,  giving  tlie  right  place  for  payment,  or  the  correction  of  the 
drawee's  name  to  make  it  correspond  with  his  acceptance,  are  not 
so.  (v)  An  alteration  perfectly  immaterial  to  the  rights  of  the 
parties  will  have  no  effect,  as,  for  instance,  the  addition  of  a  new 
name  after  the  note  had  already  become  due,  and  was  dishon- 
ored, {w)  Nor  will  the  alteration  affect  its  validity,  if  made  with 
the  consent  of  parties  before  it  has  issued,  (x)  A  bill  or  note  is 
issued  when  it  is  in  the  hands  of  some  person  entitled  to 
make  a  claim  upon  it,  not  before ;  (?/)  and  this  is,  prima  facie, 
so  soon  as  it  is  passed  a',vay  by  the  drawer  or  maker,  or  (when 
the  alteration  is  in  the  acceptance)  accepted  by  the  drawee,  (z) 
If  a  bill  or  note  exhibit  the  appearance  of  alteration,  it  is  for 
the  holder  to  account  for  it.  (a)  But  the  mere  cancellation,  bi/ 
mistahe,  of  an  acceptance  or  indorsement,  is  no  satisfaction  of 
the  bill,  or  discharge  to  the  parties  whose  signatures  are  so  can- 
celled, (h) 

4thly.  Discharge. — ^Discharge  is  when  the  right  of  action  is  not 
merely  suspended,  but  destroyed,  without  any  satisfaction,  as  by  a 


(w)  Trap  V.  Spearman,  3  Esp.  57.  Marsen  v.  Petit,  1  Camp.  82,  n.  Farquhar  v. 
Southey,  1  M.  &  M.  U. 

(m)  Catton  V.  Simpson,  8  Ad.  &  E.  136. 

(x)  Downes  v.  Richardson,  Bayley,  5th  ed.  166.  Johnson  v.  D.  of  Marlborough,  2 
Stark.  313. 

(y)  Downes  v.  Richardson.  Cardwell  v.  Martin,  9  East,  190.  Kennerley  v.  Nash, 
1  Stark.  452. 

(z)  Walton  V.  Hastings,  4  Camp.  223.  Outhwaite  v.  Limtley,  4  Camp.  1*79.  Knill 
V.  Williams,  10  East,  431.  Tidmarsh  v.  Grover,  1  M.  &  S.  735.  Co-n-ie  v.  Halsall,  4 
B.  &  A.  197.  Johnson  v.  D.  of  Marlborough,  2  Stai-k.  313.  Langton  v.  Lazarus,  5  M. 
&  W.  629. 

(a)  Knight  v.  Clements,  8  Ad.  &  E.  215.  The  jury,  if  there  be  no  other  evidence, 
cannot  be  permitted  to  look  at  the  bill  and  conjecture  from  its  appearance  how  the 
alteration  came  about.  Ibid.  Clifford  v.  Lady  H^-de  Parker,  2  M.  &  Gr.  909.  But 
circumstantial  evidence  of  consent  is  sufficient,  as  when  interest  has  been  paid  on  it 
as  altered,  and  the  person  who  prepared  the  note  states  that  he  meant  to  have  drawn 
it  in  that  form.  Cariss  v.  Tattersall,  2  M.  &  Gr.  890.  See  Henman  v.  Dickenson,  5 
Bingh.  183.  Bishop  v.  Chambre,  1  M.  &  M.  16.  Johnson  v.  D.  of  Marlborough,  and 
Downes  v.  Richardson,  ante. 

(b)  Roper  v.  Birkbeck,  15  East,  17.  Wilkinson  v.  Johnson,  3  B.  <fe  0.428.  NoveDi 
«••  Rossi.  2  B.  &  Ad.  757.     Warwick  v.  Rogers,  5  M.  &  Gr.  340 


352  IVIERCANTILE  CONTRACTS. 


Resistance  against  Payment. 


release,  or  the  provision  of  a  Bankrupt  or  Insolvent  Act.*  Thus 
an  acceptance  may  be  ivaived,  either  expressly  or  impliedly^  so  as 
to  discharge  the  acceptor ; — expressly,  by  an  agreement  to  that  ef- 
fect, (c)  or  by  a  message  to  the  acceptor  of  an  accommodation  bill, 
that  the  business  was  settled  with  the  drawer ;  {d)  impliedly,  by  the 
holder's  taking  to  himself  the  known  consideration  of  the  accept- 
ance, as  when  the  holder  agreed  with  the  acceptor,  that  he,  the 
holder,  would  receive,  instead  of  him,  that  benefit  which  had  in- 
duced him  to  accept,  (e)     But  neither  length  of  time,  silence,  nor  a 


(c)  "Walter  v.  Pulteney,  Dougl.  236,  237,  248,  249.  See  Farquhar  v.  Southey,  1  M. 
<fe  M.  14.  See  Ellis  v.  Galindo,  cited  Dougl.  250,  n.  Stevens  v.  Thacker,  Peake,  187 
Bayley,  5tli  ed.  208.     Steele  v.  Harmer,  15  M.  o.  W.  831. 

{d)  Black  V.  Peele,  Dougl.  236,  237,  248,  249  ;  Bayley,  uU  supra. 

(e)  Mason  v.  Hunt,  Dougl.  284,  297  ;  Bayley,  uU  supra. 


*  "Where  a  promissory  note  has  been  barred  by  a  discharge  in  bankruptcy,  the 
authorities  are  divided  as  to  the  effect  of  a  new  promise  in  reviving  its  negotiability. 
It  has  been  held  in  Maine,  Vermont,  and  New  York,  that  the  new  promise  does  not 
renovate  the  old  contract,  but  that  the  defendant's  liability  rests  entirely  upon  the 
new  contract,  and  the  suit,  therefore,  miist  be  in  his  name  with  whom  such  con- 
tract is  made.  Depuy  v.  Swart,  3  Wend.  135.  Moore  v.  Viele,  4  "Wend.  420.  "Wal- 
bridge  v.  Harroon,  18  "Verm.  448.  White  v.  Gushing,  17  Shep.  267.  On  the  othei 
hand,  it  has  been  decided  in  Massachusetts,  that  the  new  promise  does  not  create  a 
new  and  substantive  cause  of  action  which  may  be  the  basis  of  a  judgment,  but  that 
it  merely  operates  as  a  waiver,  by  the  promisor,  of  a  defence  which  the  statute  has 
furnished  him  against  an  action  on  the  old  promise  ;  and  therefore  that  a  new  pro- 
mise made  to  the  payee  of  a  negotiable  note,  is  a  promise  to  pay  him  or  his  order, 
or  bearer,  according  to  its  tenor.     "Way  v.  Sperry,  6  Cush.  Rep.  238. 

It  is  the  settled  doctrine  of  the  Supreme  Court  of  the  United  States,  that  no 
state  can  enact  a  bankrupt  or  insolvent  law,  which  would  discharge  the  obligation 
of  any  contracts  made  previous  to  its  passage,  or  indeed  after  its  passage,  between  any 
other  persons  than  its  own  citizens.  Ogden  v.  Saimders,  12  "Wheat.  Rep.  213.  Boyle 
V.  Zacharie,  6  Peters'  Rep.  348.  Springer  v.  Fostei-,  2  Story's  C.  C.  R.  383.  The  gen- 
eral principles  upon  which  effect  is  given  to  a  discharge  under  a  foreign  bankrupt 
law,  are  very  fully  and  ably  discussed  by  the  Supreme  Court  of  Massachusetts,  in 
May  et  als.  v.  Breed  et  ah.,  7  Cush.  Rep.  15.  It  was  held  in  that  case,  in  strict  accord- 
ance (as  it  seems  to  the  editor)  with  principle  and  the  weight  of  authority,  that  a 
discharge  under  the  English  bankrupt  law,  of  a  merchant  residing  in  England,  from 
a  debt  to  a  citizen  of  Massachusetts,  contracted  and  payable  in  England,  was  a  bar 
to  a  subsequent  action  upon  the  debt  in  Massachusetts,  whether  the  creditor  proved 
his  debt  under  the  English  commission  of  bankruptcy  or  not. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  353 

Resistance  against  Payment. 

declaration  by  the  holder,  that  he  should  look  to  the  drawer  foi 
payment,  are  sufficient  to  discharge  the  acceptor.  (/) 

It  is  a  maxim  of  law  that  if  one  principal  in  a  contract,  by  any 
act  of  his  0W71,  discharge,  or  even  give  time,  though  but  for  a  mo 
ment,  to  the  other  princijDal,  he  discharges  all  his  sureties.  In  the 
contract  by  bill  or  note,  the  maker  or  acceptor  is  considered  the 
principal,  and  the  indorsers  as  his  sureties ;  and  consequently  if  the 
holder  either  discharge  or  suspend  his  remedy  against  the  former, 
the  latter,  unless  they  have  previously  consented  to  it,  {g)  or  after- 
wards promised  to  pay  with  knowledge  of  it,  are  all  immediately 
discharged ;  (A)  but  a  mere  forbearance  to  sue  the  acceptor,  without 
any  valid  agreement  not  to  do  so,  will  not  discharge  them  ;  (i)  nor 
will  the  taking  a  collateral  security  from  the  acceptor,  (j)  as  a  new 
bill  not  in  renewal  of  the  old  one.^  It  seems  that  a  subsequent  in- 
dorser  stands  in  the  light  of  a  surety  for  the  prior  ones,  (Ic)  and  : 
therefore,  that  if  the  holder  discharge  or  give  time  to  a  irrior  in- 

(/)  Parker  v.  Leigh,  2  Stark.  228.  Farquhar  v.  Southey,  1  M.  &  M.  U.  Ding 
wall  V.  Dunster,  Dougl.  235,  247.  Adams  v.  Gregg,  2  Stark.  531.  Anderson  v.  Cleave- 
land,  13  East,  430 ;  Bayley,  ubi  supra. 

(g)  Clark  v.  Devlin,  3  B.  &  P.  3G3.  See  Withall  v.  Masterman,  2  Camp.  179. 
Stevens  v.  Lynch,  12  East,  38.  Isaac  v.  Daniel,  15  L.  J.  Q.  B.  148.  Consenting  to  a 
judge's  order  for  a  stay  of  proceedings  against  the  acceptor,  or  prior  party,  on  pay 
ment  of  debt  and  costs,  is  not  giving  him  time  so  as  to  discharge  the  drawer,  or  sub 
sequent  party.  Kennard  v.  Knott,  4  M.  &  Gr.  474.  Michael  v.  Myers,  6  M.  &  Gr. 
702. 

(h)  Ex  parte  Smith,  Co.  B.  L.  5th  ed.  168,  169.  English  v.  Darley,  2  B.  &  P.  61. 
Gould  V.  Robson,  8  East,  676.  "VVithall  v.  Masterman,  2  Camp.  179.  De  la  Torre  v. 
Barclay,  1  Stark.  7.     Rees  v.  Berrington,  2  Ves.  jun.  540. 

(i)  Walwyn  v.  St.  Quentin,  1  B.  &  P.  652.  Philpott  v.  Briant,  4  Bingh.  717. 
Orme  v.  Young,  Holt,  N.  P.  C.  84.  Combe  v.  "Wolfe,  8  Bingh.  156.  Clarke  v.  Wilson, 
8  M.  &  W.  208. 

{j)  Bring  v.  Clarkson,  1  B.  &  C.  14.  See  Price  v.  Edmunds,  10  B.  &  C.  578.  Bed- 
ford V.  Deakin,  2  Stark.  178. 

(Jc)  Bed  vide  the  observations  of  Tindal,  C.  J.,  in  Basset  v.  Dodgin,  9  Bingh.  G53. 

*  The  agreement  must  be  clear,  that  farther  time  is  to  be  given  for  payment  to 
the  acceptor  or  other  party ;  it  must  be  without  the  concurrence  of  the  other  par- 
ties; and  it  must  also  be  founded  upon  a  valid  and  valuable  consideration.  If  either 
lact  fail  to  be  made  out  in  proof,  there  is  an  end  of  the  defence.  The  law  is  laid 
down  in  the  following  cases :  McLemore  v.  Powell,  12  Wheat.  554.  The  Bank  of 
the  United  States  v.  Hatch,  6  Peters,  250. 
23 


354  MERCANTILE  CONTRACTS. 

Resistance  against  Payment. 

dorser,  he  will  discharge  those  subsequent  to  him,  {I)  But  the  dis- 
charge of  a  subsequent  indorser  does  not  discharge  o.  prior  one.  (w) 
In  Hall  V.  Cole^  {n)  the  drawer  of  a  bill  payable  to  his  own  order, 
indorsed  to  A.,  who  indorsed  it  back  to  the  drawer,  and  the  drawer 
then  indorsed  it  to  B ;  in  an  action  by  B,  against  A.,  it  was  held, 
that  the  acceptance  by  B.  of  a  cognovit  from  the  drawer  discharged 
A.,  though  it  did  not  appear  whether  the  cognovit  was  given  in  the 
character  of  drawer  or  in  that  of  indorser. 

It  was  once  thought  that  the  acceptor  of  an  accommodation  bill, 
or  maker  of  an  accommodation  note,  stood  in  the  light  of  a  surety, 
and  that  the  holder  would  discharge  him  by  discharging  or  giving 
time  to  the  person  for  whose  accommodation  he  accepted,  (o)  But 
this  has  often  been  questioned ;  and  would  perhaps  not  now  be  so 
decided,  (p)  especially  where  the  holder,  when  he  took  the  bill  or 
note,  did  not  know  of  the  accommodation.  However,  in  such  a 
case  it  has  been  held  that  giving  time  to  an  accommodation  ac- 
ceptor will  not  discharge  the  drawer  for  whose  accommodation  he 
accepted.  (5')  Where  a  promissory  note  is  deposited  by  one  party 
by  way  of  security  for  the  debt  of  another,  the  liability  of  the  maker 
stands  on  the  same  footing  precisely  as  that  of  an  ordinary  guar- 
antor, (r) 

One  of  two  joint  makers  of  a  promissory  note,  though  he  may 
have  signed  for  the  other's  accommodation,  cannot,  it  seems,  con- 
sistently with  the  principles  above  laid  down,  be  so  looked  upon 


{I)  Hall  V.  Cole,  4  Ad.  &,  E.  577 ;  6  Nev.  &  Mann.  124.  Ellison  v.  Dezell,  Selw. 
J^.  P.  8th  ed.  364,  per  Lord  Eldon,  in  English  v.  Darley,  2  B.  <k  P.  62.  See  Bank  of 
Ireland  v.  Beresford,  6  Dow.  234.     Smith  v.  Knox,  3  Esp.  46,  per  Lord  Eldon. 

(m)  Hayling  v.  Mulhall,  2  BI.  1235.  Claridge  v.  Dal  ton,  4  M.  &  S.  226.  See 
Haight  V.  Jackson,  3  M.  &  W.  598. 

(n)  4  Ad.  &  E.  577. 

(o)  Laxton  V.  Peat,  2  Camp.  185.  See  Bank  of  Ireland  v.  Beresford,  6  Dow.  233. 
Ex  parte  Glendinning,  1  Buck.  517. 

{'p)  Raggett  V.  Axmore,  4  Taunt.'  730.  Fentum  v.  Pocock,  5  Taunt.  192.  Kerri- 
80n  V.  Cooke,  3  Camp.  362.  Mallet  v.  Thomson,  5  Esp.  178.  Yallop  v.  Ebers,  1  B. 
&  Ad.  698.  Carstairs  v.  RoUeston,  5  Taunt.  551.  Farquhar  v.  Southey,  1  M.  <fe  M. 
14.    Nichols  V.  Norris,  3  B.  tfe  Ad.  41.     Harrison  v.  Courtland,  3  B.  «&  Ad.  36. 

{q)  Collett  V.  Haigh,  3  Camp.  281. 

(r)  Stone  v.  Compton,  5  Bingh.  N.  C.  142.  See  also  Brown  v.  Wilkinson,  13  Mi 
&  W.  14. 


BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES.  8o5 

Remedy  upon  Lost  Bills  and  Notes. 

as  his  surety,  tliat  giving  time  to  the  other  may  discharge  him.  (s) 
Supposing  even  that  he  could,  he  would  not  be  discharged  by  tlie 
holder's  taking  from  the  other  maker  a  cognovit,  defeasible  upon  the 
payment  of  instalments,  the  first  of  which  would  fall  due  before  the 
maker  giving  it  could  have  been  sued  to  execution,  {t)  But  one 
joint  maker  of  a  note  is  discharged  by  the  holder's  discharging  the 
other,  and  that  without  any  reference  to  the  law  of  principal  and 
surety,  but  on  the  ground  that  the  creditor's  discharge  of  one  joint 
debtor  is  a  discharge  of  all.  (w) 


Section  IX. — Remedy  upon  Lost  Bills  and  Notes. 

We  have  now  seen  how  payment  of  a  bill  or  note  is,  generally 
speaking,  to  be  enforced  or  resisted.  There  are,  however,  some 
peculiar  considerations  respecting  the  mode  of  proceeding,  when 
the  instrument  has  been  lost  or  destroyed.  The  person  who  pays  a 
bill  or  note  has,  generally  speaking,  a  right  to  the  instrument  itself 
as  his  voucher;  and  there  is  a  case  in  which  the  acceptor,  having 
paid  the  money  to  the  holder,  was  held  entitled  to  recover  it  back 
on  the  refusal  of  the  latter  to  give  up  the  bill,  (v) 

If  a  bill  or  note  has  been  lost  before  it  is  due,  and  was,  when  lost, 
in  such  a  state  that  a  transferee  of  the  finder  bona  fide  and  for  a 
valuable  consideration  might  recover  on  it,  the  loser  cannot  succeed 
in  an  action  upon  it  at  law ;  {id)  nor  can  any  action  be  maintained 
for  the  consideration  on  which  it  was  given,  {x)  since  the  bill 
operated  as  payment.  So  if  a  bill  or  note  transferable  by  delivery 
be  cut  in  halves,  and  half  be  lost,  it  has  been  held  that  the  holder 


(s)  Price  v.  Edmunds,  10  B.  &  C.  578.  See  Garrett  v.  Jull,  Selw.  K  P.  386,  Stli  ed. 
Hall  V.  "Wilcox,  1  M.  &  Rcb.  58.     Perfect  v.  Musgrave,  G  Price,  111. 

{t)  Price  V.  Edmunds,  10  B.  &  C.  578. 

(m)  Nicholson  v.  Revell,  4  Ad.  &  E.  675,  and  so  will  the  obtaining  judgment  against 
one  joint  maker  discharge  the  other.     King  v.  Iloare,  13  M.  <fe  W.  494. 

{v)  Alexander  v.  Strong,  9  M.  &  "W.  733. 

(w)  Pierson  v.  Hutchinson,  2  Camp.  '211,  et  notas.  Davis  v.  Dodd,  4  Tannt.  602. 
Poole  V.  Smith,  Holt,  145.  Pooley  v.  Millard,  1  Tyrwh.  331 ;  1  C.  &  J.  414.  Hansard 
V.  Robinson,  7  B.  <fe  C.  90. 

(x)  Champion  v.  Terry,  3  B.  &  B.  295.     Anderson  v.  Langdale,  3  B.  cfe  Ad.  660. 


356  MERCANTILE  CONTRACTS 


Remedy  upon  Lost  Bills  and  Notes. 


cannot  sue  at  law  npon  the  other  half,  (y)*  In  Bayley  on  Bills  of 
Exchange,  5th  edition,  p.  274,  it  is  remarked  that  Lord  Ellen- 
borough  assigned  as  a  reason  for  the  decision  in  this  case,  that 
"  the  other  half  might  have  immediately  got  into  the  hands  of  a 
bona  fide  holder  for  value,  and  he  would  have  as  good  a  right  of 
suit  on  that  as  the  plaintiffs  on  the  other  half,  which  afterwards 
reached  them ;  but  the  maker  of  a  promissory  note  cannot  be  liable 
in  respect  of  it  to  two  parties  at  the  same  time ;"  and  the  learned 

(y)  Mayor  v.  Johnson,  3  Camp.  324. 


*  According  to  Baron  Parke,  in  tlie  recent  case  of  Clay  v.  Crowe,  18  E.  L.  &  E.  R. 
514,  the  cases  of  Hansard  v.  Robinson,  and  Ramur  v.  Crowe,  1  Exch.  167,  as  modifi-ed 
by  Wain  v.  Bailey,  have  settled  the  English  law,  on  the  subject  of  lost  bills,  to  be 
this:  If  a  negotiable  bill  or  note,  that  is,  a  bill  payable  in  its  original  state  to  bearer 
or  order,  be  lost  at  the  time  a  party  to  it  is  called  on  to  pay,  the  loss  constitutes  a 
good  defence;  otherwise,  if  it  be  not  m  its  original  state  a  negotiable  bill  or  note,  as 
where  it  is  payable  to  the  payee  only.     In  the  last  case,  the  loss  of  the  bill  or  note 
is  no  answer  to  an  action  by  the  payee.    The  American  decisions  on  the  respective 
limits  of  the  common  law  and  the  equitable  jurisdictions  in  the  case  of  lost  instru- 
ments, were  mostly  rendered  before  the  case  of  Hansard  v.  Robinson.  They  generally 
establish  the  doctrine  that  where  an  instrument  is  lost  upon  which,  either  from  its 
original  character,  or  want  of  negotiability  at  the  time  of  the  loss,  the  debtor  could 
set  up  any  equitable  defence  against  a  subsequent  bo7ia  fide  holder,  claiming  title 
throuo-h  the  finder,  the  jurisdiction  maj^  be  properly  exercised  at  law ;  but  in  all 
other  cases  the  only  remedy  is  in  Chancery.     See  Opinion  of  Gaston,  J.,  in  Allen  & 
Wycofif  V.  State  Bank,  1  Dev.  &  Batt,  1.     McNair  v.  Gilbert,  3  Wend.  344.     Kirby  v. 
Sisson,  2  Wend.  345.     Chewning  v.  Singleton,  2  Hillch.  371.     Thayer  v.  King,  15 
Ohio,  242.     Smith  et  al.  v.  Walker,  1  Sm.  &  M.  C.  R.  432.    Aborn  v.  Bozworth,  1  Rh. 
Isl.  R.  401.     It  may  admit  of  much  doubt  whether  the  broad  principle  stated  by  Lord 
Tenterden,  that  in  every  case  governed  by  the  law  merchant  the  instrument  must  be 
produced  before  a  party  to  it  can  be  called  upon  to  pay,  would  not  more  certainly 
secure  the  ends  of  justice  by  throwing  the  great  mass  of  cases  into  the  Court  of 
Chancer}",  where  only  a  complete  indemnity  against  any  hazard  of  future  loss  can 
be  furnished.     Where  a  bank-note  is  divided  for  transmission  by  mail,  and  one  half 
is  lost,  any  subsequent  taker  receives  it  under  such  siispicious  circumstances  as  to  be 
bound  by  the  equities  of  the  original  parties.     In  the  language  of  one  of  the  Judges, 
the  half  bank-note  would  no  more  be  negotiable  than  the  vignette,  if  torn  off.     But 
according  to  the  weight  of  American  authority,  the  remedy  of  the  rightful  holder 
of  the  remaining  half,  the  original  owner  of  the  note,  is  in  the  Court  of  Chancery. 
See  Bank  of  Ya.  v.  Ward,  6  Munf.  166.     Farmers'  Bank  v.  Reynolds,  4  Rand.  186. 
Ballet  V.  Bank  of  Pennsylvania,  2  Wash.  C.  C.  R.  1*72.     Patton  v.  State  Bank,  2  Nott 
&  McChord,  464.    Hinsdale  v.  Bank  of  Orange,  6  Wend.  Sl8.     Bank  of  U.  S.  v.  Sill, 
5  Conn.  106. 


BILLS  OF  EXCHANGE  AKD  PROMISSORY  NOTES.  357 

Remedy  upon  Lost  Bills  and  Notes. 

author  adds,  "  But  qucere  whether  a  man  who  takes  half  a  note  does 
not  take  it  at  his  periL"  There  seems  good  reason  for  the  doubt 
in  this  qucere  ;  and  the  case  oi  Mayor  v.  Johnson  may  be  considered 
open  to  review.  However  that  may  be,  if  the  loser  can  show  that 
the  bill  was  accidentally  destroyed,  or  had  no  indorsements,  except 
special  ones,  or  was  unindorsed  and  not  transferable  save  by  in- 
dorsement, he  may  (unless  the  previous  authorities  be  considered  as 
overruled  by  Hansard  v.  Robinson.,  7  B,  &  C.  90,  which  is,  however, 
prior  to  Wain  v.  Bailey.,  10  Ad.  &  E.  616)  maintain  an  action  either 
on  it  or  for  the  original  consideration,  if  an}'-,  since  no  one  else  can  in 
such  case  acquire  a  title  to  it  (2)  (unless,  indeed,  the  defendant  would 
have  had  a  remedy  over  on  the  bill  or  note  upon  paying  it) ;  (a)  and 
in  such  a  case,  if  judgment  go  by  default,  the  Court  will  grant  a  rule 
to  compute  principal  and  interest,  (i)  Sir  John  Campbell,  in  his 
note  to  Pierson  v.  Hutchinson,  suggests  that  "another  distinction 
may  perhaps  be  taken  with  respect  to  a  bill  indorsed  in  blank,  and 
lost  after  it  has  become  due :  as  the  finder  could  not  in  that  case 
give  an  effectual  right  of  action  even  to  an  indorsee  for  value  and 
without  notice,  it  may  be  thought  that  the  acceptor  cannot  insist 
on  an  indemnity."  'However,  he  afterwards  observes,  that,  "  as  a 
plaintiff  would  make  out  a  prima  facie  case  by  proving  the  accept- 
ance and  indorsement,  it  might  be  hard  to  expose  the  acceptors, 
without  any  indemnity,  to  the  hazard  of  showing  by  legal  evidence 
that  the  bill  had  been  lost  after  it  became  due."  And  accordingly 
the  distinction  in  question  has  been  virtually  denied  to  exist,  (c) 
In  Bayley  on  Bills,  5th  edition,  pp.  372,  373,  a  distinction  is  drawn 
between  this  case  and  that  in  which  judgment  is  allowed  to  go  by 
default.  The  words  are,  ''  If  a  bill  be  lost  after  action  brouoht 
thereon,  and  defendant  suffer  judgment  by  default,  the  Court  will, 
on  a  copy  verified  by  affidavit,  refer  it  to  the  Master,  to  see  what  is 


{z)  Vide  "VVain  v.  Bailey,  10  Ad.  &  E.  616.  Rolt  v.  Watson,  4  Bingli.  273.  Mayor 
V.  Johnson,  Pierson  v.  Hutchinson,  et  notcwi.  Long  v.  Bailv,  ibid.  Vide  Hansard  v, 
Robinson,  7  B.  &  C.  90. 

(a)  Chapman  v.  Terry,  3  B.  &  B.  285. 

(6)  Fliglit  V.  Brown,  2  Tyrwh.  312.  Brown  v.  Messiter,  3  M.  <fe  S.  281.  Allen  v. 
Miller,  1  Dowl.  320. 

(c)  Poole  V.  Smith,  Holt,  144 ;  and  see  Pooley  v.  Millard,  1  Tyrwh.  334,  1  C  «fr  J 
414,  per  curiam. 


358  MERCANTILE  CONTRACTS. 

Remedy  upon  Lost  Bills  and  Notes. 

due  thereon,  {d)  especially  where  the  bill  has  been  shown  to  de- 
fendant, and  he  has  admitted  his  signature,  and  jDromised  payment. 
But  if  the  bill  be  lost  after  action  brought,  and  defendant  resist  the 
action,  and  put  the  plaintiff  to  prove  the  bill,  the  loss  will  be  no 
excuse  for  the  non-production  of  the  bill,  and  plaintiff  will  not  be 
entitled  to  recover."  However,  neither  in  Brown  v.  Ilessiter,  nor  in 
Allen  V.  Miller,  does  it  appear  on  what  terms  the  rule  to  refer  was 
granted,  or  in  what  character  the  j^laintifi"  sued ;  possibly  he  was 
either  payee  or  special  indorsee  ;  for  in  a  subsequent  case,  (e)  the  Court 
granted  the  rule,  subject  to  the  terms  of  producing  to  the  Master  a 
copy  of  the  bill  verified  by  afiidavit,  and  it  being  also  sworn  that 
there  was  no  indorsement  on  the  bill  itself. 

In  cases  when  the  loser  of  a  bill  is  precluded  by  the  above  rules 
from  obtaining  relief  in  a  court  of  law,  he  may  enforce  payment  in 
equity  on  giving  a  proper  indemnity.  (/)  And  stat.  9  &  10  Wm. 
3,  c.  17,  s.  3,  enacts,  "that  if  any  inland  bill  be  lost  or  miscarry, 
icithin  the  time  limited  for  its  payment,  the  drawer  shall,  on  security 
given  upon  request  to  indemnify  him  if  such  bill  be  found  again, 
give  another  bill  of  the  same  tenor  with  the  first."  It  has  been 
remarked  that  the  equity  of  this  statute  seems  to  comprehend  in- 
dorsements also,  and  that  stat.  3  &  4  Anne,  c.  9,  which  gives  the 
same  remedies  on  notes  as  were  then  in  use  on  inland  bills,  would 
seem  to  extend  it  to  notes,  {g) 


{d)  Brovra  v.  Messiter,  3  M.  S.  281.  Accord.  Allen  v.  Miller,  1  DowL  420.  See 
Clarke  v.  Quince,  3  Dowl.  26. 

(e)  Flight  V.  Browne,  2  Tyrwh.  312.  But  now  the  plaintiff  would  not  be  bound 
to  produce  the  bill  before  the  Master,  as  the  defendant  could  not  avail  himself  of  any 
part  payment  upon  a  judgment  by  default.  He  is  not  bound  to  produce  it  without 
notice  upon  the  trial,  unless  there  be  a  plea  which  renders  it  incumbent  on  him  to 
prove  it :  see  Lawrence  v.  Clai-ke,  14  M.  &  "W.  250.  Godered  v.  Armour,  3  Q.  B.  292. 
Read  v.  Gamble,  10  Ad.  &  E.  597,  note ;  and  it  may  be  questioned  whether  the  defence 
of  the  bill  being  lost,  or  the  plaintiff  not  being  the  holder  of  it,  must  not  be  specially 
pleaded ;  otherwise,  the  plaintiff  might  prove  it  in  the  same  manner  as  any  other 
instrument  which  he  cannot  produce. 

(/)  1  Ves.  341 ;  5  Ves.  338 ;  6  Ves.  812 ;  and  see  the  judgment  of  C,  B.  Richards 
ji  Davies  v.  Dodd,  "Wils.  Exch.  Rep.  111. 

ig)  Bayley,  5th  ed.  131. 


CHAPTER  II. 


COIfTEACTS     WITH     CAEEIEES. 

A  COMMON  carrier  is  one  wlio  undertakes  for  hire  to  transport  the 
goods  of  such  as  choose  to  employ  him  from  place  to  ]3lace.  (a)  Of 
this  description  are  the  proprietors  of  stage-wagons,  and  coaches 
which  carry  goods  for  hire;  lightermen,  hoymen,  barge-owners, 
ferrymen,  (b)  canal-boatmen,  owners  and  masters  of  ships,  engaged 
generally  in  the  transportation  of  goods  for  hire ;  and  other  per- 
sons,  owning  similar  instruments  of  public  conveyance,  (c)*     A 

(a)  1  Sal.  249. 

(6)  A  ferrjTnan,  however,  seem  not  to  be  in  the  situation  of  a  common  carrier,  at 
all  events,  where  he  takes  the  passenger  along  with  the  goods.  Payne  v.  Parti'idge, 
1  Show.  257  ;  1  Salk.  12.     Walker  v.  Jackson,  10  M.  &  W.  161. 

(c)  Ld.  Kaym.  909,  918;  5  T.  R.  389.  Forward  v.  Pittard,  1  T.  R.  27.  Bac.  Ab. 
Carriers,  A.  Morse  v.  Slue,  2  Lev.  69.  Rich  v.  Kneeland,  Cro.  Jac.  330.  Maving  v. 
Todd,  1  Stark.  72.  Brook  v.  Pickwick,  4  Bingh.  218.  Lovett  v.  Hobbs,  2  Show.  128. 
Upshare  v.  Aidee,  Com.  25.  As  to  the  declaration  against  a  common  carrier,  see 
Butterton  v.  Wood,  3  B.  <fe  B.  54.     Pozzi  v.  Shipton,  8  Ad.  &  E.  963. 

*  S.  P.  Camden  and  Amboy  Co.  v.  Burke,  13  Wend.  611.  Boyce  v.  Anderson,  2 
Peters' S.  C.  P..  150.  Stokes  v.  Saltonstall,  13  Peters,  181.  In  the  case  of  Boyce  v. 
Anderson,  it  was  held  by  the  Supreme  Court,  that  a  common  carrier  was  only  liable 
for  ordinary  neglect  in  ti-ansporting  slaves.  S.  P.  Clark  v.  McDonald,  4  McChord's 
Rep.  223.     Williams  v.  Taylor,  4  Porter,  238. 

Other  cases  may  be  mentioned  to  illustrate  the  proposition,  that  a  modification 
of  the  liability  attached  to  common  carriers  occurs,  as  the  nature  of  the  thing  to  be 
carried,  and  the  extent  of  the  custody  and  control  over  it  of  the  carrier,  varies. 
Thus,  as  the  proprietor  of  a  stage-coach  cannot  place  a  passenger  under  the  same 
custody  and  control  as  a  bale  of  goods,  such  proprietor  will  not  be  responsible  for 
any  injury  to  the  traveller,  which  has  been  occasioned  by  the  want  of  ordinary  care 
on  the  part  of  the  latter.  So,  if  the  owner  of  goods  accompanies  them  in  their  tran- 
sit, to  take  care  of  them,  and  is  himself  guilty  of  negligence,  he  is  not  entitled  to  re- 
cover. Brind  v.  Dale,  8  Carr.  &  P.  207.  The  same  principles  apply  to  all  cases, 
where  the  entire  custody  and  control  over  the  propei'ty  does  not  belong  to  the  car- 
rier. White  V.  Winnissimet  Company,  7  Cush.  155.  Willoughby  v.  Horridg^  16  E. 
L.  &  E.  R.  437. 


300  MERCANTILE  CONTRACTS. 

Contracts  with  Carriers. 

stage-coacli  owner,  who  carries  passengers  only^  is  not,  properly 
speaking,  a  common  carrier ;  he  does  not  warrant  the  safety  of  the 
passengers,  at  all  events ;  but  only  that,  so  far  as  human  care  and 
foresight  will  go,  he  will  provide  for  their  safe  conveyance,  (c?) 
Nor  is  a  town  carman  not  plying  between  certain  termini,  but  un- 
dertaking casual  jobs,  (e)  A  railway  company  are  common  car- 
riers with  regard  to  the  goods  which  they  convey,  unless  the  act 
constituting  them  limit  their  liability.  (/)* 

The  duty  of  a  common  carrier  is  to  .:arry  the  goods  of  all  per- 
sons offering  (for  there  need  not  be  an  actual  tender)^  {g)  to  pay  his 


{d)  Aston  V.  Heaven,  2  Esp.  533.  Christie  v.  Griggs,  2  Camp.  79.  Dudley  v. 
Smith,  1  Camp.  167.  White  v.  Boulton,  Peake,  81.  Robinson  v.  Dunmore,  2  B.  &  P. 
416.  See  Sharp  v.  Gray,  9  Bingh.  457.  The  conveyance  of  passengers  by  stage- 
coaches is  regulated  by  2  «fe  3  Wm.  4,  c.  120,  and  5  &  6  Vict.  c.  79. 

(e)  Brind  v.  Dale,  2  M.  &  Rob.  80. 

(/)  Palmer  v.  Grand  Junction  Railway  Co.,  4  M.  &  W.  749. 

(g)  Pickford  v.  G.  J.  Railway  Co.,  8  M.  &  W.  372. 


*  The  owners  of  steamboats  engaged  in  carrying  trade  on  the  navigable  rivers, 
are  considered  as  common  carriers.  Allen  v.  Sewall,  2  Wend.  327.  Gilmore  et  al.  v. 
Carman,  1  Sm.  &  M.  279.  So  a  railroad  company,  whose  business  it  is  to  transport 
for  compensation  the  baggage  as  well  as  persons  of  travellers.  Camdon  &,  Amboy 
Co.  V.  Burke,  13  AVend.  611,  Nor  in  the  case  of  a  common  carrier  of  passengers  and 
their  baggage,  is  the  i-ule  affected  by  the  circumstance  that  no  distinct  price  is  paid 
for  the  transportation  of  tlie  baggage.  Orange  Co.  Bank  v.  Brown,  9  Wend.  85. 
HoUister  v.  Nowlen,  19  Wend.  234.  Cole  v.  Goodwin,  ib.  251.  Jones  v.  Voorhees, 
10  Ohio,  145.  But  the  owners  of  a  steamboat,  who  undertake  to  tow  a  freight-boat 
for  hire,  are  not  quoad  hoc  common  carriers,  and  bound  to  more  than  ordinary  dili- 
gence and  care  in  the  management  of  their  boat.     Caton  v.  Rumney,  13  Wend.  887. 

But  although  the  fact  that  a  steamboat  is  employed  in  the  business  of  transporting 
passengers  or  merchandise,  renders  the  owners  responsible,  pro  Itac  vice,  as  common 
carriers,  it  does  not  follow  that  they  are  common  carriers  of  specie  or  bank  bills. 
This  depends  upon  the  nature  and  extent  of  the  business  in  which  they  hold  them- 
selves out  to  the  public  as  being  engaged.  Citizens'  Bank  v.  Nantucket  Steamboat 
Co.,  2  Story  C.  C.  R.  16.  Allen  v.  Sewall,  6  Wend.  335.  S.  P.  Orange  County  Bank 
V.  Brown,  9  Wend.  85.  Hawkins,  6  Hill,  586.  It  has,  however,  been  held  by  the 
more  recent  authorities,  that  money  taken  bona  fide  for  personal  use  and  travelling 
exjienses,  may  properly  be  regarded  as  forming  part  of  a  traveller's  baggage.  The 
rule  is  otherwise  as  to  money  intended  for  trade,  or  business,  or  transported  for  any 
3ther  purpose  than  that  stated,  Jordan  v.  Fall  River  R.  Company,  5  Cush.  Rep.  69. 
Weed  V.  Saratoga  &  Schenectady  Railroad  Co.,  19  Wend.  534. 


CONTRACTS  WITH  CARRIERS.  361 

Contracts  "with  Carriers. 

hire,  {h)  (unless,  indeed,  his  carriage  be  full,  or  the  goods  are  of 
such  a  kind  as  to  be  liable  to  extraordinary  danger,  or  such  as  he 
is  unaccustomed,  or  unable,  to  convey,)  {i)  to  take  proper  care  of 
them  in  their  passage,  and  to  make  a  safe  and  right  delivery  of 
them*  at  the  time  agreed  upon,  or  in  the  absence  of  any  stipula- 
tion in  that  respect,  within  a  reasonable  time.  (/)  At  common  law 
he  stands  in  the  situation  of  an  insurer  of  the  property  intrusted  to 
him,  and  is  answerable  for  every  loss  or  damage  happening  to  it 
while  in  his  custody,  no  matter  by  what  cause  occasioned,  unless  it 
were  by  the  act  of  God,  such  as  a  tempest,  or  that  of  the  king's 
enemies.f  In  other  cases,  even  his  entire  faultlessness  does  not  ex- 
cuse him :  thus,  he  is  liable  for  damage  done  by  accidental  fire,  or 
by  a  robbery,  {k)  His  liability  continues  up  to  the  time  of  the 
goods  being  delivered ;  Q)  unless,  as  sometimes  happens,  they  con- 
tinue in  his  possession  after  the  determination  of  their  journey,  un- 


(/*)  Jackson  v.  Rogers,  2  Sliower,  329 ;  Bac.  Abr.  Carriers,  B.  Riley  v.  Horne,  5 
Bingli.  217.     Parker  v.  Great  Western  Railway  Company,  7  M.  &  Gr.  253. 

(i)  Jackson  v.  Rogers,  2  Show.  32Y  ;  1  Saund.  312,  n.  Lane  v.  Cotton,  1  Ld.  Raym. 
646.  Edwards  v.  Sherratt,  1  East,  604.  Lovett  v.  Hobbs,  2  Show.  128.  Batson  v. 
Dunovan,  4  B.  &  A.  21. 

(j)  Streeter  v.  Horlock,  1  Bingh.  34.  Ilyde  v.  Trent  &  Mersey  Nav.  Co.,  5  T.  R. 
389.  Ellis  V.  Turner,  8  T.  R.  631.  Davis  v.  Garrett,  6  Bingh.  716.  Raphael  v.  Pick- 
ford,  5  M.  &  Gr.  551. 

{k)  Dale  v.  Hall,  1  Wils.  281 ;   1  Inst.  89.     Covinton  v.  Willan,  Gow.  115. 

(l)  Gatliffe  v.  Boui-ne,  4  Bingh.  K  C.  314.  Bourne  v.  GatliflFe,  4  Scott  E".  C.  1 ;  3 
M.  &  Gr.  643 ;  7  M.  &  Gr.  850 ;  11  CI.  &  Fin.  45. 


*  The  obligation  of  common  carriers,  engaged  in  transporting  passengers  for 
hire,  to  give  them  a  passage  under  all  circumstances,  was  discussed  in  the  case  of 
Jencks  v.  Coleman,  2  Sumn.  Rep.  221,  and  the  Court  determined  that  it  was  not  un- 
limited, but  subject  to  reasonable  restrictions.  They  may  rightfully  exclude  all  per- 
sons of  bad  character  or  habits — all  whose  objects  may  in  any  way  interfere  with 
their  interest,  or  disturb  the  patronage  of  their  line,  and  all  who  refuse  to  obey  the 
reasonable  regulations  which  have  been  made  for  the  government  of  the  boat;  and 
they  may  inquire  into  the  habits  or  motives  of  passengers  who  offer  theraselv«s  for 
transportation. 

■j-  What  constitutes  an  act  of  God,  so  as  to'  excuse  the  carrier,  has  been  exten- 
sively considered  in  the  following  American  cases.  McArthur  v.  Sears,  21  Wend. 
190.  Friend  v.  Woods,  6  Gratt.  1 89.  The  Reeside,  2  Sumn.  571.  Gilmore  v.  Carman, 
I  Sm.  &  M.  R.  279.  Ewart  v.  Street,  2  Bailey  S.  C.  R.  157.  Fish  v.  Cluapman,  9 
Georg.  349. 


362  MERCANTILE  CONTRACTS. 

Contracts  with  Carriers. 

der  a  contract,  express  or  implied,  by  which  the  nature  of  his  employ- 
ment, and,  of  course,  of  his  liabilities  with  regard  to  them,  may  be 
altered  ;  for  instance,  if,  on  their  arrival,  he  agree  to  hold  them  as 
a  warehouseman  or  wharfinger,  (m) 

This  being  the  rule  of  the  common  law,  and  regulating  all  cases 
in  which  there  was  no  special  contract  between  carriers  and  their 
employers,  the  former  soon  found  it  their  interest  to  make  agree- 
ments requiring  a  premium  in  proportion  to  the  risk  incurred, 
where  the  goods  intrusted  to  them  were  beyond  a  certain  value. 
This  was  generally  done  by  inserting  in  the  newspapers,  distribu- 
ting in  handbills,  and  sticking  up  in  their  offices,  a  notice,  that  they 
would  not  be  accountable  for  any  property  beyond  a  certain  value, 
unless  insured  and  paid  for  at  the  time  of  delivery.  If  this  notice 
were  brought  home  to  the  knowledge  of  the  employer,  (for  that 
was  indispensably  necessary  in  order  to  render  it  available,)  (w)  his 
consent  to  its  terms  was  implied,  (o)  and  the  carrier  became  entitled 
to  the  protection  for  which  he  stipulated ;  (7:*)  but  these  notices,  as 
generally  worded  and  interpreted  by  courts  of  law,  only  exoner- 
ated the  carrier  from  liability  for  loss  or  damage  occurring  to  unin- 
sured goods,  loithout  fault  on  his  part ;  for  if  he  were  guilty  of  wilful 
misconduct,  or  gross  negligence,  he  was  chargeable  with  the  damage 
occasioned  thereby,  and  his  notice  was  not  permitted  to  limit  his 
responsibility, (g')  unless  the  employer  had  been  guilty  of  a  wilful 
concealment  of  the  nature  and  value  of  the  property,  (?•)  for  that 


(m)  Cairns  v.  Robins,  8  M.  &  W.  258. 

(71)  Kerr  v.  "Willan,  6  M.  &  S.  150.  Palmer  v.  Grand  Junction  Railway  Co.,  4  M. 
&  W.  '739.     "Walker  v.  Jackson,  10  M.  &  W.  161. 

(o)  Mayhew  v.  Eames,  3  B.  <&  C.  601.     Rowley  v.  Home,  3  Bingh.  2. 

(p)  Nicliolson  V.  Willan,  5  East,  507. 

{q)  Smith  v.  Home,  2  B.  Moore,  18.  DufF  v.  Budd,  3  B.  &  B.  17*7 ;  8  Taunt.  144. 
Holt,  K  P.  C.  643.  Birkett  v.  Willan,  2  B.  &  A.  &56  Garnett  v.  Willan,  5  B.  &  A, 
53.  Sleat  i;.  Flagg,  5  ib.  341.  Wright  «.  Snell,  5  ib.  350.  See  the  judgment  of  Bay- 
ley,  B.,  in  Owen  v.  Burnett,  4  Tyrwh.  143 ;  2  C.  &  M.  353  ;  and  see  Bodenham  v.  Ben- 
nett, 4  Price,  31. 

(r)  Batson  v.  Donovan,  4  B.  &  A.  21.  Miles  v.  Cattle,  6  Bingh.  743.  See  tho 
comments  of  Lord  Mansfield,  C.  J.,  on  Kenrig  v.  Eggleston,  Aleyn,  93,  and  the  case 
cited  by  Hale,  1  Vent.  238,  contained  in  Gibbons  v.  Paynton,  4  Burr.  2301,  B.  N. 
P.  71. 


CONTRACTS  WITH  CARRIERS.  8G3 

Contracts  -with  Carriers. 

would  have  discharged  the  carrier,  even  though  he  had  given  no 
notice.* 

The  construction  of  these  notices,  and  the  necessity  of  proving 


*  The  doctrine  that  a  common  carrier  may  abridge  his  common  law  liability  by 
a  special  agreement,  is  daily  acted  upon  in  the  English  courts.  In  the  United  States, 
such  contracts  have  elicited  a  great  variety  of  judicial  opinion.  The  most  eminent 
commentators  have  expressed  opposite  views  as  to  the  present  state  and  tendency  of 
the  decisions  of  this  country.  Parsons  on  Contracts,  vol.  1,  p.  703,  n.  d.  Wallace's 
note  to  Smith's  Leading  Cases,  vol.  1,  p.  274.  It  has  been  argued  on  the  one  hand, 
that  no  stronger  reasons  exist  for  forbidding  such  resti'ictions  in  the  case  of  the  car- 
rier than  in  the  case  of  any  other  insurer  of  goods ;  that  the  owner,  by  entering  into 
the  contract,  virtually  agrees,  that  in  respect  to  the  particular  transaction,  the  car- 
rier is  not  to  be  regai'ded  as  in  the  exercise  of  his  public  employment,  but  as  a  pri- 
vate person,  who  incurs  no  responsibility  beyond  that  of  an  ordinary  bailee  for  hire, 
and  is  answerable  only  for  misconduct  or  negligence;  and  that  the  right  thus  to  re- 
strict the  obligation  is  admitted  in  a  large  class  of  cases  founded  upon  bills  of  lading 
and  charter-parties.  Opinion  of  Nelson,  J.,  in  The  New  Jersey  Steam  Navigation  Com- 
pany V,  Merchants'  Bank,  6  How.  344.  It  has  been  urged  on  the  other  side,  that  the 
law  imposes  upon  the  common  carrier  definite  and  absolute  duties,  which  thereby 
disable  him  from  entering  into  any  contract  in  derogation  of  those  duties;  that  he 
should  no  more  be  permitted  to  vary  his  obligations  as  a  public  servant  by  contract, 
than  a  sheriff  or  other  officer  appointed  hj  law;  that  the  legal  grounds  and  nature 
of  his  responsibility  do  not,  like  that  of  an  insurer,  depend  upon  contract,  and  that 
any  agreement  to  remit  a  part  of  his  liability-,  for  the  single  purpose  of  inducing  a 
carrier  to  exercise  his  business  of  transporting  goods,  is  without  consideration,  un- 
der unlawful  compulsion,  and  opposed  to  general  convenience  and  public  policy. 
Wallace's  note,  cited  above.  Co  wen's  opinion,  Cole  v.  Goodwin,  19  Wend.  281.  Nis- 
bet's  opinion.  Fish  v.  Chapman,  2  Geor.  349. 

The  question  has  not  been  authoritatively  determined  in  the  Supreme  Court  of 
the  United  States.  The  views  expressed  by  Nelson,  J.,  in  6  How.  344,  were  not  neces- 
sary to  sustain  the  actual  points  decided  by  the  Court.  The  suit  in  that  case  was 
brought  upon  a  special  agreement,  and  under  which  the  carrier  assumed  a  more 
onerous  responsibility  than  the  law  imposed.  The  question,  therefore,  of  the  general 
rights  to  limit  his  common  law  liability,  was  not  necessarily  involved.  In  New 
York,  the  recent  cases  overruling  Gould  v.  Hill,  2  Hill's  R.  623,  have  affirmed  the 
right  of  the  carrier  to  make  such  a  special  contract.  Parsons  v.  Monteath,  13  Barb. 
353.  Dorr  v.  N.  J.  Steam  Navigation  Company,  4  Sand.  136.  Stoddard  v.  Long 
Island  Railroad  Co.,  6  Sand.  ISO.  The  courts  of  Maine,  Pennsylvania,  South  Caro- 
lina, and  Missouri,  have  recognized  the  same  docti'ine.  Parker  v.  Flagg,  26  Maine, 
181.  Bingham  v.  Rogers,  6  Watts  &  S.  495.  Admstr.  of  Patton  v.  M'Grath,  1  Dud- 
ley Rep.  159.  Swindler  v.  Hilliard,  2  Rich.  286.  Laing  v.  Colder,  8  Barr,  479,  and 
16  Pa.  St.  R.  67.  The  doctrine  of  Gould  v.  Hill  has  received  judicial  approbation 
In  Jones  v.  Voorhees,  10  Ohio,  145.     Fish  v.  Chapman,  2  Geor.  349. 

The  American  courts,  which  have  recognized  the  validity  of  these  special  con 


364  MERCANTILE  CONTRACTS. 

Contracts  with  Oarriers. 

that  they  had  arrived  at  the  employer's  knowledge,  giving  rise  to 
much  litigation,  the  Legislature  has  enacted  positive  regulations  on 
the  subject.  Those  which  concern  carriers  by  water  we  will  enu- 
merate under  the  head  Contracts  of  A ffreiglitment ;  that  concerning 
Carriers  hy  Land,  is  stat.  11  Geo.  4.  and  1  Wm.  4,  cap.  68,  which 
enacts,  that  no  common  carrier  hj  land,  for  hire,  shall  be  liable  for 
the  loss  or  injury  to  any  gold  or  silver  coin,  gold  or  silver  in  a 
manufactured  or  unmanufactured  state,  precious  stones,  jewelry, 
watches,  clocks,  timepieces,  trinkets,  {s)  bills,  bank-notes,  orders, 
notes,  or  securities  for  payment  of  money,  stamps,  maps,  writings, 
title-deeds,  paintings,  engravings,  pictures,  gold  or  silver  plate,  or 
plated  articles,  glass,  (i)  china,  silks  manufactured  or  unmanufac- 
tured, wrought  up  or  not  wrought  up  with  other  materials,  (w) 


(s)  A  gold  chain  used  for  an  eye-glass  held  not  a  trinket.  Davey  v.  Mason,  Car. 
&  M.  45. 

{t)  See  Owen  v.  Burnett,  4  Tyrwh.  133  ;  2  C.  &  M.  853. 

(m)  Silk  dresses  made  up  for  wear  do  not  come  withirr  these  words.  Davey  v 
Mason,  Car.  &,  M.  45. 


tracts,  have  not  so  interpreted  them  as  to  protect  the  carrier  from  the  consequences 
of  his  own  negligence.  See  cases  before  cited  in  6  How.  344;  2  Rich.  286;  4  Sand, 
136;  Reno  v.  Hogan,  12  B.  Mon.  63.  The  cases  are  collated  in  the  Editor's  notes  to 
Austin  V.  Manchester  &  Railway  Co.,  11  E.  L.  &  E.  R.  514,  and  Carr  v.  Lancashire  &,  Z. 
R.  Co.,  14  E.  L.  &  E.  R.  344,  in  which  case  the  English  courts  extended  the  exemption 
of  the  carrier  beyond  any  American  precedent. 

The  student  will  find  in  the  annotation  to  the  last  case  a  collection  of  the  Ame- 
rican authorities  upon  the  question,  whether  a  general  notice  by  a  carrier,  of  an 
intention  to  assume  a  limited  responsibility,  brought  to  the  knowledge  of  the  bailor, 
without  proof  of  his  assent,  will  have  the  same  effect  as  a  special  contract.  The 
great  weight  of  judicial  opinion  seems  to  be  in  favor  of  a  distinction  between  the 
cases,  and  against  holding  such  notices  to  be  equivalent  to  special  contracts.  In  the 
recent  case  of  Camden  &  Amboy  R.  R.  Co.  v.  Baldauf,  16  Pa.  St.  Rep.  67,  it  was  held 
that  although  a  general  notice,  clear  and  explicit  in  its  terms,  and  brought  home  to 
the  knowledge  of  the  person  with  whom  the  cari'ier  deals,  might  operate  as  a  special 
contract,  this  effect  would  not  be  attributed  x^o  a  general  notice,  as  a  passenger-ticket 
in  the  English  language,  so  as  to  raise  a  presumption  of  such  contract  against  a  Ger- 
man passenger  ignorant  of  the  English  language. 

The  rigorous  rule  of  the  common  law  did  not  extend  to  the  time  of  delivering 
goods.  The  carrier  might  excuse  delay  in  delivery  by  showing  the  exercise  of  rea- 
sonable diligence.  Parsons  v.  Hard}',  14  Wend.  215.  Bo^de  v.  McLaughlin,  4  Harr. 
&  G.  291. 


CONTRACTS  WITH  CARRIERS.  3G5 

Contracts  with  Carriers. 

fars,  (v)  or  lace,  contained  in  any  parcel,  when  the  value  exceeds 
the  sum  of  lOZ. ;  unless  at  the  time  of  delivery  at  the  office,  ware 
house,  or  receiving  house,  (w)  the  value  and  nature  of  the  article 
shall  have  been  declared,  and  the  increased  charges,  or  an  engage- 
ment to  pay  the  same,  accepted  by  the  person  receiving  the  parcel. 
By  sect.  2,  common  carriers,  on  the  delivery  of  such  parcels  ex- 
ceeding the  value  of  lOZ.,  and  so  declared  as  aforesaid,  may  demand 
an  increased  rate  of  charges,  which  is  to  be  notified  by  a  notice  in 
legible  characters  affixed  in  the  office ;  (a:)  and  persons  sending 
parcels  are  to  be  bound  by  such  notice,  without  further  proof  of 
the  same  having  come  to  their  knowledge.  By  sect.  3,  carriers 
shall,  if  required,  give  a  receipt  for  the  parcel,  acknowledging  the 
same  to  have  been  insured,  which  receipt  shall  not  be  liable  to  any 
stamj)  duty ;  and  carriers  who  do  not  give  such  receipt  when  re- 
quired, or  affix  the  proper  notice,  are  not  entitled  to  the  benefit  of 
this  act.  Carriers  cannot,  by  a  notice,  limit  their  liability  at  com- 
mon law  to  answer  for  the  loss  of  any  articles  in  respect  whereof 
they  are  not  entitled  to  the  benefit  of  this  act.  (?/)  Every  office  of 
such  common  carrier  shall  be  deemed  a  receiving  house ;  any  one 
proprietor  shall  be  liable  to  be  sued,  and  no  action  shall  abate  for 
the  want  of  joining  any  co-proprietor.  (2)  Special  contracts  are  not 
to  be  affected  by  this  act.  (a)  Parties  entitled  to  damages  for  parcels 
lost  or  damaged,  may  recover  the  extra  charges  for  insurance.  (5) 
This  act  does  not  protect  any  such  common  carrier  from  liability 
to  answer  for  losses  or  injury  arising  from  the  felonious  acts  of 
any  servant  in  his  employ ;  nor  does  it  protect  any  such  servant 
from  liability  to  answer  for  the  consequences  of  his  own  neglect  or 
misconduct,  (c)  Common  carriers  are  not  concluded  as  to  the  value 
of  any  parcel  by  the  value  declared,  (d)  Money  may  be  paid  into 
court  by  common  carriers  in  the  same  mode,  ana  with  the  same 
effect,  as  money  paid  into  court  in  any  other  action,  (e)     Notwith- 

(v)  On  the  question  what  falls  within  this  denomination,  see  Mayhew  v.  Xelson, 
6  C.  &  P.  58. 

{w)  See  Syms  v.  Chaplin,  5  Ad.  &  E.  Goi. 

(a:)  The  form  of  notice  almost  universally  adopted  by  land  carriers  since  this  act 
is  given  in  the  notes  to  Owen  v.  Burnett,  4  Tyrwli.  134,  n.  a. 

(y)  Sect.  4.  (z)  Sect.  5.  (a)  Sect.  6. 

(6)  Sect.  1.  (c)  Sect.  8.  {d}  Sect.  9.  (e)  Sect.  10. 


366  MERCANTILE  CONTRACTS. 

Contracts  with  Carriers. 

standing  this  act,  it  was  considered  that  the  carrier  was  still  liable 
for  gross  negligence^  although  he  might  have  affixed  in  his  office 
such  a  notice  as  the  act  requires,  and  although  the  articles  lost  by 
his  misconduct  might  be  of  such  a  description  as  to  require  a  dec- 
laration of  value  and  payment  of  increased  charges,  which  their 
owner  had  however  neglected  to  make  in  respect  of  them.  (/)  In 
determining  what  should  be  considered  such  negligence,  the  cases 
previous  to  the  act  were  supposed  to  be  still  authorities ;  {g)  for  the 
protection  given  to  the  carrier  by  the  act  in  respect  of  the  articles 
there  named  was  thought  to  be  substituted  for  the  protection 
which  he  formerly  derived  from  his  own  notice.  The  Queen's 
Bench  has,  however,  lately  decided  that  the  carrier  is  not,  under 
such  circumstances,  liable  for  a  loss  of  the  articles  named  in  the 
statute  occasioned  by  the  gross  negligence  of  his  servants  not 
amounting  to  a  'inisfeasance.  (h) 

Generally  speaking,  when  goods  are  forwarded  in  pursuance  of 
an  order  which  binds  the  person  giving  it  to  receive  the  goods,  as 
the  property  in  them  passes  to  that  person  by  the  delivery  to  the 
carrier,  he  is  the  proper  plaintiff  if  they  should  be  lost ;  {i)  for  the 
vendor  was  his  agent  to  employ  the  carrier.  But  it  is  otherwise 
when  the  property  in  the  goods  has  not  yet  passed  to  the  vendee, 
as  where  there  is  no  writing  sufficient  to  satisfy  the  Statute  of 
Frauds,  and  the  carrier  was  not  of  his  selection ;  (j)  or  where  the 
goods  are  sent  merely  for  approval,  (/c)  or  the  consignee  is  the 
agent  of  the  consignor,  {I)  or  the  carrier  has  contracted  to  be  liable 
to  the  consignor  in  consideration  of  the  latter's  becoming  responsi- 
ble for  the  price  of  the  carriage.  (?n)  It  frequently  happens  that 
goods  are  sent  to  a  booking-office  keeper  for  the  j)urpose  of  being 


(/)  See  the  judgment  of  the  Court  in  Owen  v.  Burnett,  4  Tyrwh.  142;  2  C.  tfe  M. 
353.  And  see  Wyld  v.  Pickford,  8  M.  &  W  443,  which  decides  that  negligence  must 
De  replied  to  a  plea  of  the  notice. 

(g)  See  also  Owen  v.  Burnett,  ubi  supra. 

(h)  Hinton  v.  Dibbin,  2  Q.  B,  646. 

{i)  Dawes  v.  Peck,  8  T.  R.  330.     Dutton  v.  Solomonson,  3  B.  <fe  P.  582. 

(j)  Coats  V.  Chaplin,  2  Q.  B.  483.     See  also  Norman  v.  Phillips,  14  M.  &  W.  277 

(k)  Swain  v.  Shepherd,  1  M.  <fe  Rob.  224. 

(Z)  Sargent  v.  Morris,  3  B.  &  A.  211. 

{m)  Moore  v.  "Wilson,  1  T.  R.  659.    Davis  v.  James,  5  Burr.  2680. 


CONTRACTS  WITH  CARRIERS.  3G7 

Contracts  -with  Carriers. 

delivered  by  him  to  a  carrier.  In  such  case,  the  booking-office 
keeper  being  the  agent  of  the  owner  for  the  purpose  only  of  de- 
livering to  the  carrier,  it  must,  in  order  to  fix  him  with  negligence, 
be  shown  that  he  omitted  so  to  deliver.  It  will  not  be  even  prima 
facie  evidence  against  him,  as  it  would  against  the  carrier,  that  the 
goods  never  reached  their  destination,  {n) 

A  question  frequently  arises  in  practice,  whether  carriers  who 
have  received  a  parcel  to  be  taken  to  a  point  beyond  that  to  which 
their  own  means  of  conveyance  extend,  are  liable  as  carriers  for 
loss  beyond  that  point,  or  are  to  be  considered  as  agents  for  the 
purpose  of  carrying  to  the  end  of  their  tract,  and  employing  fresh 
agents  at  its  termination  to  complete  the  journey.  The  question 
seems  to  be  for  the  jury,  but  the  inclination  of  the  courts  is  to  look 
on  them  as  the  carriers  throughout,  (o)* 

With  regard  to  the  remuneration  to  which  a  carrier  is  entitled, 
it  is  clear  he  must  carry  for  a  reasonable  amount ;  and  if  he  insist 
on  receiving  more  before  conveying  the  goods,  or  before  parting 
with  them,  an  action  for  money  had  and  received  will  lie  against 
him  for  the  excess,  {p)  What  is  such  reasonable  amount  appears 
to  be  a  question  for  the  jury,  {q)     But  where  the  goods  are  of 


(n)  Gilbert  v.  Dale,  5  Ad.  &  E.  543. 

(o)  Muschamp  v.  Lancaster  &  Preston  R.  R.  Co.,  8  M.  &  "W.  421. 
{p)  Parker  v.  Great  "Western  Railway  Co.,  7  M.  &,  Gr.  253.     See  Pickford  v.  G.  J. 
R.,  8  M.  &  W.  872;  S.  C.  10  M.  &  W.  399.     Ashmole  v.  Wainwright,  2  Q.  B.  837. 
{q)  Ashmole  v.  Wainwright,  2  Q.  B.  837. 


*  It  has  been  held  by  the  Supreme  Court  of  Pennsylvania,  of  Ohio,  and  of 
Illinois,  tliat  the  privilege  of  transhipment,  reserved  in  a  bill  of  lading,  is  intended 
for  the  benefit  and  convenience  of  the  carrier,  but  is  not  designed  to  limit  his 
responsibility,  or  in  &ny  manner  vary  his  obligation  to  deliver  the  goods  safely  to 
the  consignee.  Whiteside  v.  Russell,  8  Watts  &  Serj.  44.  McGregor  &  Co.  v.  Kil 
gore,  6  Ohio,  358.     Dunseth  v.  Wade  et  al.,  2  Scamm.  288. 

The  doctrine  of  Muschamp  v.  Lancaster  &  Preston  R.  R.  Co.  has  been  sanctioned 
oy  the  Court  of  Queen's  Bench,  in  the  late  case  of  Watson  v.  Railway  Co.  3  E.  L.  & 
E.  R.  497.  Scotthorn  v.  South  Staffordshire  R.  R.  Co.,  18  E.  L.  &  E.  R.  553.  It  has 
been  disapproved  in  Vermont  in  Farmers  &  Mechanic's  Bank  v.  Champlain  Trans- 
portation Co.,  23  Verm.  186;  and  in  New  York  in  Van  Santford  v.  St.  John,  6  Hill, 
158,  reversing  decision  of  Supreme  Court  in  25  Wend.  660. 


3G8  MERCANTILE  CONTRACre. 

Contracts  with  Carriers. 

extraordinary  clanger,  or  carried  under  peculiar  circumstances, 
it  may  possibly  be  in  his  option  to  insist  upon  a  special  con- 
tract, (r) 


(r)  See  "Wyld  v.  Piekford,  8  M.  &  W.  443.  If  such  goods  are  tendered  to  a  car- 
rier, and  he  give  notice  to  the  owner  that  he  will  not  be  responsible  for  loss,  unless 
a  more  than  ordinary  rate  of  insurance  be  paid,  which  the  owner  declines  to  pay, 
but  leaves  the  goods  to  be  carried ;  it  appears  that  the  carrier  receives  them  on  the 
footing  of  such  notice,  his  liability  becomes  limited,  and  he  is  only  bound  to  use  the 
ordinary  care  of  a  bailee  for  reward. 


CHAPTER  III. 

CONTEACTS      OF      AFFREIGHTMENT. 

Sect.  1.  Contracts  of  affreightment  hy  charter-party. 

2.  Contract  for  conveyance  in  a  general  ship. 

3.  Duties  of  master  and  owners. 

4.  Duties  of  merchant. 

5.  General  average. 

6.  Salvage. 

7.  Dissolution  of  contracts  of  affreightment. 

Contracts  of  affreiglitment  fall  under  the  general  clenominaWn 
of  contracts  with  carriers,  being  contracts  for  the  carriage  of  goods 
in  vessels,  (a)  On  account,  however,  of  the  important  place  they 
occupy  in  the  mercantile  law,  it  has  been  thought  proper  to  devote 
a  separate  chapter  to  their  consideration.  Contracts  of  this  de- 
scription are  either — 

1.  Contracts  of  affreightment  by  charter-party ;  or, 

2.  Contracts  for  the  conveyance  of  goods  in  a  general  ship. 
We  will  speak  separately  of  the  form  and  peculiar  incidents  of 

each  of  these  two  contracts,  and  then  jointly  of  the  obligations 
which  are  equally  imposed  by  both. 

Section  I. — Affreightment  hy  Charter-party. 

The  contract  by  charter-party  is  defined  to  be  that  "by  which 
an  entire  ship,  or  some  principal  part  thereof,  is  let  to  a  merchant    ^ 
for  the  conveyance  of  goods,  on  a  determined  voyage  to  one  or 


(a)  The  carriage  of  passengers  in  mercliant  vessels  is  regulated  by  stats.  6  4  6 
Viot.  c.  lOY,  and  10  <&  11  Vict.  c.  103. 
24 


370  MERCANTILE  CONTRACTS. 

AfFreiglitment  by  Charter-party. 


more  places ;"  (i)*  the  instrument  by  which  it  is  recorded,  and 
which,  though  often  a  deed,  is  not  necessarily  so,  is  generally  exe- 
cuted by  the  owner  of  the  ship,  when  made  at  the  place  of  his 
residence,  and  sometimes  by  the  master  also,  (c)  If  made  abroad, 
it  can  of  course  only  be  executed  by  the  master,  unless  there  be  an 
agent  of  the  owners,  and,  in  that  case,  if  a  deed,  no  action  of  cove- 
nant can  be  maintained  on  it  against  the  owner,  unless  the  party 
executing  it  had  an  authority  by  deed  to  do  so ;  (ri)  though  an 
action  on  the  case  may,  for  the  breach  of  such  of  the  general  duties 
of  a  ship  owner,  as  are  not  inconsistent  with  its  terms ;  (e)  and  a 
voyage  may  be  made  up  to  a  certain  period  under  a  charter-party 
by  deed,  and  afterwards  under  a  parol  agreement,  or  vice  versa.  (/)f 
The  terms  of  a  charter-party  cannot  of  course  be  varied  by  parol,  {g) 
though  it  may,  like  other  mercantile  instruments,  be  explained  by 
the  usage  of  trade.  {li)X     The  instrument  expresses  the  freight  to 


(&)  Abbott,  part  3,  c.  1. 

(c)  But  the  chartering  of  a  vessel  need  not  be  in  -writing,  though  it  usually  is  so 
effected,  a  verbal  agreement  acted  upon  may  have  the  same  operation  as  a  charter- 
part}'.     Lidgett  V.  Williams,  4  Hare,  456. 

{d)  Harrison  v.  Jackson,  7  T.  R.  207,  and  Horsley  v.  Rush,  there  cited. 

(e)  Leslie  v.  "Wilson,  3  B.  &  B.  171.  And  see  per  Tindal,  C.  J.,  in  Bushel!  v. 
Beavan,  1  Bingh.  N.  C.  121. 

(/)  White  V.  Parkin,  12  East,  578. 

((/)  Gibbon  v.  Young,  2  B.  Moore,  224.     Thompson  v.  Brown,  7  Taunt.  656. 

(//)  Donaldson  v.  Forster,  Abb.  p.  3,  c.  1,  s.  17.  Robertson  v.  Jackson,  2  C.  B.  412. 
Thus  in  Cockburn  v.  Wright,  6  Bingh.  N.  C.  228,  where  the  Court  held  that  a  voj-age 
to  London  and  back,  with  privilege  of  sending  the  ship  to  Calcutta,  did  not  entitle 
the  merchant  to  a  voj-age  from  Bombay  to  Calcutta,  Maule,  J,  said,  "If  we  could 
import  into  this  case  knowledge  that  Calcutta  is  in  the  East  Indies,  and  that  it  is 
usual  on  the  outward  voj-age  to  take  in  a  cargo  at  Bombay  to  be  discharged  at  Cal- 
cutta before  the  commencement  of  the  voyage  homewards,  there  might  be  some 
ground  for  the  construction  of  the  charter-party  for  which  the  plaintiff  contends." 


*  A  ship  may  be  let  by  the  owner  to  the  government,  or  to  a  person  other  than 
a  merchant,  and  for  other  purposes  than  the  conveyance  of  goods,  as  to  be  emploj-ed 
in  warfare,  the  can-ying  of  troops  or  passengers,  and  such  contract  would  be  properly 
called  a  charter-party.     Abbott  on  Shipp.  241. 

•{•  A  charter-party  has  been  more  briefly  defined  to  be  "a  contract  by  which  the 
owner  lets  his  vessel  to  another  for  freight."  Marshall,  C.  J.,  Spring  v.  Gva.y,  6 
Pet.  164. 

t  A  ship  may  be  hired  by  a  parol  contract,  so  as  to  be  binding  on  both  parties: 


CONTRACTS  OF  AFFREIGHTMEXT.  371 

AfFreightment  by  Charter-party. 

be  paid,  and  generally  tlie  burthen  of  the  ship,  by  which  latter 
specification  the  parties  are  not,  however,  concluded ;  for  a  mer- 
chant has  been  held  liable  on  his  covenant  to  furnish  a  full  cargo, 
though  he  had  furnished  260  tons,  the  specified  burthen  of  the  ship, 
which,  in  reality,  contained  400.  (^)  It  also  comprises  covenants 
from  the  owners  that  the  ship  shall  be  tight,  stanch,  furnished 
with  all  necessaries,  that  she  shall  be  ready  by  a  certain  day  to  re- 
ceive, and  shall  wait  a  certain  time  to  ship  her  cargo,  shall  sail  at 
a  particular  time  for  her  destined  port,  (j)  deliver  the  goods  safely 
there,  and  be  properly  found  in  men  and  stores  during  the  voyage, 
to  the  best  of  the  owner's  endeavors.  It  may  of  course  comprise 
any  other  engagements  which  the  mei\:;hant  thinks  proper  to  exact 
and  the  owner  to  concede. 

A  clause  is  usually  to  be  found,  exempting  the  owner  from  lia- 
bility in  case  of  his  being  prevented  from  performing  his  contract 
by  restraint  of  princes.  These  words  apply  to  an  actual,  not  an 
expected  restraint,  {IS)  and  enure  to  the  benefit  of  the  owner,  not  of 
the  merchant,  on  account  of  which  I  have  sometimes  seen  the 
clause  worded,  restraints,  d'c,  mutually  excepted. 

The  merchant  usually  covenants  to  load  and  unload  within  a 
specified  time,  or,  if  he  detain  the  ship  for  a  longer  time,  which  he 
sometimes  receives  liberty  to  do,  to  pay  a  daily  sum,  which,  as  well 
as  the  delay  itself,  is  called  demurrage.'^     It  sometimes  ends  with 


(i)  Hunter  v.  Fry,  2  B.  <fe  A.  421. 

(_/)  If  no  particular  time  be  mentioned,  the  law  implies  that  she  shall  sail  within 
a  reasonable  time.  M'Andrew  v.  Adams,  1  Bingh.  N.  C.  29.  See  also  Clipsham  v. 
Yertue,  5  Q.  B.  265. 

{k)  Atkinson  v.  Ritchie,  10  East,  530.  And  if  this  clause  be  limited  "  during  the 
voyage,"  a  delay  arising  from  such  causes  at  the  port  of  loading  is  not  comprised 
within  it.     Crow  v.  Falk,  15  L.  J.  Q.  B.  183. 


there  is  no  statute  of  the  United  States  which  makes  a  charter-party,  by  deed  or 
writing,  essential  evidence  of  the  contract.  Taggard  v.  Loring,  16  Mass.  336.  Ohe  v. 
Eagle  Ins.  Co.,  4  Mason,  390. 

*  Demurrage  is  an  allowance  or  compensation  for  the  delay  or  detention  of  a 
vessel.  It  is  often  a  matter  of  contract,  but  not  necessarily  so.  Story,  J.,  in  the 
Appollon,  9  Wheat.  362.    (5  C.  R.  621.)    See  Robertson  v.  Bethune,  3  John.  R.  342. 

In  the  case  of  an  unjustifiable  seizure  and  detention  of  a  vessel  and  cargo,  where 
the  property  has  been  restored,  and  the  circumstances  do  not  call  for  aggiavatcd  or 


372  MERCAIS'TILE  CONTRACTS. 

Affreightment  by  Charter-party. 

a  clause  purporting  to  bind  the  ship's  freight  and  cargo  in  a  pecu- 
niary penal t}^  to  the  performance  of  the  contract ;  but  this  seems 
to  be  inoperative.  {T) 

The  stipulations  must  of  course  be  strictly  performed  on  both 
sides.  With  respect  to  the  time  allowed  for  loading  and  unloading, 
it  is  held,  that  the  merchant  must  pay  demurrage  for  any  delay 
beyond  the  arranged  period,  even  though  not  attributable  to  his 
fault,  but  to  some  unforeseen  impediment  to  her  loading  or  unload- 
ing, (m)  such  as  the  crowded  state  of  the  docks ;  for  he  has  ex- 
pressly engaged  and  is  bound  by  the  terms  of  his  own  j^ositive 
contract :  {n)  so,  though  he  may  not  have  been  apprised  of  the 
ship's  arrival,  (o)  or  the  bill  of  lading  have  not  come  to  his  hands ; 
without  which,  or  an  indemnity,  the  master,  as  he  has  a  right,  re- 
fuses to  deliver  the  goods,  {p)  But  where  the  detention  was  occa- 
sioned, not  by  any  impediment  to  the  ship's  loading,  but  by  ice, 
which  prevented  her  from  sailing  after  she  was  loaded,  it  was  held 
that  demurrage  was  not  payable,  since,  to  render  the  freighter  liable 
to  it,  the  delay  should  have  been  for  the  purpose  of  loading,  (q) 
And  when  the  owners  interrupted  the  unloading  by  their  wrongful 
interference,  they  were  not  allow^ed  to  receive  demurrage,  though 
the  unloading,  in  fact,  occupied  a  greater  number  of  days  than 
would  imder  the  charter-party  have  been  allowed  had  the  owners 


(0  Abbott,  pt.  3,  c.  1. 

(»?i)  See  Barker  v.  Hodgson,  3  M.  &  S.  267.  Barret  v.  Dutton,  4  Camp.  333. 
Thompson  v.  "Wagner,  ibid.  n.  335. 

(w)  Abbott,  pt.  3,  c.  1.  See  Gibbens  v.  Buisson,  1  Bingh.  N".  C.  283.  See  Pringle 
V.  MoUett,  6  M.  &  W.  80.  Leer  v.  Yates,  3  Taunt.  SST,  explained  on  this  ground  by 
Baron  Parke  in  Kell  v.  Anderson,  10  M.  &  "W.  502.  And  see  also  Hills  v.  Sughrue, 
15  M.  &  W.  253,  where  the  undertaking  to  load  was  on  the  part  of  the  owner. 

(o)  Harman  v.  Clarke,  4  Camp.  159. 

{p)  Jesson  V.  Solly,  4  Taunt.  52. 

Iq)  Pringle  v.  MoUett,  6  M.  &  W.  80. 


vindictive  damages,  reasonable  demurrage  for  the  vessel,  and  interest  on  the  value 
of  the  cargo,  have  been,  generally  allowed  in  courts  of  admiralty,  as  the  true  measure 
of  damages.     9  Wheat.  362. 

A  covenant  to  pay  for  demurrage,  applies  to  a  detention  voluntary  on  the  part 
of  the  hirer  of  the  vessel,  and  not  to  a  detention  by  capture.  Douglass  v.  Moody,  9 
Mass.  548. 


CONTRACTS  OF  AFFREIGIITilEXT.  373 

Affreightment  by  Charter-party. 

abstained  from  such  interference.  (?')  If  a  certain  demurrage  be 
agreed  on  for  the  time  during  which  the  ship  may  be  obliged  to 
wait  for  convo}^,  or  to  receive  a  cargo,  it  ceases,  in  the  former  case, 
as  soon  as  the  convoy  is  ready ;  (s)  and,  in  the  latter,  as  soon  as  the 
cargo  is  laden  and  the  clearances  obtained,  {t)  though  the  ship  be 
longer  detained  by  tempestuous  weather,  or  set  out  and  be  driven 
into  port  again.  The  days  mentioned  in  the  clause  of  demurrage 
are,  by  the  custom  of  merchants  in  London,  understood  to  be  work- 
ing days ;  (u)  in  the  absence  of  custom,  running  days  are  taken  to  be 
meant :  (v)  it  is  proper  to  state  whether  working  or  running  days  be 
intended.*  Where  a  certain  number  of  lay  days  are  allowed  for 
unloading,  they  are  to  be  reckoned  from  the  vessel's  arrival,  not  at 
the  entrance  of  the  port,  but  at  the  usual  place  of  discharge ;  to 
hold  otherwise  would  be  extremely  inconvenient  in  many  ports, 
ex.  gr.,  that  of  London,  which  extends  to  Yantlet  Creek,  (tc) 

The  substitution,  by  mutual  consent,  of  a  new  port  for  that 
named  in  the  charter-party,  without  mention  of  lay  days,  will  not 
have  the  effect  of  depriving  the  merchant  of  the  lay  days  stipulated 
for  in  the  original  contract,  (x) 

(r)  Benson  v.  Blunt,  1  Q.  B.  870.    And  see  Taylor  v.  Clay,  16  L.  J.  Q..B.  42. 

(s)  Lannoy  v.  Werry,  2  Bro.  P.  C.  60. 

(<)  Jamieson  v.  Laurie,  6  Bro.  P.  C.  4T4.  But  see  Barret  v.  Dutton,  4  Camp.  333. 
Thompson  v.  Wagner,  note  ibid.  335.     Harman  v.  Gandolphi,  Holt,  35. 

(w)  Cochrane  v.  Retburgh,  3  Esp.  121. 

(v)  Brown  v.  Johnson,  10  M.  &  W.  331. 

(w)  Brereton  v.  Chapman,  T  Bingh.  557.  Accord.  Brown  v.  Johnson,  10  M.  &  W. 
331,  where  the  words  were  "  for  discharging  at  her  destined  port,"  and  were  held  to 
mean  from  her  arrival  in  dock  ;  not  from  her  arrival  at  the  entrance  of  tJie  port,  or  at 
the  place  in  the  dock  where  she  was  to  unload.  And  see,  to  the  same  effect,  Kell  v. 
Anderson,  10  M.  A  W.  49S. 

(x)  Jackson  i\  Galloway,  5  Bingh.  N.  C.  71,  which  was  reversed;  but  not  on  this 
point.     Galloway  v.  Jackson,  3  M.  &  Gr.  960. 

*  And  if  there  be  no  usage  to  the  contrary,  and  no  express  exclusion  of  them, 
Sundaj-s  will  be  computed  in  the  calculation.  Abbot,  304.  Brown  v.  Johnson,  10 
M.  &  W.  331. 

When  the  charter-party  allows  a  certain  number  of  lay  days  for  unloading  the 
cargo,  the  consignee  has  the  whole  period,  and  is  not  bound  to  receive  them  as  soon 
as  the  master  of  the  ship  offers  to  deliver  them;  and  if  a  loss  occurs  in  the  interme- 
diate period,  after  his  refusal  to  receive  the  goods,  the  freight  is  not  earned.  Lee 
Comb.  V.  Wain.  4  Binn.  299.     Robertson  v.  Bethune,  3  John.  R.  342.    • 


374  MERCANTILE  CONTRACTS. 


Affreightment  by  Charter-party. 


Where  the  merchant  fails  to  load  within  the  stipulated  time, 
the  master  may,  of  course,  sail  home  again,  and  in  that  case  any 
cargo  which  may  have  been  loaded,  although  not  the  stipulated  one, 
will  go  in  reduction  of  the  freight  for  the  benefit  of  the  merchant,  (3/) 
unless,  indeed,  a  particular  sum  have  been  agreed  on  as  the  for- 
feiture, in  case  of  the  merchant's  default ;  in  which  case,  the  owner 
would  be  entitled  to  receive  that  sum,  and  also  any  thing  more  the 
ship  might  earn,  even  though  he  might  thereby  get  a  larger  sum 
than  the  freight  stipulated  for.  {z) 

On  the  other  hand,  where  a  charter-party  provided  that  a  vessel 
should  proceed  to  Trieste,  and  there  load  a  full  cargo,  the  vessel  to 
sail  from  England  on  or  hefore  the  4:th  of  February  next,  it  was  held, 
that  the  breach  of  the  owner's  contract  to  sail  by  that  day, 
discharged  the  merchant  from  his  obligation  to  produce  a  car- 
go, (a) 

"  The  very  words,  to  sail  on  or  before  a  given  day,  import,"  said 
the  Lord  Chief  Justice,  "  the  same  as  the  words,  conditioned  tc 

sail And,  looking  at  the  subject  matter  of  the  contract, 

without  regarding  the  precise  words,  we  think  that  construing  the 
words  as  a  condition  precedent  will  carry  into  effect  the  intention 
of  the  parties  with  more  certainty,  than  holding  them  to  be  matter 
of  contract  only,  and  merely  the  ground  of  an  action  for  damages. 
Both  parties  were  aware  that  the  whole  success  of  a  mercantile  ad- 
venture does,  in  ordinary  cases,  de|)end  on  the  commencement  of 
the  voyage  by  a  given  time.  The  nature  of  the  commodity  to  be 
imported,  the  state  of  the  foreign  and  home  market  at  the  time 
when  the  contract  of  charter-party  is  made,  and  the  various  other 
calculations  which  enter  into  commercial  speculations,  all  combine 
to  show  that  dispatch  and  certainty  are  of  the  very  first  importance 
to  their  success,  and  certainly  nothing  will  as  effectually  insure  both 
dispatch  and  certainty,  as  the  knowledge  that  the  obligation  of  the 
contract  itself  shall  be  made  to  depend  on  the  actual  performance 
of  the  stipulation  which  relates  to  them." 

(y)  Pullers.  Staniforth,  11  East,  232;  Abbott,  Sth  ed.  265.  Lidgett  i;.  'Winiams, 
4  Hare,  456.  As  to  his  duty  in  procuring  such  a  cargo,  see  Hai'ries  v.  Edmonds,  1 
Car.  &  K  686. 

(,:)  Boll  V.  Puller,  2  Taunt.  285 ;  Abbott,  Sth  ed.  265,  266. 

(a)  GlahoLm  v.  Hays,  2  M.  &  Gr.  257. 


COXTRACTS  OF  AFFREIGHTMENT. 


Affreightment  by  Charter-party. 


It  often  becomes  important  to  determine  whether,  according  to 
the  true  construction  of  a  charter-party,  the  possession  of  the 
ship  passes  to  the  merchant,  so  as  to  constitute  him  an  owner  j-^j-o 
hac  vice,  and  cause  the  general  owner  to  stand  to  him  in  tlie  re- 
lation of  a  lessor,  rather  than  a  carrier.*  On  this  question  may 
depend  the  owner's  right  of  liew  for  the  freight,  of  which  descrip- 
tion of  remedy  we  shall  speak  more  fully  hereafter,  (b)  or  his  own 
liability  to  the  suit  of  third  parties:  (c)  it  is  impossible,  however,  to 
lay  down  general  rules  for  its  solution,  which  must  in  each  case 
be  gathered  from  the  terms  of  the  instrument,  or  its  purpose  and 
object ;  as  where,  in  case  of  a  ship  let  to  the  commissioners  of  the 
Transport  Board,  the  possession  was  held  to  pass  to  ihe  King, 
on  account  of  the  nature  of  the  service  on  which  she  was  to  be 
engaged,  (d) 


(b)  See  Abbott,  part  3,  cap.  1.  Campion  v.  Colvin,  3  Bingh.  N".  C.  lY,  and  Small 
V.  Moats,  9  Bingh.  574.  Belcher  v.  Capper,  4  M.  &  Gv.  502.  See  also  Thompson  v. 
Small,  1  C.  B.  328. 

(c)  Newberry  v.  Colvin,  1  Tyrwh.  67  ;  1  C.  &  J.  192.  Dean  v.  Hogg,  10  Bingh.  345. 
/Reeye  v.  Davis,  1  Ad.  &  E.  312.  Fenton  v.  City  of  Dublin  Steam  Packet  Company, 
S  A.d.  &  E.  835. 

(d)  Trinity  H.  v.  Clarkee,  4  M.  &  S.  288.  See  Dean  v.  Hogg,  6  Carr.  &  P.  54;  10 
Bingh.  345.  Yates  v.  Railstone,  3  Taunt.  293.  In  Fenton  v.  City  of  Dublin  Steam 
Packet  Co.  the  owners  were  to  keep  the  vessel  in  order  and  the  charterers  to  pay  all 
wages  and  disbursements,  it  was  held  that  the  owners  continued  in  possession  '  the 
ship,  and  liable  for  mischief  done  by  the  negligence  of  the  crew. 


*  A  person  may  be  owner  for  the  voyage,  who,  by  a  contract  with  the  general 
owner,  hires  the  ship  for  the  voyage,  and  has  the  exclusive  possession,  command, 
and  navigation  of  the  ship.  Vallejo  v.  Wheeler,  Cowp.  143.  But  where  the  general 
owner  retains  the  possession,  command,  or  navigation  of  the  ship,  and  contracts  to 
carry  a  cargo  or  freight  for  the  voyage,  the  charter-party  is  considered  as  a  mere 
affreightment  sounding  in  covenant,  and  the  freighter  is  not  clothed  with  the 
chai-aeter  or  legal  responsibility  of  ownership.  Hooe  v.  Grovermah,  1  Craneh, 
214. 

la  the  first  case,  the  general  freighter  is  responsible  for  the  conduct  of  the  master 
and  mariners  during  the  voyage.  In  the  latter  case,  the  responsibility  rests  on  the 
general  owner.  Marcardier  v.  Chesapeake  Ins.  Co.,  8  Craneh,  39.  (3  C.  R.  20.)  Clarkson 
V.  Edes,  4  Co  wen,  470.  Palmer  v.  Gracie,  4  Wash.  C.  C.  R.  110.  Certain  Logs  of 
Mahogany,  2  Sumii.  589. 


376  MERCANTILE  CONTRACTC. 


Contract  for  Conveyance  in  a  General  Ship. 


Section  II. —  Contract  for  Conveyance  in  a  General  Ship. 

When  the  master  and  owners  of  a  ship  engage  with  separate 
merciiants  to  convey  their  goods  to  the  place  of  her  destination,  the 
contract  is  said  to  be  for  conveyance  in  a  general  shq^.  It  is  usual 
to  advertise  such  ships  in  the  newspapers,  or  in  cards  and  handbills ; 
and  care  should  be  taken  to  insert  nothing  in  these  advertisements 
which  it  is  not  the  ship-owner's  intentipn  to  make  strictly  good ; 
since  it  is  not  clear  that  some  of '  *ic  Terms  of  such  advertisement 
may  not  be  looked  upon  as  incorporated  into  the  contract,  (e)  But 
the  instrument  to  which  reference  is  generally  had  for  the  terms  of 
such  a  contract  is  the  Bill  of  Lading :  this  the  master  must  sign  and 
deliver  to  the  holder  of  the  receipt  given  by  him  for  the  goods  when 
shipped,  on  having  that  receipt  returned  to  him.  Several  parts 
({.  e.  copies)  of  the  bill  of  lading  are  commonly  made  out,  of  which 
the  merchant  sends  one  or  two  to  the  person  for  whom  the  goods 
are  destined,  and  retains  one  for  himself.  The  master  must  also 
take  care  to  have  a  part  made  out  for  his  own  use. 

There  is  some  doubt  whether  a  Bill  of  Lading,  properly  so  called, 
be  not  confined  to  marine  adventures,  and  whether  an  instrument 
so  worded  given  by  a  boat-master  in  a  canal  navigation,  would 
operate  in  any  way  except  as  a  receipt  or  memorandum.  (/) 

The  following  is  the  form  of  a  Bill  of  Lading  : — 

J.  W.  \        "  Shipped  in  good  order  by  A.  B.,  merchant,  in  and 

.No.  1.  [upon  the  good  ship  called  the  ■ ,  whereof  C.  D.  is  master, 

0.  20.  y  now  riding  at  anchor  in  the  river  Thames,  and  bound  for 
Barcelona,  in  Spain,  20  bales,  containing  100  pieces  of 
broadcloth,  marked  and  numbered  as  per  margin,  and  are 
to  be  delivered  in  the  like  good  order  and  condition,  at 
Barcelona  aforesaid ;  (the  act  of  God,  the  King's  enemies, 
fire,  and  all  and  every  other  dangers  and  accidents  of  the 
seas,  rivers,  and  navigation,  of  whatever  nature  and  kind 

(c)  Al)1jott,  part  3,  c.  2.     See  Freeman  v.  Baker,  5  B.  (fe  Ad.  797. 
(/)  Bryans  v.  Nix,  4  M.  &  W.  775. 


CONTRACTS  OF  AITREIGHTSIENT,  377 

Contract  for  Conveyance  in  a  General  Ship. 

soever  excepted,)  unto  E.  F.,  mercliant  there,  or  bis  assigns, 

he  or  they  paying  freight  for  the  said  goods  ■ ■  per  piece 

freight,  Avith  primage  and  average  accustomed.  In  Witneso 
whereof,  the  master  or  j)urscr  of  the  said  ship  hath  af- 
firmed to  three  bills  of  lading  of  this  tenor  and  date ;  one 
of  which  bills  being  accomplished,  the  other  two  to  stand 
void. 
Dated  at  London  the dav  of ." 


In  the  above  form,  a  consignee  of  the  goods,  viz.  E.  F.,  is  men- 
tioned, to  whom,  or  to  his  assigns,  they  are  to  be  delivered.  But 
the  bill  is  sometimes  made  out  for  delivery  to  the  consignor,  or  his 
assigns,  and  sometimes  "to  order  or  assigns,"  which 

import  an  engagement  to  deliver  to  the  person  whom  the  consignor 
shall  nominate,  and  his  assigns.  Other  clauses  may  be,  and  some 
times  are,  introduced  into  the  bill  of  lading,  according  to  the  nature 
of  the  contract  between  the  parties  to  it ;  to  provide,  for  instance, 
for  the  payment  of  demurrage  by  the  consignee,  the  effect  of  which 
will  be  to  raise  an  implied  undertaking  on  his  part  to  pay  it,  if  he 
receive  the  goods  under  such  bill  of  lading,  and  that,  though  he 
have  no  valuable  interest  in  them,  for  (r/)  "the  acceptance  of  goods 
in  pursuance  of  a  bill  of  lading,  whereby  the  shipper  has  made  the 
payment  of  freight  or  demurrage  a  condition  precedent  to  delivery, 
is  evidence  of  a  contract  by  the  consignee  to  pay  such  demand." 
We  shall  have  occasion  to  advert  again  to  this  subject. 

It  has  been  seen  that  the  bill  of  lading  is  usually  made  out  for 
the  delivery  of  the  goods  to  some  person,  ex.  gr.,  E.  F.,  or  Ms  assigns. 
E.  F.  can,  therefore,  by  naming  an  assign,  transfer  his  right  to  them 
to  some  other  person.  {Ji)  The  mode  of  appointing  an  assign  is  by 
indorsing  and  handing  over  to  him  the  bill  of  lading,  which  is  thus 
a  negotiable  instrument;  accordingly,  it  is  the  common  practice  of 
merchants  to  negotiate  it,  and,  by  such  assignment,  the  property 


(//)  Scaife  v.  Tobin,  S  B.  &  Ad.  523,  per  Parke,  J. 

(/()  Even  though  the  word  assir/yis  be  omitted,  it  will,  it  has  been  thought.,  be 
transferable  by  indorsement,  if  such  be  the  custom  of  merchants.  Renteria  v.  Ruding, 
1  M.  &  M.  511  ;  sed  qncere.  At  all  events,  a  party  taking  the  goods  comprehended  in 
it  will  be  liable  to  freight. 


378  MERCANTILE  CONTRACTS. 


Contract  for  Conveyance  in  a  General  Ship. 


in  tlie  goods  is  held  to  pass  to  tlio  indorsee  of  the  bill  of  lading,  (i)^ 
Nay,  though  the  consignee  named  in  the  bill  of  lading  should  be- 
come insolvent,  without  having  paid  for  the  goods,  yet  his  assign- 


(i)  Wright  V.  Campbell,  4  Burr.  2046 ;  1  Bla.  628.     Caldwell  v.  Ball,  1  T.  R.  205. 
Hibbert  v.  Carter,  1  T.  R.  Ho. 


*  By  the  well  settled  principles  of  commercial  law,  the  consignee  is  thus  consti- 
tuted the  authorized  agent  of  the  owner,  whoever  he  may  be,  to  receive  the  goods; 
and  by  this  indorsement  of  the  bill  of  lading  to  a  bona  fide  purchaser  for  a  valuable 
consideration,  without  notice  of  any  adverse  interests,  the  latter  becomes,  as  against 
all  the  world,  the  owner  of  the  goods.  This  is  the  result  of  the  principle,  that  bills 
of  lading  are  transferable  by  indorsement,  and  thus  may  pass  the  property.  It  mat- 
ters not  whether  the  consignee  in  such  case  be  the  buyer  of  the  goods,  or  the  factor, 
or  agent  of  the  owner.  His  transfer  in  such  a  case  is  equally  capable  of  divesting  the 
property  of  the  owner  and  vesting  it  in  the  indorsee  of  the  bill  of  lading.  And 
strictly  speaking,  no  person  but  such  consignee  can,  by  an  indorsement  of  the  bill 
of  lading,  pass  the  legal  title  to  the  goods.  But  if  the  shipper  be  the  owner,  and  the 
shipment  be  on  his  own  account  and  risk,  although  he  may  not  pass  the  title  by 
virtue  of  a  mere  indorsement  of  the  bill  of  lading,  unless  he  be  the  consignee,  or 
what  is  the  same  thing,  it  be  deliverable  to  his  order,  yet  by  any  assignment,  either  on 
the  bill  of  lading  or  by  a  separate  instrument,  he  can  pass  the  legal  title  to  the  same; 
and  it  will  be  good  against  all  persons,  except  a  purchaser  for  a  valuable  con" 
sideration,  without  notice,  by  an  indorsement  of  the  bill  of  lading  itself.  Such  an 
assignment  not  only  passes  the  legal  title,  as  against  his  agent  and  factors,  but  also 
against  his  creditors,  in  favor  of  the  assignee.  Conard  v.  Atlantic  Ins.  Co.,  1  Pet.  445. 
Rowley  v.  Bigelow,  12  Pick.  307.  Dawes  v.  Cope,  4  Binn.  258.  Nathan  v.  Giles,  5 
Taunt.  558.  Chandler  v.  Sprague,  5  Met.  306.  Chandler  v.  Belden,  18  John.  157. 
Wilmshurst  v.  Bowker,  V  Man.  &  Grang.  882. 

A  bill  of  lading  to  bearer,  or  even  in  blank,  delivered  by  the  shipper,  for  value, 
would  be  sufficient  to  enable  the  holder  to  receive  and  hold  the  property  against  any 
person,  except  a  prior  indorsee,  withoiit  notice.  Allen  v.  Williams,  12  Pick.  29Y. 
Low  V.  De  Wolf,  8  Pick.  101. 

If  a  bill  of  lading  is  signed  before  the  goods  are  on  board,  or  even  pui'chased,  and 
afterwards,  at  any  time  before  the  ship  proceeds  on  the  voyage  described,  goods  are 
placed  on  board,  as  and  for  the  goods  embraced  in  the  bill  of  lading,  as  against  the 
shipper  and  master,  the  bill  of  lading  will  operate  on  such  goods  by  way  of  relation 
and  estoppel.     Rowley  v.  Bigelow,  12  Pick.  307. 

The  insertion  of  the  name  of  a  person  as  consignee  in  a  bill  of  lading,  gives  such 
person  no  property  in  the  goods,  nor  right  to  take  possession  of  them,  until  effect  be 
given  to  the  bill  of  lading,  by  a  delivery  to  such  person,  hy  the  shipper  himself,  or 
some  person  by  him  duly  authorized.  Nor  will  the  mere  indorsement  of  a  bill  of 
lading,  by  the  consignee,  without  a  delivery  of  it,  transfer  the  property  in  the  goods. 
A.llen  V.  Williams,  12  Pick.  297.    Buffington  v.  Curtis,  15  Mass.  528. 

A  delivery  of  the  bill  of  lading  to  a  third  person,  for  the  benefit  of  the  indorsee. 


CONTRACTS  OF  AFFREIGHTMENT.  379 

Contract  for  Conveyance  in  a  General  Ship. 

ment  made  for  a  valuable  consideration,  and  without  notice  to  the 
assignee  that  the  goods  were  not  paid  for,  or  that  they  were  paid 
for  by  bills  sure  to  be  dishonored,  has  been  held  to  pass  them 
absolutely  to  his  assignee,  and  deprive  the  consignor  of  his  right  to 
stop  in  transitu.,  which,  as  against  the  original  consignee,  he  might 
have  exercised,  {j)  But  if  the  assignee  of  the  bill  of  lading  have 
not  acted  hona  fide,  for  instance,  if  he  knew  that  the  consignee  was 
insolvent,  and  assisted  to  defraud  the  consignor  of  the  price  of  his 
goods,  (^•)  he  stands  in  the  same  situation  as  the  consignee,  and  the 
consignor  retains  his  right  to  stop  in  transitu  ;  and,  if  there  be  any 
condition  either  in  the  bill  of  lading,  or  in  the  indorsement  thereof, 
ex.  gr.,  if  the  goods  are  to  be  delivered,  provided  E.  F.  pay  a  certaii 
draft,  all  subsequent  indorsees  take  subject  to  that  condition,  and 
have  no  title  until  it  is  complied  with,  il)     But  although  the  bill 

(_;■)  Lickbarro-w  v.  Mason,  2  T.  R.  63,  which  was  reversed  in  ei-ror,  1  H.  Bl.  357, 
and  error  brought  on  the  reversal  in  Dom.  Proc,  and  the  cause  directed  to  be  tried 
anew,  which  it  was,  and  adjudged  as  at  first,  5  T.  R.  683,  which  judgment  was 
acquiesced  in.  See  Newsom  v.  Thornton,  6  East,  17.  Salomons  v.  Nissen,  2  T.  R. 
674.  Dick  V.  Lurasden,  Peake,  N.  P.  C.  190.  Haille  v.  Smith,  1  B.  «fe  P.  563.  And 
Bee  stat.  6  Geo.  4,  c.  94,  below  cited.  But  a  delivery  order  or  shipping  note  is  not 
like  a  bill  of  lading,  and  will  not  pass  the  property  in  the  goods,  Jenkyns  v.  Us- 
borne,  7  M.  &  Gr.  678. 

(k)  Cumming  v.  Brown,  9  East,  506. 

{I)  Barrow  v.  Coles,  3  Camp.  92. 

or  inclosing  it  in  a  letter  directed  to  him,  and  putting  the  letter  in  the  post-office, 
would,  it  seems,  amount  to  a  constructive  delivery,  and  from  that  time  pass  the 
property.     Buffington  v.  Curtis,  15  Mass.  528. 

[Since  the  above  note  was  written,  the  subject  has  imdergone  a  critical  examination, 
leading  to  a  modified  enunciation  of  the  law.  The  indorsement  and  transfer  of  a 
bill  of  lading  amounts  to  no  more  than  a  symbolical  delivery  of  the  goods.  In  the 
language  of  Lord  Ellenborough,  in  Newsom  v.  Thornton,  6  East,  41,  "it  can  operate 
no  farther  than  a  direct  delivery  of  the  goods  would  iiave  done."  It  is  demonsti-ated 
by  the  American  Editors  of  Smith's  Leading  Cases,  vol.  1,  p.  751,  note  to  Lickbarrow 
V.  Mason,  in  an  able  and  elaborate  analysis  of  the  adjudicated  cases,  that  the  posses- 
sion of  the  bill  of  lading  can  clcthj  the  holder  with  no  greater  powers  than  would 
result  from  the  actual  possession  of  the  goods.  It  does  not  constitute  title  in  itself, 
and,  as  in  some  cases  of  transfer  of  negotiable  instruments,  dispense  with  the  rule, 
nemo  plus  juris  ad  alienum  transferre  potest  quam  ipse  habet.  If  therefore  the  con- 
eignee  of  the  goods  could  not  transfer  a  good  title,  although  in  possession,  to  a  bona 
fide  purchaser,  his  indorsement  and  delivery  of  a  bill  of  lading  will  not  be  allowed  a 
greater  effect  even  in  favor  of  an  innocent  party  who  has  paid  value  for  it.] 


380  MERCANTILE  CONTRACTS. 


Duties  of  Master  and  Owners. 


of  lading  is  thus  negotiable,  its  indorsement  transfers  no  more  than 
the  property  in  the  goods,  it  does  not  transfer  the  contract  between 
the  original  parties  to  it,  and  therefore  the  assignee  of  such  an  in- 
strument cannot  maintain  an  action  founded  upon  that  contract,  {m) 

This  power  of  transferring  the  property  in  the  goods  by  an 
assignment  of  the  bill  of  lading  remains  to  the  shipper  as  long  as 
the  goods  are  in  the  hands  of  any  agent  of  his,  and  he  may  alter 
their  destination  while  they  are  on  board :  thus,  if  the  captain  sign 
a  bill  of  lading  for  the  delivery  of  the  goods  to  A.  or  his  assigns, 
and  the  shipper  afterwards  transmit  a  bill  of  lading  to  B.,  making 
them  deliverable  to  him,  B.  will  be  entitled  to  them  if  nothing 
further  had  been  done  to  vest  the  property  in  A.  (n) 

The  above  observations  regarding  the  negotiation  of  the  bill  of 
lading  by  a  consignee,  apply  to  the  case  of  consignment  of  goods 
'to  a  2^urchaser ;  for,  where  they  were  consigned  to  a  factor^  his 
power  of  altering  the  property  in  them,  by  indorsement  of  the  bill 
of  lading,  was  less  extensive,  since  it  was  thought  that  though  he 
might  bind  his  principal  by  a  sale  of  the  bill  of  lading,  because  a 
factor's  usual  employment  is  to  sell,  yet  he  could  not  by  a  pledge 
thereof,  for  that  is  not  within  the  scope  of  his  authority :  (o)  and 
though  stats.  6  Geo.  4,  c.  94,  and  5  &  6  Yict.  c.  39,  have  now 
given  effect  to  his  ^jZec7^e  also,  yet  they  have  not  'given  it,  in  all 
cases,  the  same  effect  as  if  the  goods  were  his  own  property.  By 
those  statutes  the  subject  is  at  present  regulated.  The  provisions 
are  set  out  and  commented  upon,  ante^  Book  I.,  ch.  5.  (2>) 

Skotion  III. — Duties  of  Master  and  Owners. 

"We  now  come  to  consider  the  obligations  which  the  two  sorts 
of  contracts  of  affreightment  equally  impose.  These  are  divided 
by  a  celebrated  author  {q)  into  duties  to  be  performed — 

(m)  Sanders  v.  Vanzeller,  4  Q.  B.  297.     Thompson  v.  Doming'-,  14  M.  &  W.  403. 

\n)  Mitchell  v.  Ede,  11  Ad.  &  E.  888. 

(o)  Newsora  v.  Thornton,  6  East,  17.  Martini  v.  Coles,  1  M.  &  S.  140.  Shipley  v. 
Kymer,  ibid.  484.  Solly  v.  Rathbone,  2  M.  &  S.  298.  Cockran  v.  Irlam,  ibid.  301. 
See  ante.  Book  I.  cap.  5. 

(/))  See  also,  post,  Book  iv.  cap.  1,  and  in  re  "Westzinthus,  5  B.  <fe  Ad.  817. 

iq)  Abbott,  p.  3,  c.  3. 


CONTRACTS  OF  AFFREIGHTMENT.  381 

Duties  of  Master  and  Owners. 

1.  By  the  master  and  owners. 

2.  By  the  merchant. 

The  former  class  are  again  divided  into  those  which  respect, 
1st,  the  preparation  for ;  2d,  the  commencement ;  8d,  the  course ; 
and,  4th,  the  completion  of  the  voyage. 

1.  With  respect  to  the  'preparation,  (r)  the  vessel  must  be  tight, 
stanch,  and  strong,  and  furnished  with  proper  necessaries;  this  a 
charter-party  usually  requires ;  but  it  is  equally  required  by  law, 
though  there  be  no  charter-party,  (s)*  The  same  observation  ap 
plies  to  her  crew,  who  must  be  sufficient  in  number  and  ability ;  {() 
so,  if  usage  or  the  law  of  the  country  require  that  she  should  have 
a  pilot,  there  must  be  one  on  board,  as  there  must  also  when  the 
ship  comes  in  the  course  of  her  voyage  to  any  place  where  there  is 
an  establishment  of  pilots,  and  it  is  possible  to  procure  one  before 
she  enters  on  the  difficult  part  of  the  navigation,  {u)  The  goods 
are  to  be  taken  by  the  master  or  owner,  whose  responsibility  com- 
mences with  their  receipt,  from  the  shipper,  and  stored  carefidly 
on  board  ;  and  all  things  necessary  for  that  purpose,  such,  for 
instance,  as  ropes,  must  be  provided  by  the  master,  since,  if  the 
goods  be  injured  by  or  in  consequence  of  improper  stowage,  he 
and  his  owners  are  responsible.  {v)\     The  master  must  also  have 


(r)  See  generally,  Abb.  p.  3,  c.  3. 

(s)  Coggs  V.  Bernard,  2  Ld.  Raym.  909.     Lyon  v.  Mells,  5  East,  428. 

{t)  Shore  v.  Bentall,  7  B.  <fe  C.  798,  n. 

(m)  Law  V.  HoUingsworth,  7  T.  R.  160.     Phillips  v.  Headlam,  2  B.  «&  Ad.  380. 

(y)  Go£f  V.  Clinkard,  cited  1  Wils.  282. 


*  There  is  in  every  contract  of  affreightment  an  implied  warranty  of  the  sea- 
worthiness of  the  vessel.  It  is  the  duty  of  the  owner  of  the  vessel  when  he  charters 
her,  to  put  and  keep  her  in  a  suitable  condition  to  transport  her  cargo.  The  owner 
is  also  bound  to  furnish  suflScient  men  and  stores,  unless  the  contrary  be  in  terms 
provided  for,  or  results  from  the  nature  of  the  express  contract.  Putnam  v.  Wood, 
8  Mass.  481 ;  Goodrich  v.  Lord,  10  Mass.  483  ;  Ripley  v.  Scaife,  5  B.  tfe  C.  167,  (11  K 
C.  L.  R.  188.) 

I  When  goods  are  shipped  under  the  common  bill  of  lading,  it  is  presumed  that 
they  are  shipped  to  be  put  under  deck,  as  the  ordinary  mode  of  stowing  cargo. 
Vernard  v.  Hudson,  3  Sumn.  405.  Creery  v.  Holly,  14  Wend.  26.  In  the  case  of 
Vei-nard  "j.  Hudson,  Judge  Story  held,  that  this  presumption  might  be  rebutted,  by 
showing  a  positive  agreement  between  the  parties  that  the  goods  were  to  be  carried 
on  deck,  or  circumstances  from  which  such  an  agreement  might  be  inferred.     "Th« 


382  MERCANTILE  CONTRACTS. 


Duties  of  Master  and  Owners, 


on  board  the  i^roper  manifest  and  other  documents  necessary  for 
the  protection  of  the  vessel,  and  must  carry  no  false  papers  or  con- 
traband goods,  whereby  she  may  be  forfeited. 

He  must,  as  we  have  seen,  give  a  receipt  for  the  cargo  to  the 
shipper,  and  sign  bills  of  lading  as  he  may  direct,  on  having  that 
receipt  returned  to  him.  (w)  If,  by  agreement,  the  master  is  to 
proceed  to  a  particular  place  for  the  cargo,  he  must  use  due  dili- 
gence, or  the  freighter  may  be  discharged ;  {x)  and  if  the  vessel 
takes  out  a  cargo,  in  which,  the  freighter  has  no  interest,  the  cap- 
tain shall  give  notice  when  the  vessel  is  ready  to  receive  the  cargo, 
or  the  freighter  will  not  be  liable  for  omitting  to  provide  it.  (^) 

2dly  and  3dly.  With  respect  to  the  commencement  and  con- 
tinuance of  the  voyage — the  proper  clearances  being  obtained,  the 
ship  must  set  sail  at  the  stipulated  time,  or  if  no  time  for  sailing 
have  been  expressly  agreed  upon,  must  sail  within  a  reasonable 
time ;  for,  upon  general  principles,  in  all  contracts  by  charter- 
party,  where  there  is  no  express  agreement  as  to  time,  it  is  an 
implied  stipulation  that  there  shall  be  no  unreasonable  or  unusual 
delay  in  commencing  the  voyage ;  (2)*  and,  if  there  be  a  stipula- 


(«')  As  to  the  right  of  the  shipper  who  has  taken  such  a  receipt,  to  demand  the 
immediate  re-delivery  of  his  goods,  see  Thompson  v.  Small,  1  C.  B.  328. 

(x)  Freeman  v.  Taylor,  8  Bingh.  124.  A  slight  dela}"  will  not  have  this  effect. 
It  must  be  such  a  delay  as  frustrates  the  object  of  the  voj-age,  Clipsham  v.  Vertue,  6 
Q.  B.  265,  unless  it  be  made  a  condition.     See  Glaholm  v.  Hays,  2  M.  &  Gr.  251 

{y)  Fairbridge  v.  Pace,  1  Car.  &  K.  317. 

{z)  M'Andrew  v.  Adams,  1  Bingh.  N.  C.  38.     Freeman  v.  Taylor,  8  Bingh.  124. 


admission  of  proof  to  this  effect^"  he  says,  "  is  perfectly  consistent  with  the  rules  of 
law ;  for  it  simply  rebuts  a  presumption  arising  from  the  ordinary  course  of  busi 
ness."  But  in  the  case  of  Creery  v.  Holly,  the  Court  held  that  parol  evidence  was 
inadmissible,  to  show  an  agreement  by  the  shipper  that  the  goods  might  be  stowed 
on  deck,  when  a  clean  bill  of  lading  had  been  given.     See  x\bbott,  489,  note  1. 

*  And  the  same  stipulation,  it  seems,  would  be  applied  as  to  the  prosecution  and 
completion  of  the  voj-age.  But  the  principle  upon  which  the  extraordinary  respon- 
sibility of  common  carriers  is  founded,  does  not  require  that  that  responsibility 
should  be  extended  to  the  ime  occupied  in  the  transportation.  A  common  carrier, 
in  respect  to  the  time  of  delivery  of  goods,  is  responsible  only  for  the  exertion  of  due 
diligence ;  and  may  excuse  delay  in  the  delivery  by  accident  or  misfortune,  although 
not  inevitable.  It  is  enough  if  he  exerts  due  care  and  diligence  to  guard  against 
delay.     Parsons  v.  Hard}-,  14  Wend.   215.    As  to  the  damages  which  may  be  re- 


CONTRACTS  OF  AFFREIGHTMENT.  383 

Duties  of  Master  and  Owners. 

tion  to  that  effect,  must  do  so  under  the  safeguard  of  a  convoy ; 
concerning  the  nature  of  which  escort,  and  the  rules  respecting  it, 
we  treat  under  another  head,  viz.,  that  of  Insurance.  She  mast 
then  proceed  to  her  destined  port  without  deviation ;  for  if  she 
deviate  unnecessarily,  and  be  lost,  the  master  and  owners  are  re- 
sponsible, although  the  loss  be  by  the  act  of  God  or  the  King's 
enemies ;  (a)  in  fine,  the  master  is  to  use  every  effort  to  convey  the 
cargo  safely  to  its  destination  ;*  and  if,  by  reason  of  a  storm,  or 
some  other  unexpected  cause,  it  becomes  impossible  to  do  so  in  his 
own  vessel,  he  is  to  do  what  a  prudent  man  would  think  most  for 
the  benefit  of  all  concerned  ;f  what  that  may  be  it  is  impossible  to 
anticipate :  we  have,  however,  high  authority  for  saying,  that 
"  transhipment  for  the  place  of  destination,  if  it  be  practicable,  is 
the  first  object,  because  that  is  in  furtherance  of  the  original  pur- 
pose ;  ih)  if  that  be  impracticable,  return  or  a  safe  deposit  (c)  may 
be  expedient ;  the  merchant  should  be  consulted  if  possible ;  {d) 
a  sale  is  the  last  thing  the  master  should  think  of,  because  it  can 

(a)  Parker  v.  James,  4  Camp.  112.     Davis  v.  Garrett,  6  Bingh.  716. 

(6)  See  Shipton  v.  Thornton,  9  Ad.  &  E.  314,  and  post,  sect.  4,  ad  Jinem,  p.  285. 
Some  doubt  is  entertained  in  that  case  whether  it  be  the  master's  right  to  tranship, 
or  his  duty. 

(c)  See  an  instance  of  deposit,  which  seems  not  to  have  been  questioned,  in  Lid- 
dard  v.  Lopes  and  another,  10  East,  426. 

id)  Wilson  V.  Miller,  2  Stark.  1. 

covered  for  a  failure  to  deliver  goods  in  a  reasonable  time,  the  goods  themselves  not 
being  injured,  see  Bracket  v.  McNair,  14  John.  ITO.  Bell  v.  Cunningham,  3  Pet.  69. 
Colvin  V.  Jones,  3  Dana,  576. 

*  Moreover,  the  master  must,  during  the  voj-nge,  take  all  possible  care  of  the 
cargo.  If  it  require  to  be  aired  or  ventilated,  as  fruit  and  some  other  things  do,  he 
must  take  the  usual  and  proper  methods  for  this  purpose.  Abbott,  pt.  4,  ch.  5, 
p.  371. 

+  In  cases  of  necessity  or  calamity  during  the  voyage,  the  master  is  by  law 
created  an  agent  from  necessity,  for  the  benefit  of  all  concerned;  and  what  lie  fairl3'' 
and  reasonably  does,  under  such  circumstances,  in  the  exercise  of  a  sound  discretion, 
binds  all  the  parties  in  interest  in  the  voyage,  whether  owners,  or  shippers,  or 
underwriters.  Jordan  v.  Warren  Ins.  Co ,  1  Story  R.  353.  What  may  be  done 
ought  to  be  done,  when  the  rights  of  third  persons  are  essentially  con:erned  in  the 
act.  The  master  is  bound  to  act  for  the  best  interest  of  all  concerned.  Kent,  C.  J., 
Scheiffelin  v.  New  York  Ins.  Co.,  9  John.  27.  Douglass  v.  Moody,  9  Mass.  561 
Searle  v.  Scovil,  4  John.  Ch.  R.  224. 


384  MERCANTILE  CONTRACTS. 

Duties  of  Master  and  Owners. 

be  only  justified  by  that  necessity  which  supersedes  all  human 
laws :  if  he  sell  without  necessity,  his  owners,  as  well  as  himself, 
will  be  answerable  to  the  merchant ;  (e)  and  they  will  be  equally 
answerable  if  he  place  the  goods  at  the  disposal  of  a  Vice- Admi- 
ralty Court  in  a  British  colony,  and  they  are  sold  under  an  order 
of  the  court,  such  court  having  no  authority  to  order  a  sale;(/) 
and  the  persons  who  buy  under  such  circumstances  will  not  acquire 
a  title  as  against  the  merchant,  {g)  but  must  answer  to  him  for  the 
value  of  the  goods."  (A)  However,  the  master's  authority  extends 
to  hypothecate  the  cargo,  or  even  sell  a  part  of  it  where  it  is  neces- 
sary to  do  so  for  repairs,  in  order  to  the  preservation  of  the  entire 
venture ;  (^)*  and  if  he  do  the  latter,  the  merchant  on  the  ship's 
safe  arrival  at  the  place  of  destination  will  have  a  right  to  receive 
what  the  goods  would  have  fetched  if  brought  thither,  {j)  or  may 
elect  to  take  the  sum  they  actually  sold  for,  and  may  in  that  case, 
if  he  please,  deduct  it  from  the  freight.  {Ic)\ 


(e)  Freeman  v.  E.  I.  Compy.,  5  B.  &  A.  61*7.     'Wilson  v.  Dickson,  2  B.  <fe  A.  2. 

(/)  Cannan  v.  Meaburn,  1  Bingh.  243 ;  8  B.  Moore,  127. 

{g)  Morris  v.  Robinson,  3  B.  <fe  C.  196. 

(A)  Abbott,  p.  3,  c.  3,  s.  8. 

{i)  The  Gratitiidine,  3  Rob.  A.  R.  240. 

Ij)  Alers  V.  Tobin,  Abb.  p.  3,  c.  3,  s.  10. 

(k)  Campbell  v.  Thompson,  1  Stark.  490. 


*  United  Ins.  Co,  v.  Scott,  1  John.  R.  106.  Fontain  v.  Columbian  Ins.  Co.,  9 
John.  29.  Searle  v.  Scovil,  4  John.  Ch.  R.  222.  American  Ins.  Co.  v.  Coster,  3 
Paige,  323.  This  right  of  the  master  being  only  allowed  when  there  will  be  a 
benefit,  or  prospect  of  benefit  to  the  cargo,  of  course  ceases  on  the  arrival  of  the 
ship  at  her  port  of  destination.  The  cargo  then  becomes  subject  to  the  control  of 
the  consignees,  and  the  master  must,  if  deficient  in  funds,  resort  to  other  sources, 
1  John.  R.  111.  And  the  master  cannot  hypothecate  or  mortgage  the  ship  for  the 
benefit  of  the  cargo.  9  John.  31.  As  to  his  authority  to  sell  the  ship,  see  ante, 
section  "Shipping." 

•j-  In  addition  to  the  personal  responsibility  of  the  master  and  owners  of  the 
ship,  he  has  also  a  lien  on  the  ship  for  the  value  of  the  goods  sold,  and  a  right  of 
contribution  over  against  the  other  owners  of  the  cargo.  American  Ins.  Co.  v. 
Coster,  3  Paige,  323.  The  Packet,  3  Mason,  255.  And  it  seems  that  even  if  the 
vessel  be  subsequently  lost,  the  claim  against  the  owners  of  the  ship  would  not  be 
discharged.  Pope  v.  Nickerson,  3  Story's  R.  499,  500,  But  see  Abbott,  pt.  4,  ch.  5^ 
p.  3Y2. 


CO^^TRACTS  OF  AFFREIGHTMENT.  385 

Duties  of  Master  and  Owners. 

4thly.  On  the  completion  of  the  voyage^  the  master  must  have 
the  vessel  properly  moored,  report  his  ship  and  crew,  exhibit  his 
manifest  and  other  papers  to  the  proper  officers,  and  deliver  up  the 
cargo  to  the  consignee  named  in  the  bill  of  lading,  on  payment  of 
the  freight  and  other  charges  in  respect  thereof:  these  other 
charges  are  generally  primage  and  averaye^  the  nature  whereof 
will  j)resently  be  stated ;  and  the  master  need  not,  in  general,  part 
with  the  goods  till  they  are  liquidated;  if,  indeed,  it  appear  from 
the  bill  of  lading  that  the  freight  or  other  charges  have  been  paid, 
he  is  estopped  from  claiming  them  as  against  the  assignee  of  such 
bill  of  lading ;  il)  nor  can  he  detain  the  goods  of  one  person  for 
charges  upon  those  of  another,  though  he  may  any  part  of  what  is 
consigned  to  one  and  the  same  person  for  the  charges  upon  it 
all.  {m)  The  manner  of  delivering  up  the  goods,  and  consequently 
the  period  at  which  the  master  ceases  to  be  responsible  for  them, 
depends,  in  the  absence  of  agreement,  on  the  custom  of  the 
place.  (??)^     In  the  absence  of  any  custom  upon  the  subject,  the 

{I)  Howard  v.  Tucker,  1  B.  &  Ad.  '712.  But  as  between  tlie  shipper  of  goods  and 
the  owner  of  the  ship,  a  bill  of  lading  does  not  operate  as  an  estoppel.  Bates  v. 
Todd,  1  M.  &  Rob.  106,  and  see  Beckley  v.  Watling,  7  Ad.  &  E.  29,  where  some 
doubt  seems  to  be  cast  on  the  conclusiveness  of  bills  of  lading. 

{in)  Soldergreen  v.  Flight,  Abbott,  p.  3,  c.  3,  s.  11,  cited  6  East,  622. 

(n)  Warden  v.  Mourilljan,  2  Esp.  693. 


*  In  the  absence  of  any  custom  at  the  place  of  delivery,  or  any  express  agree- 
ment, the  master  is  not  bound  to  deliver  goods  to  the  consignee  personally.  It  is 
sufficient  if  he  lands  them  at  some  usual  place  of  delivery,  and  gives  notice  thereof 
to  the  consignee,  which,  in  the  case  of  carriers  by  ships  or  boats,  comes  in  lieu  of  the 
personal  delivery  usually  required  of  other  common  carriers.  Chickering  v.  Fowler, 
4  Pick.  371.  Ostrander  v.  Brown,  15  John.  39.  Gibson  v.  Culver,  17  Wend.  305. 
Fisk  V.  KewtoD,  1  Denio,  47.  Cope  v.  Cordova,  1  Rawle,  203.  2  Kent's  Com.  605. 
And  when  goods  are  safely  conveyed  to  the  place  of  destination,  and  tlie  consignet 
is  dead,  absent,  or  refuses  to  receive,  or  is  not  known,  and  cannot,  after  due  effort* 
are  made,  be  found,  the  carrier  may  discharge  himself  from  further  responsibility, 
by  placing  the  goods  in  store  with  some  responsible  third  person  in  that  business,  at 
the  place  of  delivery,  for  and  on  account  of  the  owner.  Fisk  v.  Newton,  1  Denio,  47. 
Ashur  V.  Schooner  Cassius,  2  Story's  R.  81.  Hemphill  v.  Chenie,  6  Watts  &  Serj.  62. 
And  in  this  last  case,  the  Supreme  Court  of  Pennsylvania  held,  that  the  same  duty 
would  devolve  on  carriers  engaged  in  inland  navigation,  as  on  the  Ohio  river,  in  case 
the  consignee  to  whom  notice  had  been  given  should  neglect  to  receive  and  take 
charge  of  the  goods.  That  as  to  such  carriers,  the  rule  laid  down  above,  and  by  that 
25 


58G  MERCANTILE  CONTRACTS. 

Duties  of  Master  and  Owners. 


consignee's  right  has  been  decided  to  be  to  have  reasonable  time 
and  opportunity  for  coming  and  receiving  them  from  the  ship's 
side,  (o)  If  the  consignee  send  a  lighter  for  the  goods,  the  master 
must,  by  the  custom  of  the  river  Thames,  watch  them  in  the 
lighter  till  it  is  fully  laden,  (p)  but  not  afterwards,  (q) 

All  these  duties,  which  the  law  imposes  upon  the  ship-owner 
and  his  agents,  are,  after  all,  no  more  than  consequences  of  the 
general  rule  before  stated,  respecting  carriers,  viz.,  that  they  are 
responsible  at  common  law  for  every  thing,  except  the  act  of  God 
and  the  King's  enemies.  However,  this,  their  common  law  liabil- 
ity, is  usually  narrowed  by  their  own  express  stipulations  in  the 
charter-party  or  bill  of  lading,  and  has  also  been  qualified  by  the 
intervention  of  the  legislature.* 


(o)  Gatliffe  v.  Bourne,  4  Bingh.  N.  C.  314.  Bourne  v.  Gatliffe  4  Scott,  1 ;  3  Mann. 
&  Gr.  643.  Confirmed  on  writ  of  error  in  Don.  Froc,  1  M.  &  Gr.  850,  11  CI.  & 
Finn.  45. 

(p)  Catley  v.  Wintringham,  Peake,  N.  P.  C.  150. 

(q)  Robinson  v.  Turpi n,  Abbott,  j).  3,  c.  3,  s.  12. 


court,  in  Cope  v.  Cordova,  did  not  apply;  and  that  it  is  tlieir  duty  to  altend  to  the 
actual  delivery.  See  .also  as  to  the  manner  of  delivery,  Gracie  v.  Marine  Ins.  Co.  of 
Baltimore,  8  Cranch,  75,  (3  C.  R.  39.)  Brown  v.  Ralston,  9  Leigh.  532,  542.  Powell 
V.  Myers,  26  Wend.  591.     Bourne  v.  Gatliffe,  7  Man.  <fe  Grang.  850. 

*  Masters  and  owners  of  vessels  employed  in  the  transportation  of  property,  are 
liable  as  common  carriers,  in  respect  to  foreign  as  well  as  internal  voyages.  Elliott 
V.  Russell,  10  John.  1.  Kemp  v.  Coughtry,  11  John.  107.  McGregor  v.  Kilgore,  6 
Ohio,  358.  Dunrish  v.  Wade,  2  Scam.  289.  Gordon  v.  Buchanan,  5  Yerg.  71 ;  id.  427. 
King  V.  Shepherd,  3  Story  Rep.  349.  Hart  v.  Allen,  2  Watts  Rep.  114.  Nor  is  there 
any  distinction,  whether  the  navigation  be  upon  the  ordinary  rivers,  or  the  great 
rivers  and  lakes  of  this  country.  McArthur  v.  Sears,  21  Wend.  190.  Gilraore  v, 
Carinan,  1  Sm.  &  M.  279.  But  see  Hart  v.  Allen,  2  Watts  114,  and  The  Nantucket 
Steamboat  Co.,  2  Story's  C.  C.  R.  16,  33.  In  the  case  of  common  carriers  by  water, 
there  has  been  a  more  general  recognition  of  the  right  to  restrict  the  general 
liability  by  special  contract,  than  in  the  case  of  carriers  by  land.  Thus  the  validity 
of  the  ordinary  exceptions  in  the  bill  of  lading  has  never  been  questioned. 

In  1851  Congress  passed  an  Act,  embodying  substantially  the  provisions  of  the 
text,  in  reference  to  the  liability  of  ship  owners  in  cases  of  fire,  the  loss  of  money  or 
any  precious  stone  or  metal,  or  an}'  loss  or  injury  to  property  on  board  from  embez- 
zlement, collision,  or  any  other  cause.  Vessels  of  all  descriptions,  engaged  in  river 
and  inland  navigation,  are  expressly  excepted  from  the  operation  of  the  Act.  In 
Maine,  Massachusetts,  and  probably  some  other  states,  the  responsibility  of  ship 


C0XTRACT3  OF  AFFREIGHTilENT.  087 

Duties  of  Master  and  Owners. 

The  bill  of  lading  contains,  as  we  have  seen,  these  words :  "  the 
act  of  God,  the  King's  enemies,  fire,  and  all  and  every  other 
dangers  and  accidents  of  the  seas,  rivers,  and  navigation,  of  what- 
ever nature  and  kind  soever,  excepted."  The  first  two  of  these 
were,  as  we  have  seen,  exceptions,  even  at  common  law ;  and  the 
third  was  made  so  by  stat.  26  Geo.  8,  c.  86,  s.  2,  which  enacts, 
"that  no  owner  or  OAvners  of  any  ship  or  vessel  shall  be  subject  or 
liable  to  answer  for  or  make  good  to  any  one  or  more  person  or 
persons  any  loss  or  damage  which  may  happen  to  any  goods  or 
merchandise  whatsoever,  which  shall  be  shipped,  taken  in,  or  put 
on  board,  any  such  ship  or  vessel,  by  reason  or  by  means  of  any 
fire  happening  to  or  on  board  the  said  ship  or  vessel." 

On  this  section,  Lord  Tenterden  remarks,  (r)  that  the  master 
is  not  mentioned  therein,  and  that  it  may  therefore  be  doubtful 
whether  his  responsibility  is,  in  this  case,  removed  by  the  statute, 
but  that  the  insertion  of  the  word  "  fire"  in  the  bill  of  lading  cer- 
tainly removes  it. 

The  same  statute  enacts,  (s)  that  no  master^  OAvner,  or  owners  of 
any  ship  or  vessel,  shall  be  liable  to  answer  for  or  make  good  any 
loss  or  damage  which  may  happen  to  any  gold,  silver,  diamonds, 
"watches,  jewels,  or  precious  stones,  which  shall  be  shipped,  taken 
in,  or  put  on  board,  any  such  ship  or  vessel,  hy  reason  or  means  of 
any  robbery^  embezzlement^  making  awag  vjith^  or  secreting  thereof^ 
unless  the  owner  or  shipper  thereof  shall,  at  the  time  of  shipping 
the  same,  insert  in  his  bill  of  lading,  or  otherwise  declare  in  writing, 
to  the  master,  owner,  or  owners  of  such  ship  or  vessel,  the  nature, 
quality,  and  value  of  such  gold,  silver,  diamonds,  watches,  jewels, 
or  precious  stones.  {()  It  is  doubtful  whether  this  statute  extends 
to  shipments  made  in  foreign  parts,  (a) 


(r)  Abbott,  p.  3,  c.  4. 
(s)  Sect.  3. 

{()  It  is  sufficient  to  describe  it  by  the  ordinary  name,  and  the  Vf.lue  by  the  coin 
of  the  place  of  shipment.     Gibbs  v.  Potter,  10  M.  <fe  "W.  70. 
(m)  Gibbs  V.  Potter,  ibid. 

owners  is  limited  by  statute  to  the  amount  of  the  owner's  interest  in  tlie  sliip  and 
freight.  As  to  limitation  on  the  common  law  liability,  see  note  to  previous  chapter 
on  Common  Carriers. 


388  MERCANTILE  CONTRACTS. 


Duties  of  Master  and  Owners. 


By  Stat.  6  Geo.  4,  c.  125,  s.  53,  (v)  owners  and  masters  of  ships 
are  exempted  from  liability  for  any  damage  arising  from  the  want 
of  a  licensed  or  duly  qualified  pilot,  unless  it  be  proved  that  such 
want  arose  from  any  refusal  to  take  one  on  board,  or  from  wilful 
neo-lect,  in  not  heaving  to,  or  using  all  practicable  means  consistent 
with  the  ship's  safety,  for  the  purpose  of  taking  on  board  any  pilot 
who  may  offer;  and  section  55  exempts  them  from  liability  for 
damage  arising  from  the  neglect,  default,  incompetency,  or  in- 
capacity of  any  licensed  pilot  in  charge  of  the  vessel,  so  long  as 
such  pilot  shall  be  duly  qualified  to  have  charge  of  the  vessel,  or 
no  duly  qualified  pilot  shall  have  offered  to  take  charge  thereof  {w) 

It  will  be  seen  that  the  common  law  liability  of  ship-owners  is 
discharged  to  a  considerable  extent  by  these  enactments :  where  it 
remains,  it  is  restricted  to  a  certain  ascertainable  amount  by 

Stat.  7  Geo.  2,  c.  15,  which  exempts  the  owners  from  responsi- 
bilitv  for  loss,  by  reason  of  any  embezzlement,  secreting,  or  making 
away  with,  by  the  master  or  mariners ;  or  for  any  act,  matter  or 
thing,  damage  or  forfeiture,  done,  occasioned,  and  incurred  by  the 
same  persons,  without  the  privity  of  the  owners,  further  than  the 
value  of  the  shij),  luith  her  aiiinirtenances,  and  the  freight  due,  or  to 
grow  due,  for  the  voyage  ivherein  such  loss  happened,  {x) 

Stat.  26  Geo.  3,  c.  86,  s.  1,  extends  the  provisions  of  this  act  to 
all  cases  of  robbery,  though  the  master  or  mariners  be  not  con- 
cerned therein. 

By  stat.  58  Geo.  3,  c.  159,  owners  are  not  liabl'e  to  answer  for 
or  make  good  any  los.s  or  damage  arising  by  reason  of  any  act, 
neglect,  matter  or  thing,  done,  committed,  and  occasioned  without 


(v)  The  Pilotage  Act. 

(m))  The  Protector,  1  "W.  Rob.  45.  Tlie  Agricola,  2  "W.  Rob.  10.  See  Neptune  the 
Second,  1  Dodson,  467.  The  Transit,  before  Sir  J.  Nicholl,  Feb.  1  and  March  11, 1838, 
reported  K  L.  M.  582.  The  exemption  conferred  by  this  section  extends  to  all  cases 
in  -which  the  pilot  was  bound  to  take  charge  of  the  ship,  though  the  master  may  not 
have  been  bound  to  employ  him,  as  where  she  was  only  moving  to  another  part  of 
the  harbor  into  dock.  Lucey  v.  Ingram,  6  M.  &  W.  802.  The  Fame,  2  W.  Rob.  184. 
But  if  the  mischief  arose  partly  from  the  misconduct  of  the  crew,  the  owner  is  not 
excused.  The  Diana,  1  "W.  Rob.  131.  Stuart  v.  Isemonger,  4  Moore,  P.  C.  11.  As  to 
the  ships  to  which  this  provision  extends,  see  the  Girolamo,  3  Hagg.  169.  The  Vor- 
non,  1  "W.  Rob.  316.     The  Maria,  1  W.  Rob.  95. 

{x)  Sect.  1.     See  Sulton  v.  Mitchell,  1  T.  R.  18. 


COXTRACTS  OF  .VFFREIGHTMENT.  ;j8S 

Duties  of  the  Merchant. 

the  fault  and  privity  of  such  owner  or  owners,  whicli  may  happen 
to  any  goods,  wares,  merchandises,  or  other  things  laden  or  put  on 
board  the  ship,  further  than  the  value  of  the  ship  (?/)  and  freight 
due,  or  to  grow  due,  during  the  voyage  which  may  be  in  prosecu- 
tion, or  contracted  for  at  the  time  of  the  happening  of  the  loss. 
In  construing  this  section,  the  costs  of  obtaining  the  compensation 
are  allowed  beyond  the  value  of  the  ship's  freight.  (2) 

This  statute  further  defines  what  shall  be  considered  Freight^ 
within  its  meaning,  (a)  and  that  of  the  two  prior  acts ;  and  orders, 
that  distinct  losses  happening  during  the  same  voyage,  or  same  in- 
terval between  two  voyages,  shall  be  compensated  in  the  same 
way  and  to  the  same  extent  as  if  no  other  loss  had  happened 
during  the  same  voyage  or  interval ;  and,  as  well  as  the  two  former 
ones,  provides  a  proportionate  compensation  in  cases  where  the 
value  of  the  ship  and  freight  is  less  than  the  total  amount  of  losses, 
and  a  mode  of  distribution,  and  relief  in  equity.  But  this  act  does 
not  extend  to  vessels  used  solely  in  rivers  and  inland  navigations, 
nor  to  any  ship  not  duly  registered  according  to  law ;  nor  do  any 
of  the  acts  extend  to  lighters  and  gabbets.  (/>) 

The  benefit  of  the  three  last-mentioned  acts  does  not  extend  to 
masters;  and  the  last  contains  a  provision  against  relieving  the 
master  who  happens  to  be  a  part  owner  from  responsibility ;  yet 
if  he  be  sued  along  with  the  part  owners,  he  will  be  protected  as 
well  as  they ;  for  it  is  a  rule,  that  the  damages  given  against  co- 
defendants  must  be  one  and  the  same  sum.  (c) 


Section  IY. — Duties  of  the  Merchant. 

The  merchant  who  has  taken  a  ship  to  freight  must  lade  her 
within  the  stipulated  time,  and  even  if  no  time  be  expressly  stipu- 
lated, must  do  so  in  a  reasonable  time,  {d)     lie  must  lade  her  with 


(«/)  See  Dobree  v.  Schroder,  6  Sim.  291.     Brown  v.  Wilkinson,  15  M.  &  "W.  391 
and  the  Richmond,  3  Hagg.  431. 

(z)  The  Dundee,  1  Hagg.  109.     Ex  parte  Rayne,  1  Q.  B.  982. 

(a)  Sect.  2. 

(6)  Hunter  v.  M'Gowan,  1  Bligh.  573.  (c)  Wilson  v.  Dickson,  2  B.  <fe  A.  2. 

{(1)  WoUey  V.  Reddelien,  5  il.  &  Gr.  316,  where  by  the  charter-party  the  ship 


390  MERCAXTILE  CONTRACTS. 


Duties  of  the  Merchant. 


the  stipulated  cargo,  (e)  and  must  put  on  board  no  contraband 
goods,  whereby  she  may  be  subjected  to  forfeiture.  For  a  default 
in  any  of  these  particulars,  he  will  be  liable  to  make  good  the  in- 
jury sustained  in  consequence.*  He  must  also  pay  the  chargea 
due  on  his  commodities;  these  are  usually  primage,  average,  de- 
murrage, and  freight. 

Primage  is  a  small  customary  payment  to  the  master  for  his 
care  and  trouble. 

Average  denotes  several  petty  charges,  such  as  towage,  beacon- 
age, &c.,  which  it  would  be  dif&cult  and  useless  to  enumerate; 
there  is  a  more  important  charge  called  General  Average^  of  which 
we  shall  treat  in  the  next  section. 


after  deliverinir  her  oiat-n-ard  cargo  at  Malta,  \^&s  to  sail  with  all  convenient  speed  to 
such  port,  to  Marseilles.  Genoa,  or  another  safe  port  on  the  'west  coast  of  Italy,  not 
higher  than  Manfredonia,  as  should  be  ordered  at  Malta.  It  -was  held,  the  merchant 
impliedly  undertook  that  she  should  receive  orders  within  a  reasonable  time  from 
her  arrival  at  Malta. 

(e)  When  the  merchant  undertook  "  to  furnish  and  provide  for  loading  on  board 
the  said  ship  a  full  and  complete  cargo  of  copper,  tallow,  and  hides,  or  other  goods," 
it  was  held  by  Lord  EUenborough,  at  K  P.,  that  the  stipulation  was  pei-formed  by 
furnishing  as  large  a  quantity  of  tallow  and  hides  as  she  could  take  on  board,  though 
in  consequence  of  the  absence  of  copper  she  was  obliged  to  keep  in  her  ballast. 
Moorsom  v.  Page,  4  Camp.  103.  And  when  the  stipulation  in  the  charter-party  was 
"  to  furnish  a  full  and  complete  cargo,  and  that  100  tons  of  rice  or  sugar  should  be  ship- 
ped previous  to  any  other  part  of  the  loading  to  ballast  the  vessel,"  the  Court  held 
that  the  owner  was  bound  to  supply  any  ballast  that  was  necessary  beyond  the  100 
tons,  and  that  the  merchant  was  not  bound  to  pay  freight  for  the  additional  tonnage 
of  such  ballast  Irving  v.  Clegg,  1  Bingh.  N.  C.  53.  For  as  the  owner  is  bound  to 
have  his  vessel  in  a  fit  state  for  the  voyage,  (see  a7itc,)  it  is  his  duty  in  the  first  instance 
to  provide  ballast,  and  the  merchant's  liability  to  do  so  can  in  no  case  reach  beyond 
his  express  undertaking.  See  further  in  Capper  v.  Foster,  3  Bingh.  N.  C.  938,  the 
vessel  was  to  sail  to  Rio  Nimez,  discharge  there,  and  reload  "  a  full  and  complete  cargo 
of  lawful  merchandise,"  freight  to  be  paid  at  certain  rates  on  certain  specified  arti 
cles,  viz.,  gum,  beeswax,  rice,  bullion,  ttc. ;  should  rice  exceed  SO  tons,  1/.  per  ton  ex- 
tra on  surplus.  Hides  not  to  exceed  50  tons.  Should  she  not  be  full  at  Rio  Nunez, 
the  merchant  to  have  the  liberty  of  filling  her  up  at  St.  Mary's.  Held,  that  a  fidl  and 
complete  cargo  of  lawful  merchandise  meant  a  cargo  of  goods  ejusdem  geyieris  with 
those  specified,  and  that  the  merchant  was  not  justified  in  shipping  a  great  quantity 
of  lumber  at  St.  Mary's,  though  that  was  the  staple  commodity  there,  but  must  pay 
freight  as  if  he  had  shipped  the  proper  cargo. 

*  Smith  V.  Elder,  3  John.  Rep.  105. 


C0XTRACT3  OF  AFFREIGHTMENT.  391 

Duties  of  the  Merchant. 

Demurrage  lias  been  already  spoken  of.  (/) 

Freight  is  the  payment  made  for  tlie  conveyance  of  the  mer- 
chandise {g)  to  its  destination  ;  it  denotes  the  price  of  carriage^  not 
of  receiving  goods  to  he  carried ;  and,  therefore,  though  a  merchant 
may,  of  course,  contract  to  pay  a  sum  of  money  to  a  ship-owner  for 
taking  goods  on  board,  yet  such  payment  is  not,  strictly  speaking, 
freight,  (h)  Hence  it  follows,  that  no  freight  becomes  due,  unles? 
the  carriage  of  the  goods  be  completely  performed,  (t)*  In  conse 
quence  of  this  rule,  when  a  ship  has  been  engaged  to  sail  from  one 
port  to  another,  as  from  A.  to  B.  and  back  again,  it  often  becomes 
important  to  know  whether  this  employment  is  to  be  looked  upon 
as  consisting  of  one  or  two  distinct  voyages ;  since  if  the  ship  be 
lost  after  her  transit  from  A.  to  B.,  but  before  that  from  B.  back  to 
A.  has  been  completed,  freight  will,  by  adopting  the  latter  con- 
struction, be  due  for  the  carriage  from  A.  to  B.,  but  not  by  adopt- 
ing the  former.  In  solving  this  question,  the  Court  must  be  guided 
by  the  intention  of  the  parties,  as  collected  from  the  words  and 
subject  matter  of  the  agreement.  (y)f 


(/)  See  ante,  p.  3*71,  and  see  Evans  v.  Foster,  1  B.  &  Ad.  118.  Brouncker  v. 
Scott,  4  Taunt.  1,  and  5  Bingh.  188.  With  regard  to  the  question  what  time  should 
be  allowed  where  goods  stowed  at  the  top  imjiede  the  delivery  of  those  at  the  bot- 
tom, see  Lee  v.  Yates,  3  Taunt.  387.  Rogers  v.  Hunter,  M.  &  M.  63.  Dobson  v. 
Droop,  ibid.  441. 

(g)  Lewis  v.  Marshall,  1  M.  &  Gr.  729. 

{h)  Blakey  v.  Dickson,  2  B.  &  P.  321.  Andrew  v.  Moorhouse,  5  Taunt  435.  Ab- 
bott, p.  3,  c.  7. 

[i)  Mashiter  v.  Bullar,  1  Camp.  84.     Crozier  v.  Smith,  1  M.  &  Gr.  407. 

(_;■)  Mackrell  v.  Simond.     B^'rne  v.  Pattison,  Abbott,  p.  3,  c.  7,  s.  17.     Crozier  v. 


*  Caze  V.  Baltimore  Ins.  Co.,  7  Cranch,  358 ;  (2  C.  R.  528.)  The  ship  Nathaniel 
Hoopei,  3  Sumn.  554.  Brown  v.  Ralston,  4  Rand,  504.  Palmer  v.  Lorillard,  16  John. 
356.  Griggs  v.  Austin,  3  Pick.  20.  Although  the  vessel  may  have  been  hired  by  the 
month  or  week.  Abbott,  406.  Locke  v.  Swan,  13  Mass.  79.  Passage  money  and 
freight,  it  seems,  are  governed  by  the  same  rules.  Abbott,  405,  note  1.  "Watson  v. 
Duykinck,  3  John.  335;  3  Pick.  20.  "Freight  is  the  compensation  for  the  carriage 
of  goods,  and  if  it  be  paid  in  advance,  and  the  goods  be  not  carried  by  reason  of  any 
event  not  imputable  to  the  shipper,  it  is  to  be  repaid,  unless  there  be  a  special  agree- 
ment to  the  contrary."  Griggs  v.  Austin,  3  Pick.  23.  Watson  v.  Duykinck,  3  John. 
335.    Pitman  v.  Hooper,  3  Sumn.  50. 

f  Brown  V.  Hunt,  11  Mass.  45,  47.     Locke  v.  Swan,  13  Mass.  76.     Coffin  v.  Storer, 


392  MERCANTILE  CONTRACTS. 

Duties  of  the  Merchant. 

The  owner  will  not,  however,  lose  his  freight  in  consequence 
of  an  interruption,  without  his  fault,  of  the  voyage,  which  is  after- 
ward completed,  such  as  a  capture  and  recapture ;  (Jc)*  and,  if  the 
goods  have  been  thrown  overboard  for  the  ship's  preservation,  the 
merchant  must  pay  freight,  and  be  repaid  by  a  general  average.  So, 
if  part  be  sold  for  necessary  victuals  or  repairs,  the  owners  pay  the 
merchant  the  value,  and  receive  the  freight  from  him :  and  if  the 
ship  and  cargo  be  taken,  retaken,  and  carried  by  the  recaptors  into 
a  port  short  of  its  destination,  and  there,  in  consequence  of  some 
legal  doubt  or  of  the -merchant's  delay,  th^vsliip  be -restored  before 
the  cargo,'  the'*bwners  need  not  wait  to  convey  the  latter  to  its  des- 
tination, but  are  entitled  to  the  freight,  subject  to  salvage.(Z)f   There 


Smith,  1  M.  &  Gr.  407,  where  the  ship  was  to  sail  to  Jamaica,  and  having  discharged 
her  outward  cargo  there,  "  receive  a  cargo  from  thence,  or  from  a  port  in  the  Spanish 
main,  if  required,"  if  she  should  be  required,  41.  per  diem  was  to  be  paid  till  she 
should  be  dispatched  from  her  loading  port.  Held,  that  tlie  voyage  from  Jamaica  to 
the  Spanish  main  was  not  a  distinct  voyage,  but  part  of  the  homeward. 

(k)  The  Race  Horse,  3  Rob.  A.  R.  101.    Beale  v.  Thompson,  3  B.  &  P.  405. 

(Z)  Abbott  on  Shipping,  p.  3,  c.  7,  ss.  5,  6. 

5  Mass.  252.  Banker  v.  Cheriot,  2  John.  352.  Penoyer  v.  Hallett,  15  John.  332 
Blanchard  v.  Buckman,  3  Greenleaf,  1. 

*  But  the  voyage  must  be  completed,  after  the  interruption  is  at  an  end,  to  en- 
title the  owner  of  the  ship  to  freight,  unless  the  original  interruption,  or  the  subse- 
quent failure  to  complete  the  voyage,  be  caused  by  some  wrongful  act  or  default  of 
the  owner  of  the  cargo.  The  owner  of  the  ship  has  the  right,  in  case  of  an  interrup- 
tion, as  by  an  embargo  or  blockade,  to  retain  the  goods  a  reasonable  time,  for  the 
purpose  of  completing  the  voyage  and  earning  his  freight.  Palmer  v.  Lorillard,  16 
John.  348.  Burrill  v.  Cluman,  17  John.  72.  The  ship  Nathaniel  Hooper,  3  Sumn. 
542.     Brown  v.  Ralston,  4  Rand.  504.     Spofford  v.  Dodge,  13  Mass.  G6. 

When  a  ship  and  cargo  are  injured  by  a  peril  of  the  seas,  and  the  ship  is  repaired 
in  a  reasonable  time,  so  as  to  be  able  to  carry  on  the  cargo,  the  owner  of  the  ship 
has  the  right  to  carry  it  on,  if  it  specifically  remains,  and  is  capable  of  being  car- 
ried, although  it  be  so  damaged  that  it  would  be  utterly  worthless  on  its  arrival. 
The  shipper,  in  such  case,  has  no  right  to  demand  it,  at  any  intermediate  port,  short 
of  the  port  of  destination,  without  paj^ment  of  full  freight  for  the  voyage.  And  on 
its  arrival  at  tlie  port  of  destination,  though  utterly  ruined  and  woi-thless,  by  reason 
of  the  sea  damage,  the  shipper  cannot  abandon  the  goods  for  the  freight,  but  is  per- 
sonally bound  to  pajr  full  freight  to  the  master  or  owner  of  the  ship.  Griswold  v. 
New  York  Ins.  Co.,  3  John.  321.  Jordan  v.  Warren  Ins.  Co.,  1  Story's  R.  342.  Bock 
V.  Norton,  2  McLean,  422. 

+  Tliis  point  was  decided  in  the  case  of  the  Race  Horse,  3  Rob  A.  R.  101  ;  and 


COXTRACTS  OF  AFFREIGHTMENT.  393 

Duties  of  the  Merchant. 

are  also  some  cases  in  which  a  part  payment  of  freight  may  be 
claimed :  these  shall  be  presently  considered. 

Where  goods  are  sent  in  a  general  ship,  the  amount  of  freight 
depends  on  the  agreement  of  the  parties,  or  the  value  of  the  service 
performed,  estimated  according  to  the  usage  of  trade  in  like  cases. 
If  there  be  a  charter-party,  and  a  gross  sum  is  to  be  paid  for  the 
whole  or  part  of  a  ship,  it  becomes  due,  although  the  merchant  do 
not  provide  a  complete  lading.  If  the  payment  be  so  much  per  ton, 
it  must  be  calculated  on  the  number  of  tons  the  ship  or  part  thereof 
contains ;  not  on  the  number  mentioned  in  the  description  in  the 
charter-party,  {m)  or  the  quantity  of  goods  laden  on  board.  On  the 
other  hand,  if  the  master  improperly  refuse  to  take  the  entire  quan- 
tity of  goods  agreed  on,  he  will,  nevertheless,  if  the  payment  was 
to  be  per  cask,  or  bale,  have  a  right  to  a  compensation  for  what  he 
has  carried ;  (?i)  as  he  will  in  case  of  his  deviating,  (0)  or  sailing 
with  his  ship  out  of  repair,  (^j)  or  not  sailing  according  to  stipula- 
tion with  the  first  wind  or  convoy ;  (q)  the  rule  being,  as  stated  by 
Lord  Ellenborough,  (?•)  that  "  unless  the  non-performance  alleged 


(m)  Hunter  v.  Fry,  2  B.  &  A.  421. 

(n)  Ritchie  v.  Atkinson,  10  East,  295. 

(o)  Bonrman  v.  Tooke,  1  Camp.  37Y. 

(p)  Havelock  v.  Geddes,  10  East,  555. 

(q)  Constable  v.  Cloberie,  Pahner,  397.     Hall  v.  Cazenore,  4  East,  477. 

(r)  Davidson  v.  Gwynne,  12  East,  381.     And  see  Clii^sham  v.  Vertue,  5  Q.  B.  265. 


the  cases  of  The  Martha,  3  Rob.  A.  R.  136,  and  The  Hoffman,  6  Rob.  A.  R.  231,  are  to 
the  same  effect.  la  the  ca?e  of  The  Nathaniel  Hooper,  3  Sumn.  556,  Judge  Story 
comments  on  these  cases  and  disapproves  of  the  decisions  in  them  on  this  point.  Un- 
less the  capture  or  detention  of  the  cargo  was  owing  to  some  wrongful  act  or  default 
of  the  shipper,  it  seems  difficult  to  sustain  the  decisions  on  principle.  And  even  if 
correct,  it  is  said  by  Judge  Story,  that  "it  is  not  safe  or  correct  in  many  cases  to 
reason  from  the  peculiar  doctrines  arising  out  of  the  administration  of  international 
law  and  policy  in  the  courts  of  prize,  to  the  ordinary  exigencies  of  commerce,  or  the 
ordinary  interpretation  of  common  civil  contracts."     3  Sumn.  555. 

"The  whole  of  the  cases,  in  which  the  full  freight  is,  upon  the  ordinary  princi- 
ples of  commercial  law,  due,  notwithstanding  the  non-arrival  of  the  goods  at  the 
port  of  destination,  may  be  reduced  to  the  single  statement,  that  the  non-arrival  has 
been  occasioned  by  no  default  or  inability  of  the  carrier  ship,  but  has  been  occa- 
sioned by  the  default  or  inability  of  tlie  merclianl  shipper."  The  Xatliaiiiol  Hoop- 
er, 3  Sumn.  55r> 


394  MERCANTILE  CONTRACTS. 

Duties  of  the  Merchant. 

in  breach  of  the  contract  goes  to  the  whole  root  and  consideration 
of  it,  the  covenant  broken  is  not  to  be  considered  a  condition  pre- 
cedent, but  a  distinct  covenant,  for  the  breach  of  which  the  party 
injured  may  be  compensated  in  damages." 

If  the  agreement  be  to  pay  so  much  per  month,  week,  or  other 
aliquot  part  of  the  voyage,  the  merchant  takes  the  risk  of  its  dura- 
tion, and  the  freight  will  begin  to  run  against  him  from  the  clay  the 
ship  breaks  ground,  and  continue  to  do  so,  not  only  while  she  is  at 
sea,  but  during  any  unavoidable  delay  which  does  not  suspend  the 
contract,  ex.  gr.^  for  repairs,  (s)  But  if  the  agreement  be  in  any 
other  form,  the  owner  takes  the  risk  of  the  duration  of  the  voyage, 
and  is  only  entitled  to  the  same  amount,  however  long  it  may  con- 
tinue. 

The  owner  has  a  lien  on  the  goods  until  the  freight  is  paid,  if 
he  do  not  agree  to  waive  it,  and  have  not  framed  his  charter-party 
in  such  a  manner  as  to  part  with  the  possession  of  the  vessel  to  the 
charterer,  and  it  has  been  held,  even  in  case  of  a  charter-party  by 
which  part  of  the  freight  was  payable  during  the  voyage  and  the 
rest  by  bills  at  two  and  fovir  months'  date  from  the  day  of  the 
arrival  of  the  ship  in  the  Thames  on  her  homeward  voyage,  that, 
the  charterer  having  failed  before  the  ship's  return,  the  owner 
might  insist  on  retaining  -a  lien  on  the  goods  for  his  freight,  it) 
Whether  he  exercise  that  right  or  no,  he  may  sue  the  charterer 
upon  his  contract  to  pay  freight.  (?/)     When  there  is  no  charter- 


(r)  Haveloek  v.  Geddes,  10  East,  555.  Ripley  v.  Scaife,  5  B.  <feC.  167.  See  Beale 
V.  Thompson,  3  B.  &  P.  405. 

{t)  Campion  v.  Colvin,  3  Bingh.  N.  C.  lY.  See  Saville  v.  Campion,  2  B.  &  A.  503. 
Christie  v.  Lewis,  2  B.  &  B.  410.  In  Campion  v.  Colvin,  the  Court  appears  to  rest  its 
decision  on  the  ground  of  special  agreement,  rather  than  on  the  general  right  of  lien. 
"Looking,"  saj's  his  Lordship,  "to  the  intent  of  the  parties,  it  is  clear  the  ship-owner 
meant  to  insist  on  the  delivery  of  the  bills  before  the  delivery  of  the  cargo,  so  that 
■with  respect  to  the  time  at  which  the  freight  was  payable,  there  is  no  difference  be- 
tween this  and  the  preceding  cases."  And  see  Alsager  ii.  St.  Katharine's  Dock  Comp., 
14  M.  (few.  194,  where  it  was  held  there  was  no  lien  for  freight,  it  having  been  made 
payable  "  in  cash  two  months  after  the  vessel's  inward  report,"  though  another  clause 
provided  that  the  ship  should  deliver  her  cargo  "on  being  paid  freight"  at  4/.  per 
ton,  and  the  charterer  had  become  bankrupt. 

(m)  Tapley  v.  Martens,  8  T.  R.  451.  Christy  v.  Row,  1  Taunt.  300.  Shephard  v. 
De  Bernales,  13  East,  565.     Abbott  on  Shipping,  8th  ed.  416. 


CONTRACTS  OF  AFFREIGIITirENT.  395 

Duties  of  the  Merchant. 

party,  and  the  consignee  is,  by  tlie  terms  of  the  bill  of  lading,  tc 
pay  freight.  Lord  Tenterden  expressed  an  opinion  at  N.  P.  that 
the  shipper  was  not  liable,  (v)  But  it  has  since  been  decided  m 
banco  (w)  that,  where  a  bill  of  lading  expressed  goods  to  be  con- 
signed on  account  and  risJc  of  William  Beckford.  to  Messrs.  P.  and 
W.  or  their  assigns,  iJieij  ^:)a?/i»^  freigJit,  the  owner  had  a  right  to 
sue  the  consignor,  Beckford,  for  freight,  in  the  absence  of  any  evi- 
dence of  a  custom  among  merchants  to  the  contrary.  It  might, 
however,  be  otherwise,  if  the  consignment  were  from  vendor  to 
vendee,  (x)  In  such  a  case,  it  might  be  urged  that  the  consignor, 
in  employing  the  ship-owner,  acted  as  agent  for  the  consignee  ;  (?/) 
and  perhaps  Dommet  v.  Bechford^  and  the  opinion  of  Lord  Tenter- 
den in  Drew  v.  Bird,  might,  if  this  distinction  were  adopted,  prove 
not  completely  irreconcilable.*  "Where  the  goods  are  deliverable 
to  assigns  on  2^aying  freight,  and  the  consignees  indorsed  to  C.  k  Co., 
their  agents  who  obtained  the  goods,  it  was  held  that  the  consignees 
were  not  liable  for  freight.  (2) 

The  consignee  or  indorsee  of  the  bill  of  lading  may  be  sued,  if 
he  have  received  the  goods  in  2^ursuance  of  a  hill  of  lading,  im- 
posing the  payment  of  freight  upon  him  ;  (a)  at  all  events,  in  cases 
where  there  is  no  charter-party.     But  if  the  consignee  apjoears  upon 

{v)  Drew  v.  Bird,  M.  &  M.  loG.  See  Tobin  v.  Crawford,  5  M.  &  W.  235.  Cole- 
man V.  Lambert,  5  M.  <fe  \V.  503. 

(w)  Dommet  I).  Beckford,  2  Nev.  &  Mann.  370;  5  B.  <fe  Ad.  521.  See  Tobin?;. 
Crawford,  5  M.  &  W.  239.     Coleman  v.  Lambert,  5  M.  &  W.  502. 

{x)  See  Barker  v.  Havens,  17  Johns.  Rep.  234,  cited  M.  &,  M.  157,  in  notis. 

(3/)  See  1  Nev.  &  Mann.  420. 

(2)  Tobin  V.  Crawford,  9  M.  &  W.  716. 

(a)  Ace.  Renteria  v.  Ruding,  M.  &  M.  511.  Roberts  v.  Holt,  2  Shower,  443.  Cock 
V.  Taylor,  13  East,  399.  Bell  v.  Kymer,  5  Taunt.  477.  See  Mitchenson  v.  Begbie,  6 
Bingh.  190.  He  cannot  discharge  himself  by  seizing  them  under  a  sham  execution 
against  the  consignor,  instead  of  accepting  them  under  the  bill  of  lading.  Lucas  v. 
Nockells,  10  Biagli.  157. 


*  It  is  said  by  Spencer,  C.  J.,  in  Banker  v.  Havens,  17  John.  237,  that  he  "should 
clearly  be  of  opinion,  that  if  it  appeared  that  the  goods  were  not  owned  by  the  con- 
signor, and  were  not  shipped  on  his  account,  and  for  his  benefit,  that  the  carrier 
would  not  be  entitled  to  call  on  the  consignor  for  freight;"  and  that  in  all  cases,  the 
master  ought  to  endeavor  to  get  the  freight  from  the  consignee.  See  also  3  Keut'i 
Com.  222. 


396  MERCANTILE  CONTRACTS. 

Duties  of  the  Merchant. 

the  face  of  the  bill  of  lading  to  be  a  mere  agent,  no  contract  to  be- 
come personally  liable  for  freight  can  be  implied  from  his  receipt 
of  the  goods  under  it.  (b)  Nor  is  the  acceptance  of  the  goods  of 
ifee?/"  sufficient  to  impose  charges  in  respect  of  them,  although  other 
circumstances  concurring  with  acceptance  may;(c)  such,  for  in- 
stance, as  the  previous  dealings  of  the  parties ;  {d)  and  if  there  be 
only  a  bill  of  lading,  the  law  will  not,  from  his  mere  receipt  of  good- 
under  the  bill  of  lading,  raise  an  implied  promise  from  an  indorsee 
to  do  so,  (e)  though  it  is  evidence  of  such  a  promise  which  may  be 
submitted  to  the  jury,  and  on  which  they  may  find  it.  (/)  But  if 
there  be  a  charter-party  containing  an  express  contract  by  the  char- 
terer to  pay  freight,  referred  to  in  the  bill  of  lading,  it  is  question- 
able whether  a  jury  would  be  warranted  in  finding  an  agreement 
on  the  part  of  the  consignee  or  indorsee  to  pay  freight,  as  the  re- 
ference to  the  bill  of  lading  may  have  been  introduced  simply  for 
the  purpose  of  keeping  the  charter-party  unvaried,  and  preserving 
the  lien  for  freight  under  it.  {g) 

There  are  some  cases  in  which  an  utter  stranger  to  the  contract 
may  become  chargeable  with  freight.  Thus,  if  a  neutral  vessel 
laden  with  the  goods  of  one  of  two  belligerents,  be  captured  by  the 
other,  the  ship  is  to  be  restored,  and  the  goods  confiscated,  the  cap- 
tor paying  the  full  freight ;  for  he  has  by  his  own  act  put  himself 
in  the  place  of  the  merchant,  with  respect  to  the  goods,  and  waived 
the  completion  of  the  voyage ;  {h)  but  this  is  only  where  the  goods 


{b)  Amos  V.  Temperley,  8  M.  &  W.  198. 

(c)  Wilson  V.  Kyraer,  1  M.  &  S.  157.  Seaife  v.  Tobin,  3  B.  <fe  Ad.  523.  AVard  v. 
Felton,  1  East,  507. 

((f)  Coleman  v.  Lambert,  5  M.  &  W.  502,  vbi,  by  Parke,  B.,  "Tlie  consignee  is, 
prima  facie,  the  owner  of  the  goods,  but  if  he  be  not,  he  is  not  liable,  dmplicitcr  as 
consignee,  except  on  a  new  contract,  to  pay  the  freight.  That  is  evidenced  in  or- 
dinary cases  by  the  bill  of  lading.  I  accede  also  to  the  decision  in  Wilson  v. 
Kymer,  that  the  same  evidence  may  be  deduced  from  tlie  previous  dealings  between 
the  parties." 

(e)  Moorsom  v.  Kymer,  2  M.  &  S.  303.  See  Finder  v.  Wilks,  5  Taunt.  612;  Ab- 
bott on  Shipping,  423,  8th  ed. 

(/)  Sanders  v.  Vanzeller,  4  Q.  B.  260,  and  see  that  case  as  to  the  mode  of  pleal- 
!ng  such  a  contract. 

{g)  Ibid. 

(/t)  The  Copenhagen,  1  Rob.  A.  R.  289. 


CONTRACTS  OF  AFFREIGHTMENT.  397 

Duties  of  the  Merchant. 

are  such  as  a  neutral  ship  may,  by  tlie  law  of  nations,  carry.  (/) 
On  the  other  hand,  if  the  ship  be  hostile,  and  the  goods  those  of  a 
neutral,  the  captor  is  entitled  to  the  freight,  if  he  convey  them  to 
their  destination,  but  not  otherwise,  {j) 

It  has  been  mentioned  that  fx  part  payment  of  freight  may  some 
times  be  claimed :  this  happens  in  some  cases  in  which  only  part  of 
the  cargo  is  delivered,  or  part  only  of  the  voyage  is  performed.  In 
the  former  case,  if  the  ship  were  a  general  one,  or  if  she  were  char- 
tered for  freight  to  be  paid  according  to  the  quantity  of  the  goods, 
freight  is  due  for  as  much  as  is  delivered,  ijc)  But  if  a  ship  char- 
tered at  a  specific  sum  for  the  voyage,  without  reference  to  the 
quantity  of  goods,  were  to  lose  part  of  her  cargo,  it  has  been 
doubted  whether  freight  would  be  payable  for  the  remainder,  (J) 
Yet  certainly  the  hardship  of  the  case  would  induce  the  Court  to 
construe  such  a  charter-party  as  favorably  as  the  strictness  of  law 
would  permit:  and,  if  there  were  any  circumstances  whence  it 
could  be  inferred,  such,  for  instance,  as  an  acceptance  by  the 
freighter  of  the  remaining  portion  of  the  cargo,  a  new  contract  to 
pay  freight  ^^ro  rata  might  be  held  to  arise  by  implication,  (m)  such 
OS  we  are  now  going  to  advert  to. 


(i)  Abbott,  p.  3,  c.  7,  s.  6.  {j)  Fortuna,  4  Rob.  A.  R.  278. 

{k)  Christy  v.  Row,  1  Taunt.  300. 

{I)  Malyne,  Lex.  Mercat.  p.  100.  Bright  v.  Cowper,  1  Brownlow,  21,  and  the  ob 
servations  iu  Abbott,  p.  1,  c,  7,  s.  9.  See  also  Robei'ts  v.  Haveloek,  3  B.  &  Ad.  404. 
Sinclair  v.  Bowles,  9  B.  <k  C.  92,  in  which  tlie  judges  seem  to  have  pointed  at  a  simi- 
lar distinction  as  existing  in  the  general  law  of  contracts.  See  also  Read  v.  Rann,  10 
B.  &  C,  438. 

(»i)  Mitchell  V.  Darthez,  2  Bingh.  N".  C.  555;  in  that  ease  a  ship  was  chartered 
from  London  to  Buenos  Ayres  and  back  to  Gibraltar,  freight  1300^.,  viz.,  200^.  pay- 
able before  sailing,  the  rest  on  the  final  delivery  of  the  homeward  cargo.  She  ar 
rived  at  Buenos  Ayres,  took  in  her  homeward  cargo,  and  was  wrecked  on  her  return 
homeward  at  Fayal,  and  afterwards  sold  as  unseaworthy.  Part  of  the  cargo  was 
there  sold,  and  the  proceeds,  except  224Z.  3s.  9(/.,  applied  to  defray  charges.  The 
captain  sailed  for  England  with  the  224Z.  3s.  9c/.,  and  was  again  shipwrecked,  and  the 
money  lost.  The  greater  part  of  the  residue  of  the  cargo  was  sent  to  Gibraltar,  by 
the  British  Viee-Consul,  at  the  request  of  the  captain,  and  the  freiglit  from  Faj-al  to 
Gibraltar  there  paid  upon  it  by  the  merchant's  agent.  Under  these  circumstances 
the  Court  held  that  the  ship-owner  was  entitled  to  no  more  on  the  outward  voyage 
than  the  200/.,  but  that  he  might  recover  a  reasonable  compensation  for  the  carriage 
from  Buenos  Ayres  to  Fayal,  if  the  goods  ultimately  reached  Gibraltar. 


398  MERCANTILE  CONTRACTS. 


Duties  of  the  Merchant. 


For,  2clly,  If  the  ship  having  performed  part  of  her  voyage,  be 
disabled  from  completing  the  remainder,  the  master  may,  as  we 
have  seen,  tranship  the  goods,  in  order  to  convey  them  to  their 
destination.  In  that  case  it  was  long  a  question  whether  the  re- 
mainder of  the  voyage  after  the  transhipment  was  to  be  considered 
as  performed  under  the  old  contract  or  under  a  new  one,  and 
whether  the  remuneration  was  to  be  at  the  rate  of  freight  origi- 
nally contracted  for,  or  on  a  quantum  meruit.  It  is,  however,  now 
settled,  that  if  the  goods  be  conveyed  safely  to  their  destination,  the 
freight  paid  shall  be  that  originally  contracted  for.  That  was  de- 
cided in  Shipton  v.  Tliornton^  {n)  where  goods  shipped  on  board 
the  James  Scott  at  Singapore  for  London,  under  bills  of  lading  to 
Merchant,  were,  under  circumstances  of  necessity,  transhipped  at 
Batavia  into  the  Mountaineer  and  Sesostris  under  bills  of  lading  to 
one  Ellward  or  assigns.  The  goods  arrived  safe.  Ellward  in- 
dorsed the  bills  to  Merchant,  and  he  received  the  goods.  And  it 
was  held  that  he  was  liable  to  the  original  freight  as  per  James 
Scott,  not  to  the  freight  as  per  James  Scott  to  Batavia  only,  and 
then  to  the  rates  (which  were  smaller)  as  per  Mountaineer  and 
Sesostris.  "It  maybe  taken,"  said  the  Court,  "to  be  either  the 
duty  or  the  right  of  the  owner  to  tranship.  If  it  be  the  former,  it 
must  be  so  in  virtue  of  his  original  contract ;  and  it  should  seem 
to  result  from  a  performance  by  him  of  that  contract,  that  he  will 
be  entitled  to  the  fall  consideration  for  which  it  was  entered  into, 
without  respect  to  the  particular  circumstances  attending  the  fulfil- 
ment. If  it  be  the  latter,  a  right  to  the  full  freight  seems  to  be 
implied.  The  master  is  at  liberty  to  tranship ;  but  for  what  pur- 
pose, except  for  that  of  earning  his  full  freight  at  the  rate  agreed 
on?" 

There  was  a  question  incidentally  mooted  in  this  case,  on  which 
the  language  of  the  judgment  is  important,  viz.,  "i/"  ihe  tranship- 
ment can  only  be  effected  at  a  higher  than  the  origiyial  rate  of  freight, 
which  party  is  to  stand  to  the  loss  .^"*     The  opinion  of  the  Court  ap- 

{n)  9  Ad.  &  E.  314. 


*  It  is  the  duty  of  the  master,  when  his  vessel  is  disabled  in  the  course  of  the 
▼oyage,  to  procure  another,  if  he  can,  and  take  on  the  cargo ;  and  in  his  character 


'-•VjaAV  4^  '^' 


CONTRACTS  OF  AFFREIGHTMENT.  399 

Duties  of  the  Merchant. 

peared  to  be  that  in  such  case  the  master's  right  to  tranship  would 
be  at  an  end,  but  that  he  would  become  the  freighter's  agent  to  do 
what  was  most  for  his  benefit  under  the  circumstances,  and  that, 
consequentl  J,  if  it  were  for  the  freighter's  advantage  that  the  goods 
should  be  forwarded  and  an  increased  rate  of  freight  incurred,  the 
freighter  would  be  bound  by  his  agreement  to  pay  such  increased 
rate.  If  the  merchant  prefer  receiving  the  goods  where  they  are, 
he  must  pay  freight  2"/»*o  rata  itineris  peracti.  (o)  And  this,  not  in 
the  original  contract  of  affreightment,  upon  which  the  owner,  if 
obliged  to  sue,  must  not  proceed,  but  under  a  new  one,  which  the 
law  implies  from  the  merchant's  behavior,  {p)  If  the  master,  being 
at  too  great  a  distance  from  the  mercliant  to  consult  him,  and,  act- 
ing for  the  best,  direct  a  sale,  having  good  grounds  to  believe  it 
necessary,  it  was  thought  by  some  that  there  was  no  reason  why  an 
implied  contract  to  pay  freight  pro  rata  should  not  arise  on  the 
merchant's  receiving  the  proceeds,  as  it  certainly  will,  where  the 
goods  are  seized,  and  sold  by  a  competent  prize  court,  under  a 
sentence  which  is  afterwards  reversed,  and  the  proceeds  restored. (5')* 

(o)  Malyne,  98.  Lutwidge  v.  Grey,  Abbott,  p.  3,  c.  7,  s.  13.  The  Copenhagen,  1 
Rob.  A.  R.  289. 

(p)  Luke  V.  Lyde,  3  Burr.  882;  1  Black.  190.  Cook  v.  Jennings,  7  T.  R.  381 
MuUoy  V.  Backer,  5  East,  316.     Mitchell  v.  Darthez,  2  Bingh.  N.  C.  555. 

{q)  Baillie  v.  Moudigliani,  Parke,  c.  2,  p.  70. 

as  agent  for  the  owner,  cast  on  him  by  the  necessity  of  the  case,  he  may  charge  the 
cargo  with  the  increased  freight  arising  from  the  hire  of  the  new  vessel.  Mumford 
V.  Commercial  Ins.  Co.,  5  John.  262.  Searle  v.  Scovil,  4  John.  Ch.  R.  218.  SeheifFelin 
V.  N.  Y.  Ins.  Co.,  9  John.  21. 

But  this  rule  is  only  imperatiTe  when  another  vessel  can  be  had  in  the  same  or  a 
contiguous  port,  and  would  not  extend  to  cases  where  resort  must  be  had  to  distant 
places ;  and,  independent  of  procuring  a  vessel,  there  are  further  serious  impediments 
in  the  way  of  putting  the  cargo  on  board.  Treadwell  v.  Union  Ins.  Co.,  6  Cowen, 
270.    Saltus  V.  Ocean  Ins.  Co.,  12  John.  107. 

A  stipulation  in  the  bill  of  lading  that  the  master,  in  case  of  low  water,  may  re- 
ship  into  another  craft,  does  not  vary  his  obligation  to  carry  safely;  and  the  floods 
being  injured  in  attempting  to  remove  them  from  one  place  to  another  on  shore, 
where  they  Lad  been  lauded  for  the  purpose  of  reshipping,  it  was  held  that  the 
owners  of  the  vessel  were  responsible  under  the  bill  of  lading.  McGregor  v.  Kil- 
gore,  6  Ohio  R.  358.  And  see  Whitesides  v.  Russell,  8  Serg.  &  Watts,  4-1.  Dunseth 
V.  Wade,  2  Scam.  289. 

*  In  the  case  of  Caze  v.  Baltimore  Ins.  Co.,  7  Cranch.  358,  2  C.  R.  528,  it  is  said 


400  MERCANTILE  CONTRACTS. 


Duties  of  the  Merchant. 


The  Court  of  Exchequer  has,  however,  decided  that  no  such  con- 
tract arises ;  (r)  and  if  the  master  sell  without  necessity,  or  refuse 
to  forward  the  goods  to  their  destination,  no  freight  is  due.  (s)  And 
as,  in  the  absence  of  express  stipulation,  the  voyage  does  not  com- 
mence till  the  ship  has  broken  ground,  her  owners,  if  she  be  pre- 


(r)  Vlierboom  v.  Chapman,  13  M.  &  W.  230. 

(s)  Hunter  v.  Prinsep,  10  East,  378.     Liddard  v.  Lopes,  10  East,  526.     Osgood  v. 
Groning,  2  Camp.  466. 


by  the  Court,  "  Fi'eight  in  general  is  not  due  imless  the  voyage  be  performed.  Here 
the  ship  and  cargo  never  arrived  at  their  port  of  destination,  and  of  course  the  wliole 
freight  could  not  be  due.  "Was  a  pro  rata  freight  due  ?  "We  think  not.  The  whole 
class  of  cases  resting  on  the  authority  of  Luke  v.  Lyde,  3  Burr.  882,  proceed  on  the 
ground  that  there  is  a  voluntary  acceptance  of  the  goods  themselves  at  the  interme- 
diate port ;  and  not,  as  in  the  present  case,  a  compulsive  receipt  from  the  hands  of 
the  admiralty,  after  capture  and  condemnation,  and  ultimate  restoration  upon  the 
appeal.  There  is,  in  our  judgment,  no  equity  to  support  such  a  claim;  and,  although 
it  receives  countenance  from  some  remarks  incidentally  thrown  out  in  Baillie  v. 
Moudigliani,  the  current  of  more  recent  authorit}-,  as  well  as  of  principle,  clearly 
points  the  other  way."  See  also  Columbian  Ins.  Co.  v.  Catlett,  12  "Wheat,  383;  6  C. 
R.  541.  In  the  ease  of  The  Nathaniel  Hooper,  3  Sumn.  542,  550,  Judge  Story  says, 
there  is  no  principle  which  would  justify  a  pro  rata  freight,  where  there  has  been 
no  voluntary  acceptance  of  damaged  goods  at  an  intermediate  port,  dispensing  with 
the  further  carriage  of  them,  but  an  involuntary  sale,  from  necessity,  to  prevent 
them  from  there  perishing  by  a  total  loss.  He  cites  numerous  authorities  in  support 
of  this  position.  See  also  Abbott  on  Shipp.,  5th  Am.  edit.  443,  455,  notes,  in  which 
the  American  cases  on  the  subject  of  freight  pro  rata  itineris  are  collected. 

In  the  case  of  "Welch  v.  Hicks,  6  Cowen,  510,  it  is  said,  "that  freight  pro  rata 
itineris  is  due  where  a  ship,  in  consequence  of  the  perils  of  the  sea,  without  any 
fault  of  the  master,  goes  into  a  port  short  of  her  destination,  and  is  unable  to  prose- 
cute the  voyage,  and  the  goods  are  received  by  the  owner  at  such  intermediate  port." 
"On  the  other  hand,  it  is  conceded  that  where  the  master  refuses  to  repair  his  ship 
and  send  on  the  goods,  or  to  procure  other  vessels  for  the  purpose,  and  the  owner  of 
the  goods  then  receives  them,  that  this  is  not  such  an  acceptance  of  the  goods  as  will 
entitle  the  ship  owner  to  a  pro  rata  freight.  It  is  not  a  voluntary  acceptance.  He 
does  not  elect  to  receive  his  goods  at  the  intermediate  port,  and  sell  them  there,  or 
become  his  own  carrier  to  the  port  of  destination.  He  does  not  assent  to  the 
termination  of  the  voyage  at  the  intermediate  port ;  but  it  having  been  terminated 
there,  against  his  will,  by  the  refusal  of  the  master  to  send  on  his  goods  to  the  port 
of  destination,  he  does  not,  by  receiving  them  under  such  circumstances,  in  judgment 
of  law,  promise  to  pay  the  freight  to  the  intei-mediate  port." 

As  to  the  mode  of  adjusting  a  demand  for  a  p>ro  rata  freight,  see  Coffin  v.  Storer, 
5  Mass.  252.     Robinson  v.  Marine  Ins.  Co.,  2  John.  323. 


CONTRACTS  OF  AFFREIGHTMENT.  401 

General  Average. 

vented  from  sailing,  are   entitled   to   no  compensation  for  work 
already  done,  such  as  loading  the  goods  on  board,  {t) 


Section  Y. — General  Average. 

There  are  two  charges  which  frequently  accrue  during  the  pro- 
secution of  the  adventure,  and  fall  sometimes  on  the  merchant, 
sometimes  on  the  owner,  and  sometimes  on  both  :  these  are  general 
average  and  salvage. 

Whatever  damage  or  loss  is  incurred  by  any  particular  part  of 
the  ship  or  cargo,  for  the  'preservation  of  the  rest^  is  called  General 
Average :  that  is,  the  several  persons  interested  in  the  ship,  freight, 
and  cargo,  shall  contribute  their  respective  proportions  to  indemnify 
the  owner  of  the  particular  part  against  the  damage  which  has 
been  incurred,  for  the  good  of  all ;  {u)  but  the  damage  must  be  for 
the  general  good ;  and  consequent!}^,  in  order  that  there  must  be  a 
general  average,  the  whole  adventure  must  have  been  in  jeopardy,  {v) 
It  need  not,  however,  consist  in  the  actual  loss  or  injury  of  the 
subject  matter,  in  respect  of  which  average  is  claimed,  but  may  be 
any  expense  incurred  with  relation  to  it  for  the  common  good,  ex. 
gr.,  that  of  unloading  the  cargo,  that  the  ship  may  be  repaired ;  {w) 
but  the  loss  must  have  been  voluntarily  incurred;  for  masts  and 
sails  destroyed,  in  consequence  of  the  necessity  of  carrying  an 
unusual  press  of  canvass,  are  not  subjects  of  general  average,  (x) 
though  they  are  so  if  cut  away  and  abandoned  for  the  preservation 
of  the  ship=  {y)  If  a  ship  be  obliged  to  go  into  port  for  necessary 
repairs,  the  wages  of  the  seamen  during  the  delay  are  not,  in  general, 
a  subject  of  average ;  {z)  though  it  seems  doubtful  whether  they 
would  not,  if  the  damage  to  be  repaired  itself  were  so ;  {a)  nor  is 


{t)  Curling  v.  Long,  1  B.  &  P.  634. 

(m)  Da  Costa  v.  Newnliam,  2  T.  R.  407.     "Williams  v.  London  Assurance  Co.,  1 
M.  &  S.  318.     Price  v.  Noble,  4  Taunt.  123. 
{v)  Nesblt  V.  Lusliingtou,  4  T.  R.  783. 
{w)  Plummer  v.  AVildman,  3  M.  &  S.  482. 

{x)  Covington  v.  Roberts,  2  N.  R.  378.     Power  v.  Whitmore,  4  M.  &,  S.  141. 
{y)  Birkley  v.  Presgrave,  1  East,  220. 
(z)  Power  V.  Witmore,  4  M.  &  S.  141.  (a)  Abbott,  493,  Stli  ed. 

26 


403  MERCANTILE  CONTRACTS. 


General  Average. 


the  injury  done  to  the  ship,  the  ammunition  lost,  or  the  expense  of 
heahng  sailors  wounded  in  an  action  with  the  enemy,  reimbursed, 
according  to  our  law,  by  a  general  average,  {b) 

With  respect  to  the  articles  which  contribute,  it  is  held  that  all 
objects  of  value  are  not  liable,  but  only  those  which  fall  under  the 
denomination  "merces,^^  hence  provisions  are  exempt,  (c)  as  is  the 
wearing  apparel  of  passengers.  The  owners  contribute  according 
to  the  clear  value  of  ship  and  freight  at  the  end  of  the  voyage,  after 
deducting  the  expense  thereof.  But  mariners  do  not  contribute  for 
their  wages,  save  in  the  instance  of  the  ransom  of  the  ship,  which 
is,  however,  prohibited  by  law  in  this  country,  {d) 

As  to  the  mode  of  contribution,  goods  to  be  replaced  are  valued 
when  the  average  is  calculated  at  the  ship's  place  of  destination,  at 
the  price  they  would  have  fetched  there ;  but  when  at  the  port  of 
lading,  at  the  invoice  price,  (e)  The  practice  is  to  make  an  account 
of  the  articles  that  are  to  contribute,  in  which  the  property  sacrificed 
is  included,  otherwise  its  owners  would  receive  its  value  without 
paying  towards  the  loss.  Another  account  is  made  of  the  losses  to 
be  replaced :  the  average  is  then  commonly  adjusted  by  the  brokers 
and  paid  by  the  insurers  of  the  different  parties  chargeable;  and  if 
there  be  any  dispute,  may  be  recovered  either  by  action  at  law  (/) 
or  suit  in  equity.  ((/)  There  is  also  a  lien  for  general  average  when 
due  by  the  cargo.  (A) 

This  law  of  general  average  is  of  extreme  antiquity,  being  con- 
fessedly derived  from  that  passage  in  the  Ehodian  Code  preserved 
by  Justinian, — "  Lege  Rhodia  cavetur,  ut  si  levandce  navis  gratia  jadus 
mercium  /actus  sit  omnium  contrihutione  sarciatur  quod  pro  omnibus 
datum  estJ''  It  is  scarce  necessary  to  point  out  tlie  reasonableness 
of  this  regulation.    "  When  the  ship,"  writes  Lord  Tenterden,  "is  in 


(6)  Taj-lor  v.  Curtis,  2  Marsh.  309 ;  6  Taunt.  608.  As  to  the  right  of  goods  laden 
on  deck  to  contribution,  see  Gould  v.  Oliver,  4  Bingh.  N.  C.  134,  and  Milward.  v. 
Ilibbet,  3  Q.  B.  120. 

(c)  Brown  v.  Stapylton,  4  Bingh.  119.     See  Abbott,  p.  3,  c.  8. 

(d)  22  Geo.  3,  c.  25.     43  Geo.  5,  c.  160.     45  Geo.  3,  c.  12. 

(e)  Abbott,  p.  3,  c.  1. 

(/)  Birkley  v.  Presgrave,  1  East,  220.     Dobson  v.  Wilson,  S  Camp.  480. 

{g)  Shepherd  v.  Wright,  Shower,  P.  C.  18. 

{h)  See  Lord  Teiterden's  judgment,  Scaife  v.  Tobin,  3  B.  «fe  Ad.  528. 


COXTRACTS  OF  AFFREIGHTMENT.  403 

General  Average. 

danger  of  perishing  from  the  violent  agitation  of  the  wind,  or  from 
the  quantity  of  water  that  may  have  forced  a  way  into  it,  or  is 
laboring  on  a  rock  or  a  shallow  upon  which  it  may  have  been 
driven,  or  when  a  pirate  or  any  enemy  pursues,  gains  ground,  and 
is  ready  to  overtake,  no  measure  that  may  facilitate  the  motion  and 
passage  of  the  ship  can  be  really  injurious  to  any  one  who  is  in- 
terested in  the  welfore  of  any  part  of  the  adventure,  and  every  such 
measure  may  be  beneficial  to  almost  all.  In  such  emergencies, 
therefore,  when  the  mind  of  the  brave  is  appalled,  it  is  lawful  to 
have  recourse  to  every  mode  of  preservation,  and  to  cast  out  the 
goods  in  order  to  lighten  the  ship,  for  the  sake  of  all.  Bat  if  the 
ship  and  the  residue  of  the  cargo  be  saved  from  the  peril  by  the 
voluntary  destruction  or  abandonment  of  part  of  the  goods,  equity 
requires  that  the  safety  of  some  should  not  be  purchased  at  the 
expense  of  others,  and  therefore  all  must  contribute  to  the  loss." 

The  jurists  of  the  middle  ages  sought  to  fritter  away  this  useful 
law,  by  prescribing  various,  and  sometimes  intricate,  forms  to  be 
observed  on  the  occasion  of  the  jettison.  But,  as  Lord  Tenterden 
has  remarked,  "  the  regulations  prescribed  by  persons  at  ease  in  the 
closet  or  senate- house,  will  seldom  be  followed  at  the  moment  when 
life  or  liberty  is  in  jeopardy, — at  such  a  moment  every  one  present 
will  exclaim,  with  the  friend  of  Juvenal, 

'  Fundite  quce  meet  sunt — etiam  puUherrima — ' 
and,  provided  that  the  jettison  have  been  the  effect  of  danger  and 
the  cause  of  safety,  all  writers  agree  that  contribution  ought  to  be 
made,  though  the  forms  have  not  been  complied  with."  Indeed, 
Emerigon,  to  whom  his  lordship  refers,  cites  a  remark  of  Parga,  who 
says,  that  during  sixty  years'  experience  as  a  Genoese  magistrate, 
he  had  met  with  but  five  instances  of  regular  jettison,  all  of  which 
were  suspected  of  fraud,  because  the  forms  had  been  too  accurately 
observed.* 


*  This  subject  was  examined  ■with  much  learning  in  tlie  case  of  the  Columbian 
Ins.  Co.  V.  Ashby,  13  Pet.  331.  It  is  admitted  on  all  sides,  that  the  rule  as  to  general 
average  ii  derived  to  us  from  the  Rhodian  law,  as  promulgated  and  adopted  in  the 
Roman  jurisprudence.  The  Roman  law  fully  recognized  and  enforced  the  leading 
limitations  and  conditions  to  justify  a  general  contribution,  which  have  been  ever 
since  steadil}-  adhered  to  by  all  maritime  nations.  First,  tliat  the  ship  and  cargo 
ehould  be  placed  in  a  common  imminent  peril  •  secondly,  that  tliere  should  be  a 


40-4  MERCANTILE  CONTRACTS. 


Salvage. 


Section  YI. — Salvage. 

Salvage  is  defined  to  be  a  compensation  to  be  made  by  the  ship- 
owner or  mercliant,  to  otlier  persons,  by  whose  assistance  the  ship 

voluntary  sacrifice  of  property  to  avert  that  peril ;  and,  thirdly,  that  by  that  sacri- 
fice the  safety  of  the  other  property  should  be  presently  and  successfully  attained- 
Hence,  if  there  was  no  imminent  danger  or  necessity  for  the  sacrifice,  as  if  the 
jettison  was  merely  to  lighten  a  ship  too  heavily  laden  by  the  fault  of  the  master  in 
a  tranquil  sea,  no  contribution  was  due.  So,  if  the  ship  was  injured  or  disabled  in  a 
storm,  without  any  voluntary  sacrifice;  or  if  she  foundered  or  was  shipwrecked 
without  design,  the  goods  saved  were  not  bound  to  contribution.  On  the  other 
hand,  if  the  object  of  the  sacrifice  was  not  attained ;  as  if  there  was  a  jettison  to 
prevent  shipwreck,  or  to  get  the  ship  off  the  strand,  and  in  either  case  it  was  not 
attained,  as  there  was  no  deliverance  from  the  common  peril,  no  contribution  was 
due.     13  Pet.  338. 

In  the  case  of  Bradhurst  v.  Columbian  Ins.  Co.,  9  John.  9,  it  was  held  that  where 
a  ship  is  volimtarily  run  ashore  for  the  common  good,  and  she  is  afterwards  re- 
covered and  performs  the  voyage,  the  damages  resulting  from  this  sacrifice  are  to  be 
borne  as  a  general  average.  But  that  where  the  ship  is  totally  lost,  it  is  not  a 
general  average.  The  same  question,  however,  came  up  for  decision,  in  Caze  v. 
Keilly,  3  Wash.  C.  C.  298  ;  Simms  v.  Gurney,  4  Binn.  513  ;  and  Gray  v.  Wain,  2  Serg. 
&  Eawle,  229 ;  and  it  was  held,  that  there  was  no  difference  between  the  case  of  a 
partial  and  that  of  a  total  loss  of  tlie  ship,  by  a  voluntary  stranding,  and  that  both 
constituted  equally  a  case  of  general  average.  And  the  Supreme  Court  of  the  United 
States  in  the  case  just  cited,  13  Pet.  343,  says,  "  We  have  examined  tlie  reasoning  in 
these  opinions,  (referring  to  tlie  authorities  we  have  quoted,)  and  are  bound  to  say 
that  it  has  our  unqualified  assent:  and  we  follow  without  hesitation  the  doctrine,  as 
well  founded  in  authority  and  supported  by  principle,  that  a  voluntary  stranding  of 
the  ship,  followed  by  a  total  loss  of  the  ship,  but  with  a  saving  of  the  cargo,  con- 
stitute, when  designed  for  the  common  safety,  a  clear  case  of  general  average." 

In  the  case  of  Padeford  v.  Boardman,  4  Mass.  549,  it  is  said,  "  General  average 
expresses  that  contribution  to  a  loss  or  expense  voluntarily  incurred  for  the  preserva- 
tion of  the  whole,  in  which  all  who  are  concerned  in  a  ship,  freight,  and  cargo,  are 
to  bear  an  equal  part,  proportionable  to  their  respective  interests.  And  for  the  loss 
incurred  by  this  contribution,  however  small  in  amount,  the  respective  owners  are 
to  be  indemnified  by  their  insurers." 

In  the  same  case  it  was  held,  that  when  in  the  course  of  a  voyage,  a  ship  insured, 
being  damaged  by  winds  and  storms,  voluntarily  seeks  a  port  to  refit,  the  expenses 
consequent  thereon,  including  the  wages  and  provisions  of  the  crew  during  the  de- 
tention, are  a  subject  of  general  average;  but  the  repairs  are  a  distinct  cliarge  upon 
the  vesseh  See  also  Saltus  v.  Comra.  Ins.  Co.,  10  John.  48Y.  Potter  v.  Ocean  Ins. 
Co.,  3  Sumn.  27.  But  it  has  been  said  that  "  General  average  can  only  arise,  where 
the  sacrifice  has  been  made  for  the  common  benefit,  and  has  accomplished  the  object. 


C0XTRACT3  OF  AFFEEIGIITMEXT.  405 

Salvage. 

or  its  lading  may  be  saved  from  impending  peril,  or  recovered  after 
actual  loss,  (i)  The  policy,  as  well  as  justice,  of  awarding  such  a 
compensation,  is  so  obvious,  that  it  has  been  in  all  ages  allowed  by 
the  codes  of  all  civilized  nations,  {j)  Salvage  may  become  due, 
either  upon  rescue  from  the  perils  of  the  sea,  or  from  the  hands  of 
enemies. 


(i)  Abbott,  p.  3,  c.  10.  As  to  salvage  in  a  i-iver,  see  Nicholson  v.  Chapman,  2  IL 
BL  245. 

(j)  In  England  it  has  alwaj's  existed  bj'  force  of  the  law  merchant ;  and  it  is  now 
recognized  and  secured  in  cases  of  rescue  from  perils  of  the  sea,  by  stat.  9  «fc  10 
Vict.  c.  99,  s.  19. 

The  expenses  and  charges  of  going  to  a  port  of  necessity  to  refit,  can  properly  be  a 
general  average  only  when  the  voyage  has  been  or  might  be  resumed.  If  it  has 
been  abandoned  from  necessity,  then  it  is  not  a  case  for  the  application  of  the  doc- 
trine."    Williams  v.  Suffolk  Ins.  Co.,  3  Sumn.  513. 

The  necessary  costs  and  charges  incurred  in  case  of  capture  in  prociu'ing  the 
restoration  of  the  ship  and  cargo  are  to  be  allowed  as  a  general  average ;  but  in  this 
case,  it  is  held  in  Massachusetts,  the  wages  and  provisions  of  the  crew  during  the 
detention  are  not  to  be  included.  The  reason  given  is  that  the  delay  is  not 
voluntarily  incurred.  Spafford  v.  Dodge,  14  Mass.  65,  74.  In  New  York  they  are 
included.  Leavenworth  v.  Delafield,  1  Caines,  573.  Penny  v.  New  York  Ins.  Co.,  3 
Caines,  155. 

In  case  of  jettison  of  a  deck  load,  to  avoid  dangers  of  the  seas,  the  owner  is  not 
entitled  to  the  banefit  of  general  average.  Doane  et  al.  v.  Keating,  12  Leigh.  391. 
This  rule  has  bsan  recognized  in  New  York,  New  Hampshire,  Connecticut,  and 
Louisiana. 

In  case  of  jettison  of  goods,  their  value  is  generally  to  be  estimated  at  their 
prime  cost,  or  original  value;  or,  if  the  vessel  have  arrived  at  her  port  of  des- 
tination, at  their  value  at  such  port.  "Nothing  could  be  more  conjectural  and 
uncertain,  in  the  ascertainment  of  the  value  of  goods,  thrown  overboard  in  cases 
of  jettison,  than  to  leave  that  value  to  be  fixed  by  the  probable  or  possible  chances 
of  escape  from  the  impending  danger."  Rogers  v.  Mechanics'  Ins.  Co.,  2  Story, 
173,  174. 

In  cases  of  general  average,  the  master  and  owners  may  retain  all  goods  of  the 
shippers,  until  their  share  of  the  contribution  towards  the  average  is  either  paid 
or  secured.  And  it  seems  there  is  no  exception  to  this  rule  in  favor  of  the 
government. 

AVhere  certain  slop  clothing,  belonging  to  the  United  States,  was  shipped  on  board 
a  vessel,  which  went  ashore,  and  much  expense  was  incurred  in  saving  the  goods  on 
board,  it  was  held  that  the  officei's  of  the  United  States  had  no  right  to  take  tlia 
goods  shipped  by  them,  without  paying  or  securing  their  contribution  to  tlie  gfuerivJ 
average.     United  States  v.  Wilder,  3  Sum.  308. 


406  MERCANTILE  CONTRACTS. 

Salvacje. 

When  tlie  rescue  is  from  dangers  of  the  sea,  the  salvor  or 
rescuer  has  a  lien  on  the  goods  preserved,  and  formerly  might  have 
kept  them  till  a  recompense  had  been  made  to  him ;  {k)  but  by  a 
recent  statute,  {I)  he  is  required  to  report,  and  place  them  at  the 
disposal  of  the  receiver  appointed  under  that  act,  or  the  officer  of 
customs  at  the  nearest  port,  who  may  detain  (m)  the  same  until 
satisfaction  is  made  of  the  salvage,  or  security  or  bail  has  been 
given  by  the  owner  for  its  payment.  The  amount  of  this  recom- 
pense might,  too,  if  the  parties  Avould  not  agree,  have  been  ascer- 
tained by  a  jury  in  an  action  brought  by  the  salvor  against  the 
owner  of  the  goods,  or  by  the  owner  of  the  goods  (having  first 
tendered  what  he  thought  sufficient)  against  the  salvor,  {n)  In  most 
cases,  the  Court  of  Admiralty  had,  and  in  many  cases  retains  juris- 
diction, and  will,  on  suit  brought,  fix  the  amount  of  salvage  to  be 
paid,  and  take  care  of  the  property,  pendente  lite,  (o) 

Besides  the  common  law  and  admiralty  jurisdictions,  a  tribunal 
for  the  summary  adjustment  of  salvage  in  certain  cases  was  pro- 
vided by  several  statutes ;  (p)  but  these  are  now  repealed  by  the 
recent  statute  above  referred  to,  by  which  every  receiver  {q)  ap- 
pointed under  it,  and  all  (r)  justices  of  the  peace,  mayors,  bailiffs, 
and  other  officers  of  corporations  and  port  towns,  constables,  head- 
boroughs,  tithing-men,  and  officers  of  customs  and  excise,  are 
armed  with  powers  to  gather  men  and  horses  and  carts,  and  de- 
mand assistance  from  vessels  lying  in  the  neighborhood,  in  order 
to  the  preservation  of  any  ship  in  distress.  A  mode  is  also  chalked 
out  for  adjusting  summarily  their  remuneration,  and  that  of  the 
rescuers  in  other  cases  of  salvage,  by  the  intervention  of  two  jus- 
tices (s)  residing  near  the  place,  or,  if  they  cannot  agree,  a  third 
person  conversant  with  maritime  affairs,  nominated  by  them,  who 


(k)  Hartford  v.  Jones,  1  Lord  Raym.  393.     Baring  v.  Day,  8  East,  57. 
(0  9  <fc  10  Vict.  c.  99,  s.  5. 
(r,i)  Sects.  19,  23. 

(n)  Abbott,  p.  3,  c.  10,  s.  2 ;  but  now  see  9  &  10  Vict.  c.  99,  s.  21. 
(o)  Sect.  19. 

Ip)  12  Ann,  st.  2,  c.  18.     26  Geo.  2,  c  19.    49  Geo.  3,  c.  122.     63  Geo.  3,  c.  87 
1  «fe  2  Geo.  4,  cc.  75,  76. 

{q)  9  &  10  Vict.  c.  99,  sect.  2. 

(r)  Sect.  14.  (»)  Sect.  21. 


CONTRACTS  OF  AFFREIGHTMENT.  407 

Salvage. 

may  decide  on  the  amount  of  salvage,  and  enforce  its  payment  in 
oases  where  the  sum  claimed  shall  not  exceed  200?.  A  like(^) 
power  is  in  similar  cases  given  to  three  or  more  commissioners  of 
salvage,  whom  the  commissioners  of  admiralty  are  authorized  to 
appomt  for  different  ports  and  districts.  The  decision  (i()  of  both 
these  tribunals  is  subject,  however,  to  appeal  to  the  High  Court  of 
Admiralty,  and,  in  the  event  of  such  appeal,  the  property  must  be 
delivered  up  to  the  owner  upon  his  giving  bail  in  double  the 
amount  awarded  for  salvage.  In  the  event  of  the  salvage  claim 
exceeding  200Z.,  and  the  same  not  being  settled  by  agreement  or 
arbitration,  it  must  be  determined  exclusively  (t;)  by  the  High 
Court  of  Admiralty,  which  is  expressly  declared  to  have  jurisdic- 
tion to  decide  all  claims  and  demands  in  the  nature  of  salvage, 
except  in  certain  cases  of  droits  of  admiralty,  and  where  the  jus- 
tices or  commissioners  have  given  a  decision,  which  has  not  been 
duly  appealed  against,  {lu)  These  regulations  do  not  apply  to  the 
Cinque  Ports,  {x)  where  a  summary  jurisdiction  is,  however,  pro 
vided  by  stat.  1  &  2  Geo.  4,  c.  76.  (See  with  regard  to  appeals  in 
such  cases,  3  &  4  Vict.  c.  65,  s.  5.) 

With  respect  to  salvage  from  enemies,  the  law  formerly  was, 
that  where  a  ship  was  taken  and  retaken  before  the  captor  had 
conducted  her  infra  pi'cesidia^  or,  at  all  events,  before  he  had  ob- 
tained a  sentence  of  condemnation  against  her,  the  original  owner 
had  a  right  to  her  again  on  paying  salvage  to  the  recaptors.  But, 
if  not  retaken  till  a  late:  period,  she  was  deemed  to  have  become 
the  absolute  property  of  the  captors,  and  consequently  the  lawful 
prize  of  the  recaptors ;  the  original  owner's  possibility  of  reinstate- 
ment being  considered  extinguished  by  the  carriage  infra  lyraisidia^ 
or  sentence  of  condemnation,  {y) 

This  rule  was,  however,  altered  by  the  legislature  in  favor  of 
the  original  owner  of  the  captured  property,  (z)  who  is  now  entitled 
to  have  it  again  on  payment  of  salvage,  no  matter  at  what  period 
the  recapture   may  have  taken   place,    and   the  benefit  of  thisr 


{t)  Sect.  22.  (m)  Sect.  23.  {v)  Sect.  21. 

{w)  Sect.  40.  {x)  Sect,  43. 

{y)  See  case  of  L'Actif,  1  Edw.  185. 

{z)  13  Geo.  2,  c.  4,  s.  18.     17  Geo.  2,  c.  34,  s.  20.     29  Geo.  2,  e.  34,  s.  24. 


408  MERCANTILE  COFTRACTS 

Dissolution  of  Contracts  of  Affreightment. 

alteration  is  extended  to  the  allies  of  Great  Britain,  whose  vessels 
have  been  captured  by  the  enemy  and  recaptured  by  British  ships, 
unless,  indeed,  it  appear  that  those  allies  themselves  act  towards 
British  property  on  a  less  liberal  principle,  for,  in  that  case,  our 
courts  adopt  their  rule,  and  mete  to  them  according  to  their  own 
measure  of  justice,  (a)   ;    '■'--(^-    'v»  -    ^a-'-'^''-      {\.-   ■  ^ 

The  amount  of  salvage  on  recapture  has  at  various  times  been 
variously  regulated  by  statute.  In  1793,  it  was  fixed  at  one-eighth 
for  the  Eoyal  Navy,  and  one-sixth  for  private  ships,  {b)  Similar 
provisions  were  made  during  the  last  war,  and  the  same  rate  of 
salvage  is  fixed  for  His  Majesty's  hired  armed  ships  as  for  the 
Eoyal  Navy,  (c) 


Section  VII. — Dissolution  of  Contracts  of  Affreightment. 

It  remains  only  to  add  a  few  words  upon  the  mode  in  which 
contracts  of  affreightment  may  be  dissolved.  Like  all  others,  they 
may,  of  course,  be  rescinded  by  the  consent  of  parties,  and  are  so, 
if  rendered  unlawful  by  a  declaration  of  the  government  made 
before  their  performance  :  thus,  the  breaking  out  of  hostilities  be- 
tween the  country  to  which  the  ship  belongs  and  that  to  which  she 
is  bound,  rescinds  the  contract  of  affreightment.  It  is  not,  how- 
ever, dissolved  by  an  embargo,  which  is  but  a  temporary  suspen- 
sion, not  a  total  interdiction  of  Commerce ;  {d)  unless,  indeed,  the 
embargo  was  intended  as  a  hostile  measure  against  the  country  to 
which  the  ship  belongs,  and  the  object  of  the  voyage  has  been 
thereby  lost,  (e) 

On  the  same  principle,  if  the  exportation  of  the  articles  of 
which  the  cargo  is  to  consist  be  prohibited,  the  contract  of  affreight- 
ment is  dissolved,  (/)    But  such  a  prohibition  by  a  foreign  govern- 


(a)  The  Santa  Cruz,  1  Rob.  A.  R.  63. 
(6)  33  Geo.  3,  c.  60. 

(c)  See  Stat.  43  Geo.  3,  c.   16,  ss.   39,  41.     Stat.  45  Geo.  3,  c.  '72,  s.  V.     Stat.  48 
Geo.  3,  c.  132. 

{(I)  Iladley  v.  Clarke,  8  T.  R.  259. 

(«)  Touteng  v.  Hubbard,  3  B.  &  P.  291. 

(/)  See  Lord  EUenborough's  remarks,  in  Barker  v.  Hodgson,  3  M.  &  S.  267. 


C0XTRACT3  OF  AFFREIGHTMENT.  499 


Dissolution  of  Contracts  of  Affreightment. 


ment  is  no  excuse  for  the  non-performance  of  an  engagement  to 
lade  a  vessel  with  a  cargo  of  the  goods  the  exportation  of  which 
is  prohibited ;  for  one  nation  will  not  enforce  the  merely  positive 
regulations  of  another,  if  inconsistent  with  its  own.  {g) 

It  is  illegal,  as  contrary  to  the  law  of  nations,  to  attempt  to 
enter  a  blockaded  port  in  violation  of  the  blockade ;  and,  after  a 
notification  of  such  blockade,  the  act  of  sailing  loith  the  intention  of 
violating  the  blockade,  is  illegal.  Qi)  But  the  mere  act  of  sailiu"- 
to  a  port  which  is  blockaded  at  the  time  the  voyage  is  commenced 
without  any  premeditated  intention  of  breaking  the  blockade,  if  it 
shall' be  found  to  continue  in  force  when  the  ship  arrives  off  the 
port,  is  not  illegal ;  {i)  for  it  may  be  of  the  first  importance  to 
neutral  merchants  to  possess  the  opportunity  of  introducing  their 
goods  at  the  earliest  moment  after  the  blockade  has  been  relaxed.* 

{g)  Bright  v.  Page,  Abb.  p.  2,  c.  11 ;  3  B.  &  P.  295,  n.  a.  Et  vide  Sjoerds  v.  Lus- 
eombe,  16  East,  201. 

(A)  The  Neptunus,  2  Rob.  110.     Medeiros  v.  Hill,  8  Bingh.  231. 

{i)  Medeiros  v.  Hill,  8  Bingh.  231.  The  Shepherdess,  5  Rob.  2G-4.  See  ISTaylor  v. 
Taylor,  9  B.  &  C.  718. 


*  The  measure  of  damages  in  action  against  carriers,  according  to  Mr.  Sedge- 
wick,  is  the  value  of  the  goods  at  the  place  of  destination.  Tliis  rule  is  sustained  in 
a  note  to  Flanders  Maritime  La-w,  p.  159,  by  reference  to  a  number  of  American 
eases,  among  others  to  Gillingham  v.  Demprey,  12  Serg.  &  Rawl.  ISS.  The  Cassius, 
2  Story,  81.  Watkinson  v.  Laughton,  8  Johns.  213.  Brackett  v.  McNair,  14  Johns, 
ITO.     Contra,  Bridge  v.  Austin,  4  Mass.  115.     Edmondson  v.  Baxter,  4  Hayw,  112. 


> 


CHAPTEE,  IV. 

MARITIME      I  2s"  S  U  E  A  N  C  E  . 

Sect.  1.  Definition  and  nature  of  the  contract. 

2.  The  parties^  or  who  may  he  insurers  and  insured, 

3.  Subject  matter^  or  ivhat  may  he  insured. 

4.  The  policy. 

5.  Residts  of  contract. 

6.  Proceedings  on  the  contract. 


Section  I. — Definition  and  Nature  of  Contract. 

Insukakce  is  a  contract  by  wliicli  one  partj^,  in  consideration 
of  a  premium,  undertakes  to  indemnify  another  party  against  a 
particular  event,  (a)  A  policy  of  insurance  is  the  instrument  in 
which  this  contract  is  set  forth.*     The  party  who  undertakes  to 

(a)  2  Bl.  Comm.  458. 


*  In  England,  it  would  seem  to  be  a  necessary  result  from  the  requisitions  of  certain 
statutes,  28  Geo.  3,  c.  56,  and  35  Geo.  3,  c.  63,  that  a  contract  of  insurance,  to  be 
valid,  must  be  in  writing.  And  the  learned  authors  who  have  treated  on  thesubiecl 
of  insurance  in  this  country,  express  a  doiibt  whether  an  action  on  a  contract  of  in- 
surance merely  oral,  would  now  be  sustained,  as  the  usage  of  a  written  contract  has 
long  and  universally  prevailed.  1  J.  Duer  on  Ins.  60;  1  Phil,  on  Ins.  8.  It  is  ad- 
mitted, however,  that  upon  principles  of  common  law,  an  unwritten  or  parol  contract 
of  insurance  would  undoubtedly  be  sufficient.  It  may  be  observed,  that  the  usage 
which  has  prevailed  to  express  the  contract  of  insurance  in  writing,  by  no  means 
conflicts  with  the  right  to  make  it  by  words.  And  although  there  are  certain  con- 
tracts which  at  common  law  might  be  made  by  parol,  that  are  now  required  to  be  in 
writing,  thus  forming  a  class  of  written  contracts  not  under  seal,  wholly  unknown 
to  the  common  law,  yet  it  is  submitted  that  nothing  short  of  legislative  enactment 
can  increase  that  class  of  contracts,  or  add,  as  it  were,  another  clause  to  the  Statute 
of  Frauds. 


MARITIME  INSURANCE.  411 

Definition  and  Nature  of  Contract. 

indemnify  is  called  the  Insurer^  and,  having  subscribed  the  policy, 
the  Underwriter.  The  party  indemnified  is  termed  the  insured  or 
assured.  The  subject  matter  of  insurance  is  very  extensive,  since 
any  description  of  interest  may  be  insured  against  any  species  of 
danger ;  save  only  where  the  contract  would  be  opposed  to  the 
common  law,  or  to  some  statute,  ex.  gr.^  9  Anne,  c.  6,  s.  57,  which 
forbids  insurances  on  marriages,  births,  christenings,  and  service. 
The  three  principal  species  of  insurance,  which  will  alone  be  taken 
notice  of  in  this  treatise,  are:  1.  Maritime  Insurance.  2.  Insurance 
on  Lives.     3.  Insurance  against  loss  by  Fire. 

Maritime  Insurance  takes  place  when  a  merchant  gives  a  pre- 
mium to  others  to  assure  his  ship  or  goods,  from  one  port  or  place, 
to  some  other  port  or  place,  on  such  terms  as  they  agree  to.  And 
if  the  ship,  or  goods,  &c.,  perish,  or  are  lost  in  whole,  or  in  part, 
every  subscriber  is  to  make  a  recompense  either  to  the  extent  of 
his  subscription,  or  2^'''o  rata,  in  proportion  thereto,  "whereby," 
says  the  statute  43  Eliz.  c.  12,  "  on  the  loss  or  perishing  of  any 
ship,  there  followeth  not  the  undoing  of  any  man,  but  the  loss 
lighteth  rather  easily  on  many  than  heavily  upon  a  few."  This 
contract,  which  was  introduced  into  England  by  the  Italians,  ap- 
peared of  so  much  importance  to  the  legislature  in  the  reign  of 
Elizabeth,  that  by  the  statute  43  of  tliat  Queen,  cap.  12,  the  chan- 
cellor was  empowered  to  issue  a  commission,  appointing  the  Ee- 
corder  of  London,  the  Judge  of  the  Admiralty,  two  doctors  of  the 
civil  law,  two  common  lawyers,  and  three  merchants,  to  form  a 
court,  of  whom  three  were  to  be  a  quorum,  who  were  to  adjudi- 
cate on  all  controversies  arising  out  of  policies.  But  this  juris- 
diction, proving  defective  in  many  respects,  soon  fell  into  disuse, 
especially  after  it  had  been  decided  by  the  Court  of  Upper  Bench, 


Pai'ties  may  make  a  valid  agreement  for  an  insurance,  to  be  afterwards  carried 
out  by  the  execution  of  a  policy  in  due  form.  Perkins  v.  "Washington  Ins.  Co.,  4  Cow. 
646.  On  a  refusal  to  execute  the  policy,  a  Court  of  Equity  will  decree  a  specific 
performance.  1  J.  Duer,  66,  110.  Flint  v.  Ohio  Ins.  Co.,  8  Ohio,  504.  Tayloe  v.  Mer- 
chants' Fire  Ins.  Co.,  9  How.  S.  C.  R.  390.  Or  it  seems  an  action  at  law  might  be 
sustained  on  tlie  agreement,  and  if  a  loss  lias  occurred,  a  recovery  had  for  it  as  part 
of  the  damages.  1  J.  Duer,  66.  Lightbody  v.  North  American  Ins.  Co.,  23  Wend. 
18.     McCullock  V.  Eagle  Ins.  Co.,  1  Pick.  278. 


412  MERCANTILE  CONTRACTS. 

The  Parties  to  a  Contract  of  Insurance. 

in  Cane  v.  Moy,  2  Sid.  121,  that  a  judgment  in  the  Court  of  Po- 
licies in  the  defendant's  favor  was  no  bar  to  a  subsequent  action 
against  him  for  the  same  cause.  It  is  always  considered  a  con 
tract  uherrimce.  Jidei^  and  receives  a  liberal  construction,  (5)  for 
the  benefit  of  trade,  and  of  the  assured.  In  considering  it,  we 
will  treat,  1.  Of  the  parties  to  the  contract,  or  who  may  be  in 
surers  and  insured.  2.  Of  the  subject  matter  of  the  contract,  or 
what  may  be  insured.  3.  Of  the  policy  or  instrument  in  which 
the  contract  is  set  forth,  its  form  and  construction.  4.  Of  the 
results  of  the  contract ;  and,  5.  Of  the  proceedings  consequent 
on  those  results. 


Section  II. — The  Parties  to  a  Contract  of  Insurance. 

At  common  law,  any  individual,  partnership,  or  corporation, 
might  have  become  insurers.  By  stat.  6  Geo.  1,  c.  18,  the  King 
was  empowered  to  erect  two  chartered  companies,  viz.,  the  Eoyal 
Exchange  Assurance,  and  London  Assurance  Companies,  for 
insuring  ships,  and  lending  money  on  bottomry;  and  by  the  12th 
section  of  that  act,  a  monopoly  was  conferred  upon  them,  as 
against  all,  excepting  individual  underwriters  ;  of  which,  however, 
they  have  since  been  deprived,  and  the  common  law  on  this  sub- 
ject is  restored,  by  stat.  4  Geo.  4,  c.  114. 

Any  person,  whether  British  or  alien,  may,  generally  speaking, 
be  insured.  No  policy,  however,  can  be  effected,  nor  action 
maintained  by  or  on  behalf  of  an  alien  enemy  during  war :  (c) 
vmless,  indeed,  his  ship  be  protected  by  the  royal  license,  in  which 
case  any  person  who  effected  the  insurance  as  his  trustee  may 
sue.  {d)  A  neutral  part-owner  of  goods,  the  residue  of  which  be- 
longs to  one  who,  before  the  action,  though  subsequently  to  the 
loss,  became  an  enemy,  may  sue  on  an  insurance  of  his  own  share,  (e) 

(6)  2  Wms.  Saund.  200,  in  notis. 

(c)  Brandon  v.  Nesbitt,  6  T.  R  23.  Bristow  v.  Towers,  6  T.  R.  35 ;  vide  etlain 
Flindt  V.  Waters,  15  East,  260. 

{d)  Kensington  v.  Inglis,  8  East,  2'73,  recognized  in  Flindt  v.  Waters,  15  East,  260. 

{i)  Rotch  V.  Edie,  6  T.  II.  413.  See  Mr.  Campbell's  remarks  on  that  ease,  Brom- 
ley V.  Hesseitine,  1  Camp.  76,  in  notis. 


MARITIME  INSURANCE.  413 


The  Parties  to  a  Contract  of  Insurance. 


An  English  subject  living  and  trading  under  the  p-otection^  and 
for  the  henejit^  of  a  foreign  state,  is  looked  on,  if  that  state  be  hos- 
tile, as  an  enemy ;  if  it  be  neutral,  as  a  neutral.  {/)  But  it  does 
not  appear  to  follow  that,  because  a  British  or  neutral  merchant 
happens  to  be  resident  in  an  enemy's  country,  goods  to  be  de- 
livered for  him  at  a  neutral  or  friendly  port  are,  on  that  account, 
uninsurable ;  (5')  nor  does  the  military  occupation  of  a  country  by 
our  enemies,  12:180  facto  constitute  the  natives  of  that  country  also 
enemies.  (A) 

Under  the  head  of  Parties,  it  seems  proper  to  remark,  that 
subscriptions  to  a  policy  are  almo&t  always  procured  by  a  Broker,  {{) 
concerning  whom  the  practice  is  that  the  underwriters,  to  whom, 
in  most  instances,  the  insured  are  unknown,  look  to  the  broker 
for  the  payment  of  the  premium,  and  he  to  the  insured.  The 
latter  pay  the  premiums  to  the  broker  only,  and  he  is  a  middle- 
man between  the  insured  and  underwriter ;  but  he  is  not  solely 
an  agent ;  he  is  a  principal  to  receive  the  money  from  the  insured, 
and  pay  it  to  the  underwriter,  (y)*     The  mode  in  which  this  pay- 


(/)  M'Connel  v.  Hector,  3  B.  <fe  P.  113.     WilHson  v.  Patteson,  7  Taunt.  439. 

(cf)  Bromley  v.  Hesseltine,  1  Camp.  '75. 

(k)  Hagedorn  v.  Bell,  1  M.  &  S.  450. 

(i)  In  the  absence  of  any  precise  instructions,  it  is  the  duty  of  the  broker  to  pro- 
cure the  policy  to  be  made  and  to  obtain  it  from  the  insurers  within  a  reasonable 
time,  and  he  will  be  liable  in  an  action  on  the  case  for  an  omission  to  do  this,  in 
■which  it  is  sufficient  to  allege  that,  although  a  reasonable  time  had  elapsed,  lie  wrong- 
fully, and  in  breach  of  his  duty,  neglected  to  procure  the  policy  to  be  effected ;  and 
if  he  seeks  to  excuse  himself  on  the  ground  of  the  impossibility  of  finding  persona 
willing  to  undertake  tlie  risk,  or  any  other  justifiable  ground,  he  must  set  that  up. 
See  Turpin  v.  Bilton,  5  M.  &  Gr.  455. 

(j)  Power  V.  Butcher,  10  B.  &  C.  329.  See  a  very  clear  explanation  of  this  doc- 
ti'ine  by  Lord  Ellenborough,  in  his  judgment  in  Jenkins  v.  Power,  6  M.  &  S.  282. 


*  An  agent  who  insures  for  his  principal  has  authority  to  abandon  the  cargo. 
Chesapeake  Ins.  Co.  v.  Stark,  6  Cranch,  288.  And  to  settle  the  loss,  if  he  has  posses- 
sion of  the  policy.  Errick  v.  Johnson,  6  Mass.  192.  As  to  effect  of  revocation  of 
authority  on  the  right  of  agent  to  sue  on  poliej'  in  his  name,  see  Reed  v.  Pacific  In 
Burance  Co.,  1  Mete.  166. 

One  part-owner  of  a  vessel,  as  such,  has  no  authority  to  insure  for  the  rest  of  tha 
owners,  although  he  bo  also  the  ship's  husband.  Finney  v.  Fairhaven  Ins.  Co.,  5 
Mete.  192,     Pinney  v.  "Warren  Ins.  Co.,  1  Mete.  16.     Turner  v.  Burrows,  8  "Wend.  144. 


414  IfEr.CAyTUJE  CONTRACTS. 


The  Subject  Matter,  or  What  may  be  Insured. 


ment,  and  the  payment  made  to  the  insured  in  ca.se  of  loss,  is 
usually  effected,  will  be  seen  in  Stewart  v.  Aherdein.  {k) 


Section  III. — The  Salject  Matter^  or  What  may  le  Insured. 

At  common  law,  an  interest  on  the  part  of  tlie  insured  in  the 
subject  matter  of  insurance  was  not  absolutely  requisite,  and  might 
have  been  dispen.sed  with  by  a  policy  containing  the  words  interest 
err  no  interest;  though,  in  the  absence  of  such  words,  it  was  under- 
stood to  exist,  and  must  have  been  proved.  (Z)  However,  by  stat. 
19  Geo,  2,  c.  37,  s.  1,  it  is  enacted,  "that  no  in.surances  shall  be 
made  by  any  person,  bodies  corporate  or  politic,  on  any  ship  lehng- 
vny  to  Bis  Majesty  or  any  of  his  subjects,  or  any  goods,  merchandises, 
or  effects  laden,  or  to  be  laden  on  board  such  ships,  interest  or  no 
interest,  or  without  further  proof  of  interest  than  the  policy,  or  by 
way  of  gaming  or  wagering,  or  without  benefit  of  salvage  to  the 
assurer,  and  that  every  such  insurance  shall  be  void,"  A  policy 
offending  against  the  provisions  of  this  section  is  called  a  Wager 
Policy!^  By  sect.  2,  however,  "  insurances  on  private  ships  of  war, 
fitted  out  by  any  of  Ilis  Majesty's  subjects,  solely  to  cruise  against 


(A;)  4  M.  &  W,  211 ;  arde,  b.  i.  c.  5. 

{I)  See  Lucena  v.  Crawford,  3  B.  <fe  P.  101,  per  Chambre,  J.  In  Saddlers'  Co.  v.  Bad-- 
cock,  2  Atk.  5.56,  per  Ld.  Ilardwicke,  such  an  instrument  was  rather  a  viager  than  a 
j>r>lijC]i,  wliich  is  a  contract  to  indernnifif,  and  accordingly  some  wagers  have  been  held 
proliibited  by  stat.  14  Geo.  3,  c.  48,  which  aimed  at  similar  policies  on  lives.  Patter- 
son V.  Powell,  0  Bingh.  320. 

Nor  a  master  of  a  vessel,  as  such.  Foster  v.  United  Ins.  Co.,  11  Pick.  8.5.  But  where 
a  partrowner  of  a  vessel  eflfects  insurance  for  himself  and  the  other  owners  without 
their  previous  authority,  they  may  ratify  his  act  even  after  they  obtain  knowledge 
of  the  loss  of  the  vessel ;  and  tlie  bringing  of  an  action  on  the  policy  in  their  names 
is  a  sufficient  ratification  of  his  act.     Finney  v.  Fairhaven  Ins.  Co.,  .5  Mete.  192. 

*  In  most,  if  not  all  of  the  United  States,  it  is  believed  wager  policies  are  now 
rirohibited,  either  expresslj',  or  as  coming  within  the  purview  of  statutes  against 
gaming  and  wagers.  Independent  of  any  statute,  it  is  doubtful  whether  such  policies 
would  now  be  sustained,  though  in  some  of  the  earlier  cases  of  New  York  their 
validity  at  common  law  seems  to  have  been  recognized.  In  Massachusetts,  they  were 
considered  illegal  on  general  j)rinciples.  Ruchanan  v.  Ocean  Ins.  Co.,  6  Cow.  318 
Amory  v.  Oilman,  2  Mass.  1.     1  J.  Duer  on  Ins.  if4. 


MARITIME  IXSURANCR  415 


The  Subject  Matter,  or  What  may  be  Insured. 


his  euemies,  may  be  made  by  or  for  the  owners  thereof,  interest  or 
no  interest,  free  of  average  and  without  benefit  of  salvage  to  the 
insurer."  By  sect.  3,  an}''  eflects  from  any  port  or  places  in  Europe 
or  America,  in  possession  of  the  crowns  of  Spain  or  Portugal,  may 
be  insured  in  the  same  manner  as  if  this  act  had  not  been  made. 

It  will  be  observed,  that,  in  consequence  of  the  words  printed 
in  italics,  foreign  ships  are  not  within  the  statute,  {m)  In  ordinary 
cases,  it  is  now  requisite  that  the  subject  matter  of  insurance  should 
be  one  in  which  the  insured  is  interested^  and  of  course,  it  must  be 
such  as  it  is  possible  to  have  an  interest  in ;  and  it  has  been  decided 
that  if  the  insured  has  before  the  loss  assigned  away  his  interest, 
ex.  gr.,  by  selling  the  vessel  insured,  he  cannot  sue  upon  the  policy 
for  his  own  benefit,  nor  as  trustee  for  the  assignee,  unless  the  policy 
was  expressly  or  impliedly  assigned,  {n)  Ships,  (o)  goods,  a  special 
property  therein,  ex.  gr.,  that  of  a  carrier,  (p)  or  money  expended 
by  a  captain  for  the  ship's  use,  his  commission  and  privileges,  {q) 
expected  profits,  (;•)  bottomry  or  respondentia  interest,  (s)  freight,  {t) 
have  all  been  held  fit  subjects  of  Marine  Insurance.  Under  the 
term  freight,  may  be  insured  the  benefit  an  owner  would  derive 
from  carrying  his  own  goods  in  his  own  vessel ;  {>()  but  in  order  to 
recover  under  a  policy  upon  freight,  the  assured  must  prove  that, 
but  for  the  intervention  of  a  peril  insured  against,  some  freight 
would  have  been  earned,  by  showing,  either  that  some  goods  were 
put  on  board,  or  that  there  was  some  contract  for  doing  so.  (r) 

(w)  Thelussou  v.  Fletcher,  Doug.  315.  Craiiford  v.  Hunter,  ST.  R.  11.  Nantes  v. 
Thompson,  2  East,  3S5. 

(h)  Fowles  V.  Innes,  11  M.  it  W  10. 

(o)  It  seems  doubtful  whether  a  mortgagee  of  a  ship  can  now  insure  the  whole 
ralue.     Irving  v.  Richardson,  2  B.  «fe  Ad.  193. 

(p)  Tark,  U.     Crowley  v.  Cohen,  3  B  &  Ad.  47 

{q)  Gregory  v.  Christie,  Park,  14.     King  v.  Glover,  2  X.  R.  20G. 

(r)  Grant  v.  Parkinson,  Park,  402.  Eyre  v.  Glover,  16  East,  218;  3  Camp.  2T6. 
Barclay  v.  Cousins,  2  East,  544.     Stockdale  v.  Dunlop,  6  M.  <fe  "W.  224. 

(s)  Simonds  t'.  Hodgson,  3  B.  &  Ad.  50. 

(<)  Montgomery  v.  Eggington,  3  T.  R.  3G2.  Taylor  v.  Wilson,  15  East,  324.  See 
Barclay  v.  Stirling,  5  M.  &  S.  C. 

(«)  Flint  v.  Flemyng,  1  B.  «t  Ad.  40.     Devaux  v.  J'Anson,  5  Bingh.  X.  C.  510. 

((')  Fliat  V.  Flemyng,  nbi  supra,  Ilorncastle  i<.  Stuart,  7  East,  400.  See  Forbes  r. 
Aspinall,  13  East,  331.  Lord  Ellenborough's  expressions  in  tliat  case,  "that,  hi  order 
to  recover  07i  a  policy  on  fnUjht,  a  full  cargo  must  be  ready  to  be  s\ipped,  attd  the  ship 


416  MERCANTILE  CONTRACTS. 


The  Subject  Matter,  or  What  may  be  Insured. 


There  are  many  other  legal  subjects  of  insurance;  a  defeasible  or 
inchoate  interest  may  be  insured,  as  well  as  one  absolute  and  per- 
fect, (ty)*  In  a  word,  any  person  who  has  an  interest  in  the  subject 
matter  of  insurance  may  be  insured  to  the  extent  of  that  interest: 
and  any  person  may  be  said  to  have  an  interest,  who  may  b' 
injured  by  the  risks  to  which  that  subject  matter  is  exposed,  (x)f 
or  would  only  but  for  them  have  a  moral  certainty  of  advantage. 


must  be  ready  to  receive  her  cargo,''  are  explained  by  Tindal,  C.  J.,  in  Devaiix  v.  J'An- 
son  5  Binfh.  N.  C.  538.  His  Lordship  remarks,  that  in  that  case  the  inability  of  the 
ship  to  receive  the  cargo  was  not  occasioned  by  any  peril  insured  against,  but  by  her 
being  already  partly  loaded.  In  Devaux  v.  J'Anson,  the  ship  was  lost  while  in  a  dock, 
where  she  could  not  have  received  the  cargo,  in  consequence  of  an  accident,  which 
happened  on  endeavoring  to  get  her  out  of  the  dock,  in  which  she  had  been  placed 
for  repairs.     The  insured  were  held  entitled  to  recover  on  the  policy  on  freight. 

{w)  In  Sutherland  v.  Pratt,  11  M.  <fe  W.  297,  it  was  decided  that  a  merchant's  in- 
terest in  the  safety  of  goods  which  he  had  purchased  as  sound,  but  which  had  been 
damaged  at  a  time  prior  to  the  purchase,  was  insurable  by  a  policy  containing  the 
words  lost  or  not  lost.  See  post,  Stirling  v.  Vaughan,  11  East,  619;  2  Camp.  225.  Le 
Cras  V.  Hughes,  Park,  Insur.  406.  But  it  is  doubtful  whether  Le  Cras  v.  Hughes  can 
be  supported.  In  Devaux  v.  Steele,  6  Bingh.  N.  C.  358,  strong  reflections  were  cast 
on  it. 

{x)  Lucena  v.  Crawford,  2  N.  R.  800.  See  Stirling  v.  Vaughan,  ubi  supra.  Hobba 
V.  Hannam,  3  Camp.  93.  Page  v.  Fry,  2  B.  <&  P.  240.  See  the  notes  to  Coram  v. 
Sweeting,  2  Wms.  Saund.  202,  e. 

*  The  decisions  in  the  United  States,  as  to  the  interest  in  the  subject  matter  of 
insurance,  are  fully  as  liberal  in  relation  to  the  right  to  insure,  as  those  referred  to  in 
the  text.  The  term  interest,  as  used  in  application  to  the  right  to  insure,  does  not 
necessarily  \m^\j  property  in  the  subject  of  insurance.  One  holding  goods  as  agent, 
or  trustee  of  another,  has  an  insuiiable  interest.  Buck  v.  -Chesapeake  Ins.  Co.,  1  Pet. 
151.  See,  as  to  an  equitable  interest,  Locke  v.  North  American  Ins.  Co.,  13  Mass.  61 ; 
as  to  profits,  Patapsco  Ins.  Co.  v.  Coulter,  3  Pet.  239 ;  as  to  expected  commissions  cf 
merchants  to  whom  goods  have  been  consigned,  Putnam  v.  Mercantile  Marine  Ins. 
Co.,  6  Mete.  886  ;  as  to  interest  of  mortgagor,  which  it  seems  may  be  insured, 
although  the  property  be  mortgaged  to  its  full  value,  Iligginson  v.  Dall,  13  Mass.  94; 
and  as  to  a  bottomry  interest,  which  it  seems  must  be  insured  eo  nomine,  Kenny  v 
Clarkson,  1  John.  885;  and  s6e  also,  Hancox  v.  Fishing  Ins.  Co.,  3  Sumn.  132,  140,  in 
which  case  the  doctrine  on  this  subject  is  generally  stated.  "The  truth  is,"  &&ya  Mr. 
Justice  Story,  "  that  an  insurable  interest  is  sui  generis,  and  peculiar  in  its  texture  and 
operation.  It  sometimes  exists  where  there  is  not  any  present  property,  or  jus  in  re,  oi 
jus  ad  rem.  Inchoate  rights,  founded  on  subsisting  titles,  unless  prohibite'd  by  the 
policy  of  the  law,  are  insurable ;  as,  for  example,  freight,  resi^ondentia,  and  bottomry." 

f  See  note  to  10  Ves.  158 ;  15  Ves.  67 ;  5  Term,  709 ;  2  Peters,  25. 


MARITIME  INSURANCE.  417 


The  Subject  Matter,  or  What  may  be  Insured. 


Still,  tliongh  the  definition  of  an  interest  is  thus  wide,  there  must  be 
some  interest  such  as  the  law  can  take  notice  of;  thus,  though  the 
profits  likely  to  be  made  on  an  expected  cargo  may  be  insured,  yet 
no  insurance  can  be  effected  on  the  expected  profits  of  a  cargo,  to 
which  the  claim  of  the  party  insuring  is  founded  on  a  contract  void 
by  the  Statute  of  Frauds,  {y)  And,  upon  the  whole,  the  leaning 
seems  to  be  at  present'  towards  a  more  confined  signification  of  the 
word  interest  than  has  been  attributed  to  it  by  some  of  the  older 
authorities,  (s) 

The  insurance  of  seamen's  wages,  or  any  thing  to  be  received  in 
lieu  thereof,  is  illegal ;  for  the  maxim,  that  freight  is  the  mother  of 
wages,  a  maxim  which  tends  to  the  public  good,  by  stimulating 
mariners  to  exertion,  would  be  evaded  if  the  mariner  could  insure 
the  receipt  of  his  wages  at  all  events,  (a)  Lord  Ellenborough  held 
at  ]Sr.  P.  that  an  insurance  on  300/.  lent  to  the  captain^  payable  out  of 
the  freight,  teas  illegal,  {h) 

The  interest  which  an  underwriter  acquires  in  the  safety  of  that 
which  he  has  insured,  is  not,  in  this  countr}^,  a  legal  subject  matter 
of  insurance,  except  in  three  cases,  viz.:  1,  the  insolvency ;  2,  the 
hanhruptcy  ;  3,  the  death  of  the  insurer,  in  which  a  reassurance,  as  it 
is  termed,  is  allowed,  but  must  be  stated  in  the  policy  to  be  such, 
and  must  not  exceed  in  amount  the  sum  before  insured,  (c)*  This 
section  of  the  act  extends  to  foreign  ships,  {d) 


{y)  Stockdale  v.  Dunlop,  6  M.  &  W.  224. 

(z)  See  Devaux  v.  Steele,  6  Bing.  N.  C.  358.     Lucena  v.  Crawford,  2  N.  R.  321. 

(a)  See  Webster  v.  De  Taster,  7  T.  R.  157. 

(6)  Wilson  V.  Roj-al  Exchange  Assurance  Co.,  2  Camp.  625. 

(c)  19  Geo.  2,  c.  37,  s.  4. 

{d)  Andree  v.  Fletcher,  2  T.  R.  161. 


*  A  contract  of  reassurance  is  not  prohibited  by  the  principles  of  the  common 
law ;  and  it  is  not  believed  that  any  of  the  states  have  adopted  the  statute  cited  by 
the  author.  Merry  v.  Prince,  2  Mass.  278.  3  Kent.  Com.  278.  The  reinsured  may 
recover  costs  and  expenses  incurred  in  good  faith,  in  defending  a  suit  on  the  first  in- 
surance.    New  York  Marine  Ins.  Co.  v.  Protection  Ins.  Co.,  1  Story  R.  459. 

A  double  insurance  is  when  one  insures  the  same  thing  twice  over,  against  the 

same  perils;  Perkins  v.  New  Eng.  Marine  Ins.  Co.,  12  Mass.  217  ;  and  in  such  case  the 

assured  has  an  obligation  from  two  or  more  parties  to  perform  the  same  thing  at  the 

same  time.     He  cannot  obtain  satisfaction  from  both.     But  he  may  consider  each  as 

27 


418  MERCANTILE  CONTRACT. 

The  Subject  Matter,  or  What  may  be  Insured. 

It  is  scarcely  needful  to  observe,  that  the  subject  matter  of  the 
insurance  will  be  improper,  and  the  policy  unavailable,  where  a 
voyage  insured  is  one  prohibited  by  law  ;  or  goods  insured  are  in- 
tended for  carrying  on  an  illegal  commerce,  (e)  Trading  with  an 
enemy  without  the  King's  license  is  illegal.  (/)  But  such  trade 
will  be  legalized  by  a  royal  license,  (g)  the  conditions  of  which 
must  be  strictly  observed.  Thus,  if  it  require  a  bond  as  a  prelim- 
inary to  exportation,  that  bond  must  be  given,  or  the  exportation 
will  be  illegal,  (h)  So,  if  the  license  be  for  a  limited  time ;  though, 
if  the  adventure  were  bona  fide  prosecuted  within  the  time,  it  will 
not  become  illegal  so  as  to  avoid  a  policy,  because  accidentally 
protracted  beyond  it.  {i)  A  subject  of  Great  Britain  domiciled  in 
a  country  in  amity  with  ours,  may  exercise  the  privilege  of  a  sub- 
ject of  that  country,  by  trading  with  one  in  hostility  to  ours,  {j) 

An  infirmity  in  any  part  of  an  integral  voyage  or  policy  ren- 
ders the  whole  illegal ;  {k)  as,  for  instance,  if  a  merchant  insure 
le"-al  and  illegal  goods  together  in  the  same  policy :  but  if  a  ship 


(e)  Camden  v.  Anderson,  723;  1  B.  &  P.  2'72.  Johnson  v.  Sutton,  Dougl.  254. 
D^.mada  v.  Motteux,  Park,  234. 

(/)  Potts  V.  Bell,  8  T.  R.  548. 

{g)  Vandyck  v.  Whitmore,  1  East,  4Y5.  Usparicha  v.  Noble,  13  East,  332.  See 
Robinson  v.  Touray,  1  M.  <fe  S.  217.  Robinson  v.  Cheeswright,  ibid.  220.  Hagedorn 
V.  Reid,  1  M.  &  S.  5GV.     Rucker  v.  Ansley,'  5  M.  &,  S.  25. 

(/«)  Vandyck  v.  Whitmore,  ubi  supra. 

{i)  Schroeder  v.  Vaux,  15  East,  52. 

(j)  Bell  V.  Reid,  1  M.  <fe  S.  726. 

(k)  Parkin  v.  Dick,  2  Camp.  221,  11  East,  502,  in  "Vtilson  v.  Marryat,  8  T.  R.  31. 

liable  to  paj-  a  proportionate  part,  and  recover  accordingly,  or  he  may  require  either 
to  pay  the  whole ;  and  tlie  party  who  pays  the  whole,  or  a  disproportionate  partj 
will  be  entitled  to  a  contribution  against  the  other,  so  that  the  burden  maybe  borne 
according  to  their  respective  liabilities.  Wiggin  v.  Suffolk  Ins.  Co.,  18  Pick.  145. 
And  without  regard  to  the  order  of  time  in  which  the  policies  were  made.  2  Kent. 
Com.  280. 

It  is  usual  among  the  insurance  offices  in  this  country  to  insert  clauses  in  their 
policies,  in  relation  both  to  prior  and  subsequent  insurances  against  the  same  risks. 
As  to  the  effect  and  construction  of  these  clauses,  which  differ  in  several  offices,  see 
Kent  V.  Manufacturers'  Ins.  Co.,  18  Pick.  19.  Jackson  v.  Mass.  Mutual  Fire  Ins.  Co., 
23  Pick.  418.  American  Ins.  Co.  v.  Griswold,  14  Wend.  399.  Carpenter  v.  Provi- 
dence Washington  Ins.  Co.,  16  Pet.  495.  An^post,  note  mider  the  head  of  Fire  In- 
iurance. 


MARITIME  INSURANCE.  419 


The  Policy — its  Form  and  Construction. 


bring  hither  from  a  hostile  country  some  goods  licensed  and  others 
not  licensed,  an  insurance  on  the  licensed  goods  will  not  be  there- 
by  vitiated.  (0* 


Sectiox  IV. — The  Policy — its  Form  and  Construction. 

The  policy,  which  is  usually  printed,  with  a  few  terms  super- 
added in  writing,  as  the  intention  of  the  parties  happens  to  require, 
is  an  instrument  of  an  extremely  ancient  form,  and  very  inaccu- 
rate and  ungrammatical  in  its  language,  which,  however,  having 
acquired  a  fixed  meaning  from  judicial  decisions,  and  the  usage  of 
trade,  it  is  now  safest  to.  adhere  to.  (?n)  The  words  in  writing,  if 
there  be  a  doubt  upon  the  meaning  of  the  whole,  tave  greater  ef- 
fect attributed  to  them  than  those  in  print ;  because  they  are  the 
immediate  terms  selected  by  the  parties,  whereas  the  others  are  a 
general  formula,  (n)     Parol  evidence  is  not  admissible  to  control 


{I)  Pieschall  v.  Allnutt,  4  Taunt.  792.     See  1  M.  &  S.  450. 
{m)  Brough  v.  Whitmore,  4  T.  R.  206. 

(w)  4  East,  136.     See  per  Pollock,  C.  B.     Alsager  v.  St.  Katherine's  Dock  Com- 
pany, 14  M.  &  W.  798. 


*  The  effect  on  the  contract  of  insurance  of  the  illegality  of  the  voyage,  which 
may  arise  either  from  the  character  of  the  goods  or  the  nature  of  the  trade,  has  been 
examined  wi+h  much  learning,  and  forms  a  prominent  head  in  some  of  the  works  on 
Insurance,  and  particularly  the  treatise  of  Mr.  Duer,  recently  published. 

It  is  contended  by  that  Jearned  author,  that  a  subsequent  illegality,  although  not 
contemplated  or  intended  by  the  insured,  when  the  policy  was  effected,  avoids  the 
policy  from  the  time  it  occurs,  and  discharges  the  insurers  from  all  subsequent  risks. 
1  J.  Duer,  344.  But  in  the  case  of  Clark  v.  Protection  Ins.  Co.,  1  Story  R.  109,  Judge 
Story  expresses  the  opinion  that  the  only  effect  of  such  subsequent  illegality,  is  to 
exempt  the  insurers  from  any  liability  for  a  loss,  of  which  the  illegality  is  the  imme- 
diate and  proximate  cause,  whilst  their  liability  for  all  losses  proceeding  from  other 
risks  remains  unimpaired ;  and  it  is  said  by  Chancellor  Kent  that  if  the  voyage,  as 
originally  insured,  be  lawful,  a  subsequent  illegality  does  not  affect  it,  if  the  loss  be 
not  tainted  with  such  illegality.  3  Kent  Com.  262.  And  it  is  conceded,  that  al- 
though an  infirmity  in  any  part  of  an  integral  voj'age  renders  the  whole  illegal, 
yet  an  illegality  arising  from  subsequent  causes,  and  not  intended  at  the  inct^ption 
of  the  voj'age,  does  not  render  the  contract  void  in  its  origin,  and  the  insured  cau 
recover  for  losses  occurring  before  the  illegality  attached. 


420  MERCANTILE  CONTRACTS. 


llie  Policy — its  Form  and  Construction. 


the  meaning  of  a  policy,  or  indeed  of  any  other  written  instru 
ment ;  (o)  tliougli  it  is  admissible,  as  in  cases  of  other  mercantile 
instruments,  to  ex]}lai7i  the  language  of  the  policy  with  reference 
to  the  usual  practice  of  trade,  ex.  gr.,  to  show  that  the  Gulf  of 
Finland  is  considered  by  mercantile  men  part  of  the  Baltic,  (j))^ 

(o)  Aguilar  v.  Rogers,  7  T.  R.  421.  Yeats  v.  Pym,  6  Taunt.  446.  Haines  v. 
Knightley,  Skinn.  54.  Weston  v.  Ernes,  1  Taunt.  115.  Blackett  v  R.  E.  A.  C,  2 
Tyrwh.  266  ;   2  C.  &  J.  244.     Reading  v.  Menbam,  1  M.  &  Rob. 

{p)  Ubde  V.  AValters,  3  Camp.  16,  accord.  Robertson  v.  Clark,  1  Bingb.  445. 
Moxon  V.  Atkins,  3  Camp.  200.  Vallance  v.  Dewar,  1  Camp.  503.  Letbulier's  case, 
2  Sal.  443.  Noble  v.  Kennoway,  Doug.  510.  Chauraud  v.  Angerstein,  Peake,  43. 
Powell  V.  Horten,  2  Bingb.  N.  C.  668.  Bold  v.  Rayner,  1  M.  &  W.  343.  See  also 
Lewis  V.  Marsball,  7  M.  &  Gr.  729. 


*  In  some  cases  parol  evidence  is  necessary  to  enable  tbe  Court  to  give  any  con- 
struction to  the  written  contract.  General  and  indeterminate  words  sometimes  occur 
in  a  policy,  which  may  properly  be  explained  and  limited  by  parol  evidence,  so  as  to 
designate  with  certainty  the  subject  to  which  the  parties  intended  to  refer.  Words 
which  may  be  consistently  applied  to  different  subjects,  are  of  this  character,  as,  for 
instance,  the  -wovd  freiffht,  which  may  mean  goods  on  board  of  a  vessel,  or  the  price 
to  be  paid  for  the  carriage  of  the  goods.     1  J.  Duer,  167,  170. 

Foreign  words,  when  such  happen  to  be  used,  or  words  purely  technical,  of  which 
the  legal  import  has  not  been  fixed,  must,  of  necessity,  be  translated,  or  explained  by 
evidence,  to  enable  the  Court  to  give  them  any  effect.  1  J.  Duer,  175.  Sleight  i'. 
Hartshorne,  2  Johns.  531. 

Parol  evidence  may,  of  course,  be  received  to  remove  a  latent  ambiguity  in  a  con- 
tract of  insurance,  as  in  other  written  insti-uments.  As  where  a  vessel  is  insured  to 
a  foreign  port,  and  it  appears  that  there  are  two  ports  of  the  same  name  to  which 
the  description  in  the  policy  will  equally  apply,  in  such  case  evidence  will  be  re- 
ceived to  show  which  of  them  was  intended  by  the  parties.  1  J.  Duer,  174.  Carru 
thers  V.  Sheddon,  6  Taunt.  14. 

When  particular  words  have  acquired,  by  the  known  usage  of  trade,  a  peculiar 
meaning,  wholly  distinct  from  their  ordinary  and  popular  sense;  or  when  by  a  gen- 
eral practice  the  voyage  or  trade  to  which  the  insurance  relates,  has  been  pursued  in 
a  certain  course  or  manner,  that  the  terms  of  the  policy  in  their  ordinary  interpreta- 
tion would  not  embrace;  it  may  be  shown  by  parol  evidence,  and  the  Court  will  in 
the  one  case  adopt  the  commercial  meaning  of  the  words  in  the  construction  of  the 
contract,  and  in  the  other  give  the  same  effect  to  the  usage  as  if  it  were  adopted  in 
the  contract  by  express  words.     1  J.  Duer,  179,  195. 

And  when  the  interpretation  of  words,  or  the  construction  of  a  clause  in  the 
policy  that  may  be  understood  in  a  sense  more  or  less  extensive,  has  not  been  fixed 
by  judicial  decisions,  parol  evidence  may  be  admitted  to  show,  whether  they  have 
obtained  by  use  and  practice  between  the  assurers  and  the  assured,  any,  and  what 


MARITIME  INSURANCE.  421 


Tlie  Policy — its  Form  and  Construction. 


But  the  usage  of  Lloyd's,  being  prima  facie  only  tlie  usage  of  a 
single  house,  will  not  be  binding  upon  one  who  cannot  be  shown 
to  be  acquainted  with  it.  (5-)  And  it  has  been  thought  that  the 
practice  of  admitting  usage  to  explain  mercantile  contracts,  ought 
not  to  be  extended,  (r) 

A  policy  is  either  open  or  valued.  An  open  policy  is  where  the 
value  of  the  thing  insured  is  not  inserted  in  the  policy  ;  and,  there- 
fore, must  be  proved  at  the  trial,  if  a  loss  happen.  A  valued  policy 
is  where  the  value  of  the  thing  insured  is  settled  by  agreement 
between  the  parties,  and  inserted  in  the  policy,  usually  in  this  form : 
— "  Tlie  said  ship,  c&c,  goods^  and  merchandise^  c&c,  for  so  much 
as  concerns  the  assureds  hj  agreement  between  the  assureds  and  assurers 
in  this  policy,  are  and  shall  he  valued  at  £,  ."     And  sometimes 


{q)  Gabay  v.  Lloyd,  3  B.  &  C.  793.  But  qucere  whether  it  be  not  admissible  in 
certain  cases  even  between  such  persons,  on  the  same  principle  as  the  rules  of  the 
Liverpool  Stock  Exchange  were  admitted  between  parties  not  members,  in  Stewart  v. 
Cauty,  8  M.  &.  W.  160. 

(r)  Anderson  v.  Pitcher,  2  B.  <fe  P.  168,  per  Lord  Eldon. 


known  and  definite  import.     The  usage,  if  proved,  will  govern  the  construction.     1 
J.  Duer,  185.     Parr  v.  Anderson,  6  East,  20Y. 

In  relation  to  the  constituent  qualities  and  essential  requisites  of  a  valid  usage, 
our  limits  will  not  allow  more  than  the  insertion  of  the  general  rule  laid  down  by 
Mr.  Duer  in  his  valuable  treatise  on  Insurance,  from  which  we  have  extracted  the 
matter  of  this  note,  and  to  which  we  refer  the  reader  for  a  full,  interesting,  and  able 
exposition  of  the  rule,  and  of  the  subject  of  usage  generally.  "It  is  to  be  collected 
from  the  decisions,  that  in  these  cases,  a  usage,  that  can  alone  be  allowed  to  control 
the  intei'pretation  of  the  policy,  or  vary  the  legal  rights  of  the  parties,  must  be  gen- 
eral, uniform,  notorious,  reasonable,  and  consistent  with  the  terms  of  the  policy,  and 
to  a  certain  extent  with  the  rules  of  law.  I  do  not  mean  to  affirm  that,  in  any  sin- 
gle case,  all  these  are  stated  as  the  necessary  properties  of  a  valid  usage,  or  that  in 
any,  the  terms  used  to  describe  them  have  been  defined  with  the  precision  they  will 
be  found  to  require.  It  is  only  from  an  attentive  consideration  and  comparison  of 
all  the  cases,  that  these  essential  requisites  of  a  usage  can  be  deduced,  and  it  is  by 
the  same  process,  that  we  must  ascertain  the  sense  in  which  the  terms  used  to  describe 
them  are  properly  to  be  understood."  1  J.  Duer,  258.  And  see  al^o  Yeaton  v.  Fry. 
5  Cranch,  335;  2  C.  R.  273.  Columbian  Ins.  Co.  v.  Catlett,  12  Wheat.  383;  6  C.  R. 
541.  Gracie  v.  Marine  Ins.  Co.  of  Baltimore,  8  Cranch,  75;  3  C.  R.  39.  Seaman  v. 
Loring,  1  Mason,  127.  Donnell  v.  Col.  Ins.  Co.,  2  Sumn.  381.  Palmer  v.  Warren 
Ins.  Co.,  1  Story,  360.  Rogers  v.  Mechanics'  Ins.  Co.,  1  Story,  607.  Citizens'  Bank 
V.  Nantucket  Steamboat  Co.,  2  Stor}',  16. 


422  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

the  words,  '"'' the  policy  to  he  deemed  sufficient  proof  of  interest  in  cast 
of  loss,^^  are  added.  Valued  policies  derive  their  origin  from  the 
difficulty  the  assured  sometimes  had  in  proving  the  value  of  his  in- 
terest, which  induced  him  to  give  the  insurer  a  greater  premium  to 
agree  to  estimate  it  at  a  certain  sum,  from  which  he  derives  this  ad- 
vantage, viz.,  that  in  case  of  a  total  loss,  he  is  only  bound  to  show 
some  interest  in  order  to  satisfy  the  stat.  19  Geo.  2,  c.  87,  but  not 
the  value,  because  that  is  admitted  by  the  insurer,  (s)  However, 
valued  policies  must  not  be  used  as  a  cover  for  wagering  ;  and,  there- 
fore, the  interest  of  the  assured  must  be  a  real  hona  fide  interest,  not 
a  mere  colorable  one,  otherwise  the  policy  wixl  be  void ;  nay,  if  he 
fraudulently  overvalue  his  interest,  in  order  to  cheat  the  insurers, 
he  will  not  be  permitted  to  recover  even  for  what  he  actually  had 
on  board,  (/) 

The  following  is  the  ordinary  form  of  a  j)olicy  of  insurance  on 
ship  and  goods : 

"/n  the  name  of  God.     Amen. 

"A.  B.,  as  well  in  his  own  name,  as  for  and  in  the  name  and 
names  of  all  and  every  other  person  or  persons  to  whom  the  same 
doth,  may,  or  shall  appertain,  in  part  or  in  all,  doth  make  assur- 
ance, and  cause  himself,  and  them,  and  every  of  them,  to  be  in- 
sured, lost  or  not  lost,  at  and  from  Upon  any  kind  of 
goods  and  merchandises,  and  also  upon  the  body,  tackle,  apparel, 
ordnance,  munition,  artillery,  boat,  aud  other  furniture,  of  and  in 
the  good  ship  or  vessel,  called  the  whereof  is 
master,  under  God,  for  this  present  voyage,  E.  T.,  or  whoever  else 
shall  go  for  master  in  the  same  ship,  or  by  wdiatsoever  other  name 
or  names  the  same  ship,  or  the  master  thereof,  is  or  shall  be  named 
or  called ;  beginning  the  adventure  upon  the  said  goods  and  mer- 
chandises from  the  loading  thereof  aboard  the  said  ship, 

"upon  the  said  ship,  &c.  and  so  shall  continuo 

and  endure  during  her  abode  there,  upon  the  said  ship,  &c.  And 
further,  until  the  said  ship,  with  all  her  ordnance,  tackle,  apparei, 


(.s)  Lewis  V.  Ptucker,  2  Burr.  lltL    Tlielusson  v.  Fletcher,  Doug.  315. 

(t)  Ilaigh  V.  De  la  Cour,  3  Camp.  319.     See  Shawe  v.  Felton,  2  East,  116. 


MARITIME  INSURANCE.  423 

The  Policy — its  Form  and  Construction. 

&c.,  and  goods  and  merchandises  whatsoever,  shall  be  arrived  at 

upon  the  said  ship, 
&c.,  until  she  hath  moored  at  anchor  twenty-four  hours  in  good 
safety ;  and  upon  the  goods  and  merchandises,  until  the  same  b? 
there  discharged  and  safely  landed.  And  it  shall  be  lawful  for  the 
said  shij),  &c.,  in  this  voyage,  to  proceed  and  sail  to,  and  touch 
and  stay  at  any  ports  or  places  whatsoever, 

without  prejudice  to  this  insurance.  The  said  ship,  and  goods 
and  merchandises,  &c.,  for  so  mucii  as  concerns  the  assureds,  by 
agreement  between  the  assureds  and  assurers  in  this  policy,  are 
and  shall  be  valued  at  Touchimy  the  adven- 

O 

tures  and  perils  which  we  the  assurers  are  contented  to  bear,  and 
to  take  upon  us  in  this  voyage ;  they  are  of  the  seas,  men-of-war, 
fire,  enemies,  pirates,  rovers,  thieves,  jettisons,  letters  of  mart  and 
countermart,  surprisals,  takings  at  sea,  arrests,  restraints,  and  de- 
tainments of  all  kings,  princes,  and  people,  of  what  nation,  condi- 
tion, or  quality  soever,  barratry  of  the  master  and  mariners,  and 
of  all  other  perils,  losses,  and  misfortunes  that  have,  or  shall  come 
to  the  hurt,  detriment  or  damage,  of  the  said  goods  and  merchan- 
dises, and  ship,  &c.,  or  any  part  thereof.  And  in  case  of  any  loss 
or  misfortune,  it  shall  be  lawful  to  the  assureds,  their  factors,  ser- 
vants, and  assigns,  to  sue,  labor,  and  travel  for,  in  and  about  the 
defence,  safeguard,  and  recovery  of  the  said  goods,  and  merchan- 
dises, and  ship,  &c.,  or  any  part  thereof,  without  prejudice  to  this 
insurance ;  to  the  charges  whereof,  we  the  assurers  will  contribute 
each  one  according  to  the  rate  and  quantity  of  his  sum  herein  as- 
sured. And  it  is  agreed  by  us  the  insurers,  that  this  writing  or 
policy  of  assurance,  shall  be  of  as  much  force  and  effect  as  the 
surest  writing  or  policy  of  assurance  heretofore  made  in  Lomhard 
street^  or  in  the  Royal  Exchange^  or  elsewhere  in  London.  And  so 
we  the  assurers  are  contented,  and  do  hereby  promise  and  bind 
ourselves,  each  one  for  his  own  part,  our  heirs,  executors,  and 
goods,  to  the  assureds,  their  executors,  administrators  and  assigns, 
for  the  true  performance  of  the  premises,  confessing  ourselves  paid 
the  consideration  due  unto  us  for  this  assurance  by  the  assured 
at  and  after  the  rate  of 
"  In  witness  whereof,  we  the  assurers  have  subscribed  our  namea 
and  sums  assured  in  London^ 


424  MERCANTILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


"  N.  B.  Corn,  fish,  salt,  fruit,  flour,  and  seed,  are  warranted  free 
from  average,  unless  general,  or  the  ship  be  stranded.  Sugar^ 
tobacco,  hemp,  flax,  hides,  and  skins,  are  warranted  free  from  ave- 
rage, under  5^.  per  cent— Audi,  all  other  goods,  also  the  ship  and 
freight,  are  warranted  free  from  average,  under  2>l.  per  cent.^  unless 
general,  or  the  ship  be  stranded." 

The  principal  parts  of  the  policy  are : — 1.  The  name  of  the  in- 
sured or  his  agent.  2.  That  of  the  ship.  3.  The  subject  matter 
of  insurance.  4.  The  voyage  insured.  5.  The  perils  insured 
against.  -6.  The  date  and  subscription.  7.  The  memorandum. 
8.  Stamp.     9.  Warranties.     Let  us  consider  these  in  order. 

1.  N'ame  of  Insured.  {u)—Bj  stat.  28  Geo.  3,  cap.  56,  it  is  enact- 
ed, that  it  shall  not  be  lawful  for  any  person  to  make  or  effect  any 
policy  of  insurance,  on  any  ship,  goods,  or  other  property,  without 
first  inserting  the  name  or  names,  or  usual  style  and  firm,  of  07ie  or 
more  of  the  i^ersons  interested  in  such  insurance,  or  of  the  consignor  or 
consignors^  consignee  or  consignees  of  the  property  so  insured,  or  of  the 
person  or  persons  residing  in  Great  Britain  who  shall  receive  the  order 
for  and  effect  such  policy,  or  of  the  person  or  persons  who  shall  give 
the  order  to  the  agent  immediately  employed  to  effect  such  policy. 
Policies  are  declared  void  if  contrary  to  this  statute,  which  must,  it 
has  been  held,  receive  a  liberal  construction,  (v)* 


(?()  Usually  inserted  thus : — "  A.  B.  (the  insured),  as  -well  in  bis  own  name,  as  for 
and  in  the  name  and  names  of  every  other  person  or  persons  to  whom  the  same 
doth,  may,  or  shall  appertain,  doth  make  assurance,  and  cause  himself  and  them  and 
every  of  them,  to  be  insured,  lost  or  not  lost." 

(v)  See  WoolfF  v.  Ilorncastle,  1  B.  &  P.  316.  Bell  v.  Gilson,  ibid.  445,  and  De 
Vignier  i;.  Swanson,  there  cited.  Mellish  v.  Bell,  15  East,  4.  Ilibbert  v.  Martin,  1 
Camp.  588.     Dickson  v.  Lodge,  1  Stark.  22G.     See  Bell  v.  Janson,  1  M.  &  S.  201. 

*  There  is  no  similar  statute  in  the  United  States,  and  no  reason  is  perceived  why 
a  policy  delivered,  in  blank  as  to  the  name  of  the  assured,  might  not  be  filled  up  with 
the  name  of  the  party  intended.  Burrows  v.  Turner,  24  Wend.  276.  In  practice  it 
is  understood  to  be  the  usual  mode,  to  insert  the  name  of  the  party  effecting  the 
insurance,  whether  principal  or  agent,  and  adding,  "for  himself  and  whom  it  may 
concern." 

The  phrase  ickom  it  may  concern  is  a  technical  one,  and  is  understood  to  mean,  nol 


MARITIME  INSURANCK  405 


The  Policy — its  Form  and  Construction. 


2,  The  Name  of  the  Ship,  {w) — The  ship  ought  to  be  truly  de- 
scribed, for  a  variance  from  its  right  name  might  discharge  the  un- 
derwriter: it  is,  however,  usual  to  insert  in  the  policy,  "or  by 
whatever  other  name  or  names  the  ship  shall  be  called ;"  the  effect 
of  which  is,  to  render  a  mistake  in  the  name  immaterial,  if  the  iden- 
tity of  the  ship  can  be  proved,  and  the  underwriter  be  not  preju- 
diced by  it.  (x)  A  policy  may  also  be  effected  upon  ship  or  shijjs 
expected  from  any  particular  place.  (?/)  The  same  observations 
apply  to  the  name  of  the  master,  which  is  generally  inserted  along 
with  that  of  the  ship,  with  the  addition  of,  "  or  whosoever  else  shall 
go  for  master  in  the  said  ship." 

3.  The  Subject  Mattel'  of  Insurance.  {£) — The  subject  matter  should 
be  described  with  accuracy,  (a)  and  evidence  of  usage  is  not  admis- 

{w)  Generally  described  as  "the  good  &\\\]}  or  vessel  called  the ,  whereof  is 

master,  under  God,  for  this  present  voj^age,  E.  F.,  or  whosoever  else  shall  go  for 
master  iu  the  said  ship,  or  by  whatsoever  name  or  names  the  same  ship  or  master 
thereof  is  or  shall  be  named  or  called." 

{x)  Le  Mesurier  v.  Vaughan,  6  East,  382. 

ly)  Kewley  v.  Ryan,  2  H.  Bl.  343. 

{z)  When  the  policy  is  on  ship,  described  as — "the  body,  tactle,  apparel,  ord- 
nance, munition,  artillerj',  boat,  and  other  furniture  of  and  in  the  good  ship  or  vessel 
called,"  tfec,  (fee. 

(a)  Glover  v.  Black,  3  Burr.  1394.  Simonds  v.  Hodgson,  6  Bingh.  114,  reversed 
upon  another  point  in  3  B.  <fe  Ad.  57. 


any  body  who  may  have  an  interest  in  the  thing  insured,  but  only  such  as  are  in  the 
contemplation  of  the  contract ;  and  he  for  whose  benefit  the  insurance  is  procured, 
is  the  person,  in  the  contemplation  of  the  contract,  whom  it  alone  concerns.  Under 
this  term  the  policy  will  cover  the  interest  intended  by  the  person  ordering  the 
policj^,  altliough  the  existence  of  such  interest  was  unknown,  not  only  to  the  in- 
surers, but  to  the  broker  or  agent  effecting  the  policy;  and  these  words  may  inure 
for  the  benefit  of  any  person  intended  to  be  insured,  though  he  gave  no  authority 
for  the  purpose,  if  he  afterwards  adopt  it,  which  he  may  do  not  only  before,  but 
after  a  loss  takes  place.  1  Phil,  on  Ins.  152,  153,  157.  3  Kent's  Cora.  258.  Buck  v. 
Chesapeake  Ins.  Co.,  1  Pet.  151. 

But  where  a  policy  is  made  in  the  name  of  a  particular  person,  who  is  the  owner 
of  a  proportion  only  in  interest  of  the  property  insured,  without  any  such  words  in- 
dicating an  intention  to  insure  beyond  his  own  interest,  it  seems  that  it  cannot  be 
made  effectual  to  cover  the  interests  of  others,  upon  parol  proof  that  such  was  the 
intention  and  understanding  of  all  the  parties.  Finney  v,  Bedford  Commercial  Ins. 
Co.,  8  Mete.  834. 


426  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

sible  to  contradict  the  plain  meaning  of  sucli  description,  {b)  A 
ship-owner  may  insure,  under  the  name  of  freight,  the  benefit  ho 
expects  to  derive  from  carrying  his  own  goods  in  his  own  vessel ;  (c) 
so,  provisions  are  comprehended  imder  the  word  furniture,  {d)  It  is 
a  sufficient  description  to  say  that  a  policy  is  upon  goods  generally  ; 
but  that  word  will  be  intended  to  mean  goods  of  ordinary,  not  ex- 
traordinary, danger;  not  such,  for  instance,  as  goods  intended  to  be 
lashed  on  deck,  (e)  unless,  indeed,  they  be  goods  which  it  is  usual 
and  j)roper  to  stow  there :  (/)  for  what  is  usually  done  by  such  a 
ship  with  such  a  cargo  on  such  a  voyage,  is  understood  to  be  re- 
ferred to  by  every  policy,  and  to  make  a  part  of  it,  as  much  as  if  it 
were  expressed  therein,  (g)  An  assurance  may  be  effected  upon 
prof  is  generally.  (A)  But  freight  must  be  insured  eo  nomine,  and  is 
not  covered  by  a  policy  on  goods,  (i)  Although  the  suhject  matter 
of  insurance  must  be  properly  described,  tlie  nature  of  the  interest 
may  be,  generally  speaking,  left  at  large ;  in  other  words,  though,  a 
policy  must  state  correctly  what  is  insured,  it  is  not  necessary  that 
the  reason  loliy  the  party  insures  should  also  be  expressed,  {j) 

It  sometimes  happens  that  the  insurance  is  upon  goods,  "  to  be 
thereafter  declared  and  valued,  by  ship  or  ships;"  or  in  some  form 
which  leaves  it  to  the  insured  to  make  a  subsequent  declaration  of 
the  goods  intended.  This  declaration  of  interest,  as  it  is  called,  is  the 
mere  exercise  of  a  power  conferred  on  the  assured  :  it  requires  no 
assent  on  the  part  of  the  underwriters,  though  they  generally  sign 
their  initials  to  it,  not,  however,  for  the  purpose  of  expressing  their 


(6)  Blackett  v.  Royal  Kxchange  Assurance  Co.,  2  Tyrwh.  26G ;  1  C.  &  J.  244.  Seo 
Lewis  V.  Marshall,  7  M.  &  Gr.  T29. 

(c)  Flint  V.  Flemyng,  2  B.  <fe  Ad.  45.     Devaux  v.  J'Anson,  5  Bingh.  N.  C.  519. 

{d)  Brougli  V.  AVhitmore,  4  T.  R.  206.  As  to  the  extent  of  this  -word,  see  Blactett 
u.  Royal  Exchange  Assurance  Co.,  2  Tyrwh.  266 ;  2  C.  &  J.  244. 

(e)  Judgment  of  Lord  Lyndhurst  in  Blackett  v.  Royal  Exchange  Assurance  Co., 
Ross  V.  Thwaites,  Park,  26.     Backhouse  v.  Ripley,  ibid. 

(/)  Da  Costa  v.  Edmunds,  4  Camp.  142.  See  Gould  v.  Oliver,  4  Bingh.  K  C.  l34. 
See  Milward  v.  Hibbert,  3  Q.  B.  120. 

{g)  Pelly  v.  Royal  Exchange  Assurance  Co.,  1  Burr.  350.  See  Noble  v.  Kenno 
way,  Doug.  510,  and  2  Wms.  Saund,  200,  in  notis. 

(h)  Eyre  v.  Glover,  16  East,  218;  3  Camp.  3*76. 

(i)  Baillie  v.  Moudigliani,  Park,  90. 

(;■)  Crowley  v.  Cohen,  3  B.  &  Ad.  478. 


MARITIME  INSURANCE.  427 


The  Policy — its  Form  and  Construction. 


assent,  but  for  that  of  autlientication.  It  is  generally  put  upon  tlie 
policy  for  convenience  ;  but  this  is  not  necessary;  neither  is  there 
any  necessity  for  its  being  in  writing.  An  error  in  it,  made  with 
out  fraud,  may  be  corrected  without  the  assent  of  the  underwriter, 
and  without  a  new  stamp,  {k)  But  though  it  does  not  require  the 
underwriter's  assent,  it  ought  to  be  communicated  to  him,  {l)  else 
it  would  be  in  the  power  of  the  insured  to  destroy  it,  and  substi- 
tute another  in  its  place.  If  the  words  of  the  policy  be  large  enough 
to  cover  an  illegal  adventure,  and  an  illegal  adventure  was  in  fact 
intended  by  the  insured,  the  policy  is  void,  and  the  underwriter 
cannot  sue  for  the  premium,  (w) 

4.  The  Voyage.  (?2)* — The  voyage  also  must  be  accurately  de- 


(^•)  Robinson  v.  Touray,  3  Camp.  160. 

{I)  Harman  v.  Kingston,  3  Camp.  150. 

(»i)  Jenkins  v.  Power,  6  M.  &  S.  282. 

(?t)  Usually  described  as  follows : — A.  B.,  <te.,  do  make  assurance,  &c.,  lost  or  not 

lost,  at  and  from ,  upon  the  body,  Ac.     Beginning  the  adventure  upon  the  said 

ship,  (fee,  from  and  immediately  following ,  and  so  shall  continue  and  endure 

until  the  said  ship,  <fec.,  shall  be  arrived  at ,  and  there  hath  moored  at  anchor 

twenty-four  hours  in  good  safety ;  and  it  shall  be  lawful  for  the  said  ship  in  this 
vo3'age  to  proceed,  and  sail  to,  and  touch  and  stay  at  any  ports  or  places  whatso- 
ever, for  any  purposes  whatsoever,  particularly  at  C.  and  D.,  and  forwards  and  back- 
wards, and  backwards  and  forwards,  in  any  direction  for  the  purposes  of,"  (fee. 


*  An  insurance  on  a  ship  in  reference  to  the  voyage,  under  the  usual  terms  of  the 
policy',  is  an  insurance  on  the  ship  for  the  voyage,  and  not  on  the  ship  and  voyage. 
It  is  an  undertaking  for  the  ability  of  the  ship  to  perform  the  voyage,  and  to  bear 
any  damage  which  she  may  sustain  during  the  voyage;  not  an  undertaking  that  she 
shall  in  any  event  perform  the  voyage.  Alexander  v.  Baltimore  Ins.  Co.,  4  Craneh, 
370;  2  C.  R.  143. 

In  the  case  of  Cleaveland  v.  Union  Ins.  Co.,  8  Mass.  316,  the  insurance  was  at  a 
certain  premium  per  month,  on  the  brig  Liberty,  her  cargo  and  outfits,  "at  and  from 
Salem  to  any  port  or  ports,  place  or  places,  backwards  and  forwards,  round  the 
globe,  one  or  more  times,  during  her  stay  and  trade  at  all  such  places,  until  her  re- 
turn to  her  port  of  discharge  in  the  United  States;"  and  it  was  held  that  the  com- 
mencement and  end  of  the  voyage  were  sufSciently  expressed.  See  as  to  the  mean- 
ing and  construction  of  the  term,  at  a?i(7/ro?«.  Merchants'  Ins.  Co.  v.  Clapp,  11  Pick. 
56.  Taylor  v.  Lowell,  3  Mass.  341.  Hendricks  v.  Commercial  Ins.  Co.,  8  Jolin.  1. 
At  and  from  Island,  Dickey  v.  Baltimore  Ins.  Co.,  7  Craneh,  327  ;  2  C.  R.  514.  As  to 
goods  being  landed  in  "good  safety,"  Bridge  v.  Niagara  Co.,  1  Hall,  423. 


428  MERCANTILE  CONTRACTS. 

Tae  Policy — its  Foi-ra  and  Construction. 

scribed ;  (o)  the  description  comprehending  the  times  and  places  at 
which  the  risk  is  to  begin  and  end.  It  is  said  that  an  omission  of 
the  X'T''^^^  where  the  risk  is  to  begin,  would  render  the  policy  void 
for  uncertainty ;  {p)  but  that  an  omission  of  the  time  would  cause 
the  risk  to  begin  from  the  making  of  the  policy.  (2)*  The  insertion 
of  the  words  at  and  from  the  ship's  loading  port  has  the  effect  of 
making  the  insurer  answerable  for  any  misfortune  which  may 
happen  while  the  ship  remains  there,  as  if  she  be  burnt  or  lost 
there,  or  detained  by  an  embargo,  (r)  The  insertion  of  these 
words,  moreover,  implies  that  the  ship  is  either  there  at  the  time, 
or  shortly  will  be  there ;  (5)  in  default  of  which,  the  underwriter  is 
discharged ;  and,  if  she  be  not  there  when  the  policy  is  made,  she 
must,  in  order  that  the  risk  may  attach,  arrive  there  in  good 
physical  safety.  If  she  arrive  at  the  outward  port  so  shattered  as 
to  be  a  mere  wreck,  a  policy  on  the  homeward  voyage  never 
attaches,  {t)  I  use  the  words  good  physical  safety,  because  it  is 
suf&cient  if  she  arrive  safe  in  that  sense,  though  from  political 


(o)  Robertson  v.  French,  4  East,  130.  Langhorne  v.  Hardy,  4  Taunt.  628.  Spitta 
V.  "Woodman,  2  Taunt.  416. 

(p)  Molloy,  62,  c.  Y  ;  Park,  28.     Sed  qucere. 

\q)  Ball  V.  Knight,  Fitz.  274.     Barnard,  454. 

(r)  Rotch  V.  Edie,  6  T.  R.  413.  Palmer  v.  Marshall,  8  Bingh.  79.  Williamson  v. 
Innes,  there  cited.    See  2  Atk.  359.     Warre  v.  Miller,  4  B.  &  C.  538. 

(s)  Per  Lord  EUenborough,  Hull  v.  Cooper,  14  East,  479.  Mount  v.  Larkins,  8 
Bingh.  108,  and  see  Freeman  v.  Taylor,  8  Bingh.  124. 

(t)  Parmeter  v.  Cousins,  2  Camp.  235. 


*  "When  the  insurance  is  for  a  term  of  time,  the  termini  of  the  risk  are  the  day 
and  hour  specified  when  the  insurance  commences  and  terminates,  and  the  statement 
of  the  place  of  either  is  not  common.  Groupet  v.  Sea  Ins.  Co.,  24  "Wend.  209.  Manly 
V.  United  M.  &  F.  Ins.  Co.,  9  Mass.  82.  Coggleshall  v.  American  Ins.  Co.  of  K  Y.,  8 
"Wend.  283.  And  a  deviation,  in  the  ordinary  sense  of  the  word,  is  not  predicable 
of  a  marine  policy  on  time  merely  Union  Ins.  Co.  v.  Tysen,  3  Hill,  118.  A  policy 
of  insurance  on  goods,  ta  be  shipped  oetween  two  certain  daj"s,  does  not  cover  goods 
shipped  on  either  of  those  days.  Atkins  v.  Boylon  F.  &  M.  Ins.  Co.,  5  Mete.  439. 
In  marine  policies  on  time  a  clause  is  frequently  inserted,  providing  that  if  the  ves- 
eel  be  at  sea  at  the  expiration  of  the  time,  the  risk  shall  continue  until  she  arrives  at 
her  port  of  destination.  As  to  being  at  sea,  within  the  meaning  of  such  a  clause,  sea 
Union  Ins.  Co.  v.  Tysen,  3  Hill,  118.  American  Ins.  Co.  v.  Hutton,  24  "Wend.  330. 
Bowen  v.  Hope  Ins.  Co.,  20  Pick.  275. 


MARITIME  INSURANCE.  409 


The  Policy — its  Form  and  Construction. 


causes  she  may  be  in  great  danger  of  condemnation,  (u)  It  is  also 
implied  that  she  shall  sail  thence  as  soon  as  she  reasonably  can, 
and,  therefore,  if  the  insured  mean  to  protect  his  vessel  during  a 
stay  in  port,  he  should  use  those  words  in  the  policy,  {v)  A  policy 
at  and  from  on  freight,  the  ship  being  in  a  foreign  port,  means  on 
the  homeward  freight,  and  will  not  cover  a  subsequent  loss  of  the 
outward ;  {iv)  neither  does  such  a  policy  at  all  attach  until  the 
vessel  is  in  a  condition  to  begin  to  take  in  her  homeward  cargo,  {x) 
When  the  policy  is  at  and  from  any  island  or  district,  the  words  in 
general  protect  the  ship  in  sailing  from  one  port  to  another  in  that 
island  or  district  for  the  purpose  of  loading,  at  least,  if  the  whole 
island  or  district  be  usually  considered  as  one  place ;  (?/)  but  it 
would  be  otherwise  if  the  i3olicy  were  "at  and  from  her  port  of 
lading  in  such  an  island  or  district:"  the  commencement  of  the 
voyage  would  then  be  restricted  to  one  particular  place,  and,  gen- 
erally speaking,  the  words  port  of  lading  comprehend  one  place 
only,  and  it  is  a  deviation  if  a  ship  insured  at  and  from  her  port  of 
lading,  begin  to  load  at  one  place  and  finish  at  another  out  of  the 
line  of  her  intended  voyage,  even  though  within  the  jurisdiction 
of  the  same  Qustom-house.  (2)  A  policy  on  goods  at  and  from  Gr., 
beginning  the  adventure  from  the  loading  on  board  the  ship,  does 
not  protect  goods  laden  before  the  ship's  arrival  at  G.,  (a)  unless 
there  be  something  to  indicate  that  a  prior  loading  was  contem- 
plated ;  (&)  as  when  the  words  used  were  "  from  the  loading  on 
board  the  ship  wheresoever."  (c)     A  voyage  to  A.  B.  and  C.  means 

(m)  Bell  V.  Bell,  2  Camp.  475. 

(d)  Palmer  v.  Penning,  9  Bingh.  460.  Palmer  v.  Marshall,  8  Dingh.  319.  See 
Smith  V.  Surridge,  4  Esp.  25.  Grant  v.  King,  4  Esp.  175,  where  the  delay  was  held 
reasonable. 

(w)  Admitted  Mackenzie  v.  Shelden,  2  Camp.  431,     Bell  v.  Bell,  ibid.  475. 

{x)  Williamson  v.  Innes,  1  M.  &  Rob.  88. 

(?/)  Camden  v.  Cowley,  1  Bla.  417.  Bond  v.  Nutt,  Cowp.  601.  Porshaw  v.  Cha- 
bert,  3  B.  <fe  B,  158.  Warre  v.  Miller,  4  B.  <fe  C.  538.  Cruiekshank  v.  Janson,  2 
Taunt.  301. 

(2)  Brown  v.  Tayleur,  4  Ad.  &  E.  241. 

(a)  Langhorn  v.  Hardy,  4  Taunt.  628.  Horneyer  v.  Lushington,  15  East,  46. 
Spitta  V.  Woodman,  2  Taunt.  416;  6  East,  188.  Mellish  v.  Allnutt,  2  M.  &  S.  lOd. 
liickman  v.  Carstairs,  2  Nev.  &  Mann.  571 ;  5  B.  <fe  Ad.  663. 

(b)  Bell  V.  Hobson,  16  East,  240.     Gladstone  v.  Clay,  1  M.  &.  S.  418. 

(c)  Gladstone  v.  Clay,  ubi  supra. 


430  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

a  voyage  to  all  or  any  of  tliem,  with  this  reserve,  that  if  the  ship 
go  to  more  places  than  one,  she  must  visit  them  in  the  order 
in  which  they  are  mentioned  in  the  policy,  {d)*  and  must  not  split 
the  voyage  into  two;  ex.  gr.,  by  loading  goods  at  A.,  and  unload- 
ing them  and  loading  others  at  B.  (e)  If  a  voyage  be  from  or 
to  a  district  containing  several  ports,  they  must,  in  the  absence 
of  provisions  to  the  contrary,  be  visited  in  their  geographical 
order.  (/)  But  words  are  generally  inserted  to  auihorize  devia- 
tions from  the  direct  track,  in  order  to  the  better  accomplishment 
of  the  purposes  of  the  voyage,  {g)  However,  if  the  vessel  sail 
upon  a  voyage  different  from  that  described  in  the  j)olicy,  or,  hav- 
ing sailed  on  that  described,  afterwards  deviate,  the  underwriters 
are  released,  (/.'  their  risk,  in  the  former  case,  never  attaching,  and 
in  the  latter  bbing  discharged  upon  a  principle  which  we  will  ex- 
plain when  we  come  to  speak  of  Warranties.  But  a  mere  intention 
to  deviate  never  carried  into  effect  will  not  discharge  them,  (i)  and, 
if  the  ship  be  hindered  from  completing  her  voyage  by  a  mere 


(d)  Marsden  v.  Reid,  3  East,  512. 

(e)  Sellar  v.  M' Vicar,  1  N.  R.  23.     Vide  5  B.  &  C.  201,  5  B.  &  A.  45. 

(/)  Cl.ason  V.  Simraonds,  G  T.  R.  633.  See  Andrews  v.  Mellish,  5  Taunt,  496. 
It  will  be  stated  presently,  on  the  authority  of  Gardner  v.  Senhouse,  3  Taunt.  16, 
and  Marsden  v.  Reid,  3  East,  57,  that  in  case  of  a  voyage  to,  or  liberty  to  touch  at, 
several  places,  they  must  be  taken  in  the  order  mentioned  h\  the  policy ;  but  as  this 
results  from  an  implication  from  the  order  in  which  they  are  named,  it  probably 
might  be  controlled  by  a  custom  to  visit  them  in  a  different  order. 

((/)  See  Leathly  v.  Hunter,  1  Bingh.  517.  Bottomley  v.  Bovil,  5  B.  <fe  C.  210. 
Bragg  V.  Anderson,  4  Taunt.  229.  Wright  v.  Sliiffuer,  11  East,  515.  Lambert  v.  Lid- 
dard,  5  Taunt.  480. 

(/t)  Woolridge  v.  Boydell,  Dough  16.  "Way  v.  Moudigliani,  2  T.  R.  30.  Bottom- 
ley  V.  Bovil,  5  B.  &  C.  210.  Hogg  v.  Horner,  Park,  445.  Middlewood  v.  Blakes,  1 
T.  R.  162.     Parkin  v.  Tunno,  11  East,  22. 

(i)  Kewley  v.  Ryan,  2  H.  Bl.  343,  cited  Hare  v.  Travis,  7  B.  <fe  C.  14.  Heselton 
«.  Allnutt,  1  M.  &S.  46. 


*  Kane  v.  Col.  Ins.  Co.,  2  Johns.  264.  But  an  insurance  on  a  voyage  at  and  from 
C.  to  N.  with  liberty  to  touch  at  M.  for  trade,  and  to  take  in  part  of  cargo,  would 
not  justify  a  voyage  directly  to  M.  and  from  thence  to  N.  Where  the  policy  ex- 
pressly stipulates  tliat  the  voj-age  shall  commence  at  a  particular  place,  no  other 
can  be  substituted,  though  it  be  one  in  the  usual  course  of  the  voyage.  Murray  v. 
Cob  Ins.  Co..  4  Johns.  443. 


MARITIME  INSURANCE.  431 


Tlie  Policy — its  Form  and  Construction. 


temporary  impediment,  slie  may,  it  would  seem,  lawfully  wait  at  a 
neighboring  place  of  safety  till  it  is  removed,  and  afterwards  pur- 
sue her  voyage  at  the  risk  of  the  underwriter,  (j)  We  have  seen 
that  the  words  at  and  from  an  island  or  district  will  generally  pro- 
tect the  ship  in  sailing  from  one  port  of  that  island  or  district  to 
another.  Bat  where  she  is  insured  to  such  an  island  or  district,  the 
risk  as  to  the  ship  determines  at  the  first  port  there  at  which  she 
stops  to  unload ;  (IS)  the  owner  who  wishes  to  avoid  the  effect  of 
this  rule  should  insure  the  vessel  to  her  port  or  ports  of  discharge. 
These  words,  if  used,  protect  the  vessel  till  her  cargo  is  substan- 
tially discharged ;  I  say  substantially,  for  if  the  principal  part  of  the 
cargo  be  unladen,  the  risk  will  thereupon  determine,  daough  part 
be  left  on  board  to  effect  some  object  unconnected  wifAi  that  of  the 
voyage  insured,  ex.  gr.^  to  serve  as  ballast  while  she  proceeds  in 
search  of  a  new  cargo,  il)  As  to  the  goods,  they  will,  in  general, 
continue  to  be  protected  till  their  arrival  at  their  port  of  de- 
livery, (m) 

The  voyage,  as  far  as  the  underwriter's  risk  is  concerned,  is 
generally  limited  to  determine  when  the  ship  has  been  moored 
"  twenty -four  hours  in  good  safety.''''  The  words  "  good  safetif  are 
material ;  for  instance,  though  she  arrive  in  port,  and  remain  there 
more  than  four-and-twenty  hours,  yet,  if  she  arrive  a  mere  wreck, 
and  afterwards  founder,  she  cannot  be  said  to  have  moored 
an  instant  in  good  safety^  and  the  underwriter  will  not  be  dis- 
charged, {n)  But  it  is  otherwise,  if  having  continued  in  safety 
twenty-four  hours,  she  be  afterwards  lost,  although  in  consequence 
of  an  act  performed  during  the  voyage,  for  instance,  smuggling ;  (0) 
and  if  the  words  good  safety  be  not  used,  the  risk  determines  at  the 
expiration  of  the  limited  time,  whatever  be  the  condition  of  the 


{j)  See  Schroeder  v  Tliompson,  7  Taunt.  462.  Blackenhagen  v.  L.  A.  Co.,  1 
Camp.  454.  Hadley  v.  Clarke,  8  T.  R.  259.  But  see  Brown  v.  Vigne,  12  East,  383. 
Doyle  V.  Powell,  4  B.  A  Ad.  207. 

{k)  Camden  v.  Anderson,  1  Bl.  417.     Leigh  v.  Mather,  1  Esp.  412. 

{l)  Moore  v.  Taylor,  ]  Ad.  <fe  E.  25. 

(?n)  Leigh  v.  Mather,  1  Esp.  412. 

(«)  Shawe  v.  Felton,  2  East,  109  See  Horneyer  v.  Lushington,  16  East,  46. 
Maples  V.  Eames,  2  Str.  1243. 

(0)  Lockyer  v.  OfEey,  1  T.  E.  252.     Angersteia  v.  Bell,  Park,  55. 


432  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

vessel.  (;j>)*  But  if  the  risk  be  "  until  the  ship  be  discharged  from 
her  voyage,"  she  is  not  considered  discharged  until  the  goods  are 
unladen,  {q) 

The  risk  on  goods  is  generally  limited  to  continue  until  they 
shall  be  "  discharged  and  safely  landedP  This  landing  must,  how- 
ever, be  accomplished  with  reasonable  expedition ;  delay  would  be 
in  the  nature  of  a  deviation,  and  would  discharge  the  under- 
writer. (?')  But  as  the  policy  protects  the  goods  till  landed,  the 
underwriter  is  liable,  though  the  loss  happen  after  a  transhipment 
into  shallops,  lighters,  droghers,  or  launches,  such  transhipment 
being  in  the  usual  course  of  the  voyage,  (s)  which  course  the  un- 
derwriter is,  as  we  have  repeatedly  observed,  presumed  to  know. 
But  it  is  otherwise  if  the  assured  tranship  them  on  board  another 
vessel,  it)  or  send  his  own  lighter,  and  take  the  goods  into  his 
own  custody,  or  discharge  the  public  lighterman  who  was  em- 
ployed, (w) 

(;))  Meretony  v.  Dunlop,  cited  in  Lockyer  v.  Offley,  1  T.  R.  252.  See  Pole  « 
Fitzgerald,  Willes,  641. 

{q)  Skinn.  243,  Com.  Dig.  Merchant,  E.  9. 

(r)  Park,  470.     See  Leigh  v.  Mather,  1  Esp.  412.     Noble  v.  Kennoway,  Dougl.  492. 

(s)  Stewart  v.  Bell,  5  B.  &  A.  238.  Matthie  v.  Potts,  3  B.  &  P.  23.  Rucker  v.  L. 
A.  Co.,  B.  &  P.  432.     Tierney  v.  Ethrington,  Burr.  348. 

(t)  Bold  V.  Rotheram,  15  L.  J.  Q.  B.  2Y4. 

(w)  Sparrow  v.  Carruthers,  2  Str.  1236.     Strong  v.  Natally,  1  K  R.  19. 

*  The  case  of  Meretony  v.  Dunlop  has  been  supposed  to  lay  down  the  rule 
that  where  there  is  a  time  policy  on  a  ship,  if  the  ship  within  the  time  receives 
damage,  however  severe,  by  the  perils  of  the  sea,  but  the  amount  of  it  is  not  ascer- 
tained until  after  the  time  has  expired,  and  till  then  she  is  kept  afloat  as  a  ship, 
although  from  this  damage  she  afterwards  sinks,  or  is  found  to  be  in  a  state  not  fit 
for  navigation,  and  is  incapable  of  being  repaired,  the  insurers  can  neither  be  made 
liable  for  a  total  nor  partial  loss.  This  doctrine  was  overruled  by  the  Court  of 
Queen's  Bench  in  Knight  v.  Faith,  15  Ad.  <fe  Ell.  K  S.  649,  Lord  Campbell  express- 
ing great  doubt  as  to  whether  it  had  ever  in  fact  been  laid  down  by  Lord  Mansfield. 
It  has  been  disapproved  by  Continental  and  American  jurists.  See  Peters  v.  Phcenis 
Insurance  Company,  3  Serg.  &l  Rawl.  Rep.  25.  "The  doctrine,"  says  Lord  Campbell, 
"seems  contrary  to  the  principle  of  insurance  law,  that  the  insurer  is  liable  for  a 
loss  actually  sustained  from  a  peril  insured  against  during  the  continuance  of  the  risk." 

Tlie  general  question  of  what  will  constitute  an  arrival  in  good  safety,  is  dis- 
cussed in  Meigs  v.  Mutual  Marine  Insurance  Company,  2  Cush.  R.  439.  King  v. 
Middletown  Insurance  Company,  1  Conn.  184.  Dickey  v.  United  Insurance  Com- 
pany, 11  Johns.  R.  358.    Samuel  v.  Royal  Exchange  Assurance  Company,  8  B.  &  C.  H9. 


MARITIME  INSURANCE.  433 


The  Policj' — its  Form  and  Construction. 


5.  Perils* — The  perils  against  Avhich  the  insurer  guarantees, 
are  described  to  be  "  Of  the  seas,  men-of-war,  fire,  enemies,  pirates, 
rovers,  thieves,  jettisons,  letters  of  mart  and  countermart,  surpri- 
sals,  takings  at  sea,  arrests,  restraints,  and  detainments  of  all  kings, 
princes,  and  people,  of  what  nation,  condition,  or  quality  soever ; 
barratry  of  the  master  and  mariners,  and  all  other  perils,  losses, 
and  misfortunes,  that  have  or  sliall  come  to  the  hurt,  or  detriment, 

or  damage  of  the  said ,  or  any  part  thereof."    When  the  words 

lost  or  not  lost,  Gallic^,  "  sur  honnes  et  mauvaises  nouvelles,^^  are  in- 
serted, they  render  the  underwriter  liable  in  respect  of  loss  by  any 
of  the  above  perils,  though  the  ship  be  lost  at  the  time  of  insurance; 
a  circumstance  which,  but  for  those  words,  would  avoid  the  po- 
licy, {v)  Nay,  it  will  even  include  cases  in  which  the  subject  mat- 
ter of  insurance  had  not  vested  in  the  assured  at  the  time  of  the 
occurrence  of  the  loss ;  for  instance,  if  a  merchant  having  bought 
goods  at  sea  were  to  insure  them,  lost  or  not  lost,  the  policy  would 
cover  a  loss  sustained  by  them  during  the  voyage,  but  before  the 
purchase,  {ic)  It  is  sometimes  the  practice  to  restrain  these  words, 
by  warranting  the  ship  to  be  well  on  a  particular  day ;  yet,  even 
then,  if  she  were  well  on  any  part  of  that  day,  though  she  be  lost 
before  the  policy  is  effected,  the  underwriter  will  be  liable,  (x)  In- 
deed, if  the  insured  knew  at  the  time  of  making  the  insurance  that 
the  ship  was  lost,  that  fraud  avoids  the  policy,  {y)  But  where  the 
member  of  a  mutual  insurance  company  proposed  a  vessel  for  in- 
surance which  was  accepted  and  the  premium  paid,  but  afterwards 
and  before  the  policy  was  actually  executed,  she  was  lost,  Avhich 

(v)  Jeffreys  v.  Legendra,  1  Sho-w.  324.     E.  of  March  v.  Pigot,  5  Burr.  2803. 

{w)  Sutherland  v.  Pratt,  11  M.  &  W.  296. 

(a;)  Blackhurst  v.  Cockell,  3  T.  R.  360. 

(y)  Jeffrej-s  v.  Legendra.     E.  of  March  v.  Pigot,  nbi  supra. 

*  The  insurers  do  not  undertake  that  the  voyage  shall  be  performed  without  de- 
lay, or  that  the  perils  insured  against  shall  not  occur.  They  undertake  only  for 
losses  sustained  by  those  perils.  The  peril  must  act  directly,  and  not  circuitously, 
upon  the  subject  of  insurance.  It  must  be  an  immediate  peril,  and  the  loss  the  proper 
consequence  of  it;  and  it  is  not  sufficient  tliat  the  voj-age  be  abandoned,  for  fear  of 
the  operation  of  the  peril.  Smith  v.  Universal  Ins.  Co.,  6  Wheat.  176  ;  5  C.  R.  54 
Parties  raaj'  contract  so  as  to  incur  risks  antecedent  to  the  date  of  the  contract. 
Coggleshall  v.  American  Ins.  Co.,  3  Wend.  283. 
28 


434  MERCANTILE  CONTRACTS. 


The  Polic}- — its  Form  and  Construction. 


was  known  to  all  parties  at  the  time  of  executing  the  policy,  the 
words  lost  or  not  lost  were  held  to  entitle  the  assured  to  recover. 
The  Court  said  that  there  was  considerable  analogy  between  this 
case  and  Paine  v.  Meller,  (2)  decided  by  Lord  Eldon,  who  held  the 
purchaser  bound  to  perform  his  contract,  although  the  house  was 
burnt  before  the  time  appointed  for  conveying  it.  So  in  the  pre- 
sent case  the  insured  had  bought  and  paid  for  the  underwriter's 
promise  to  indemnify  ;  equity  would  have  compelled  the  latter  to 
execute  a  formal  policy  whenever  tendered  to  him :  in  voluntarily 
executing  it,  he  had  only  performed  a  manifest  duty,  and  could  not 
now  retract  the  obligation,  (a) 

Let  us  now  examine  the  extent  of  the  above  words,  and  see 
what  losses  will  be  embraced  by  them. 

Perils  of  the  Sea.^ — These  words  mean,  losses  occasioned  strictly 


(z)  6  Ves.  jun.  3-19. 

(a)  Mead  v.  Davison,  3  Ad.  &.  E.  303. 


*  The  meaning  of  the  terms  "perils  of  the  seas,"  and  "dangers  of  the  river," 
have  frequently  come  under  consideration  in  actions  against  common  carriers ;  it 
being  usual  to  insert  in  bills  of  lading  an  exception  of  such  perils  and  dangers.  A 
question  has  arisen  whether  those  terms  are  more  comprehensive  than  the  exception 
implied  at  common  law,   "  an  act  of  God,  or  of  the  public  enemies." 

An  act  of  God  means  something  in  opposition  to  the  act  of  man  ;  such  an  act  as 
could  not  happen  by  the  intervention  of  man — as  storms,  lightning,  and  tempests. 
Even  the  words  "inevitable  accident,"  sometimes  used,  are  hardly  adequate  to  ex- 
press the  ground  of  a  common  carrier's  excuse  at  common  law,  for  accidents  arising 
from  human  force  and  fraud  are  sometimes  inevitable.  The  term  "act  of  God,"  can 
only  mean  natural  accidents,  as  those  above  mentioned ;  and  not  accidents  arising 
from  the  fault  or  negligence  of  man.  But  the  terms  "  perils  or  dangers  of  the  seas," 
and  "perils  or  dangers  of  the  river,"  in  addition  to  losses  arising  from  natural 
causes,  will  sometimes  embrace  those  arising  from  the  act  of  tliird  persons;  and  will 
be  found  to  allow,  in  several  cases,  human  agency  and  other  causes  to  excuse  a  loss 
bv  a  common  carrier.  McArthur  v.  Sears,  21  Wend.  190.  Keal  v.  Saunderson,  3 
Smedes  &,  Marsh.  5*72.  Many  disasters  which  would  not  come  within' the  definition 
of  "act  of  God,"  come  within  the  term  "dangers  of  the  river,"  which  term  narrows 
down  the  liability  of  the  common  carrier.  Such,  for  instance,  as  losses  occasioned 
by  hidden  obstructions  in  the  river,  newly  placed  there,  and  of  a  character  that  hu- 
man skill  and  foresight  could  not  have  discovered  and  avoided.  Gordon  v.  Buchanan, 
6  Yerg.  71  ;  Turney  v.  Wilson,  7  Yerg.  340.  See  Howell  v.  Cincinnati  Ins.  Co.  7  Ohio, 
276,  in  which  case  a  contrary  opinion  appears  to  have  been  expressed. 


MARITIME  INSURANCE.  ^^ty 


The  Policy — its  Form  and  CoQstruction. 


by  sea  damage,  (b)  ex.  gr.,  by  stress  of  Avcather,  winds  and  waves, 
lightning  and  tempest,  rocks,  sands,  &c.  A  loss  occasioned  by  the 
ship  insured  being  run  down,  is  one  by  perils  of  the  sea ;  (c)  so  is  a 
loss,  by  her  taking  the  ground  on  the  uneven  bed  of  a  dry  harbor,  {d) 
or  a  loss  of  animals,  killed  by  the   agitation  of  the   ship  in  a 


(b)  Ex  marinse  tempestatis  discrinaine.  Emerigon,  vol.  i.  c.  12,  in  initio.  See  5 
M.  &  S.  464;  Com.  Dig.  Merchant,  E.  9.  Shawe  v.  Felton,  2  East,  109,  and  Parfit  v. 
Thompson,  13  M.  &  W.  392. 

(c)  Smith  V.  Scott,  4  Taunt.  126.  Buller  v.  Fisher,  3  Esp.  6Y  ;  for  winds  and 
waves  which  drive  the  ships  together  are  causa  causans. 

{d)  Fletcher  v.  Inglis,  2  B.  &  A.  315.     See  Ilahn  v.  Corbett,  2  Bingh.  205. 


"The  phrase  'danger  of  the  seas,'"  says  Judge  Story,  "whether  understood  in 
its  most  limited  sense,  as  importing  only  a  loss  by  the  natural  accidents  peculiar  to 
that  element ;  or  whether  understood  in  its  more  extended  sense,  as  including  inevi- 
table accidents  upon  that  element,  must  still,  in  either  case,  be  clearly  understood  to 
include  only  such  losses  as  are  of  an  extraordinary  nature,  or  arise  from  some  irre- 
sistible force,  or  some  overwhelming  power,  which  cannot  be  guarded  against  by  the 
ordinary  exertions  of  human  skill  and  prudence."  The  Scliooner  Reeside,  2  Sumn. 
571. 

It  should,  however,  be  observed  that  a  common  carrier  may  be  liable  on  account 
of  a  loss  occurring  bj'  a  danger  of  the  sea  or  river,  unless  care  and  diligence  to 
avoid  it  be  shown.  Whitesides  v.  Russell,  8  Serg.  &  Watts,  44.  And  yet  for  the 
Bame  loss  the  insurer  may  also  be  liable ;  for  it  is  no  defence  to  the  latter,  as  will  be 
more  fully  shown  hereafter,  that  the  carrier  did  not  use  the  requisite  skill  and  care 
to  avoid  the  danger  which  actually  caused  the  loss.  Waters  v.  Louisville  Merchants' 
Ins.  Co.,  11  Pet.  213.  King  v.  Shepperd,  3  Story  R.  360;  and  ^os;!,  347,  note.  See 
Natchez  Ins.  Co.  v.  Stanton,  2  Sm.  <fe  Marsh,  340. 

In  the  case  of  Perrin  v.  The  Protection  Insurance  Co.,  11  Ohio,  147,  where  the  in- 
surance was  on  a  steamboat,  and  the  risks  described  were  according  to  the  usual 
form,  it  was  held  that  a  loss  arising  from  an  explosion  of  the  boiler,  was  covered  by 
the  policj^  This,  say  the  Court,  "seems  plain  to  us  when  we  consider  the  subject 
insured,  and  the  nature  of  the  risks  to  which  it  is  of  necessity  exposed.  The  insu- 
rance was  on  a  steamboat.  The  policy  is  in  the  form  which  has  long  been  in  use  for 
marine  risks ;  and  the  words  which  describe  the  perils  are  large  enough  to  embrace 
all  such  as  arise  in  the  ordinary  use  of  the  thing  insured.  A  policy  on  ships  covers 
losses  arising  from  accidents  to  the  power  which  moves  them ;  and  it  must  be  pre- 
sumed that  the  parties  contemplated  the  same  protection  to  a  steamboat  when  the 
loss  occui's  (b}-  accident)  to  her  motive  agencies."  This  decision  has  been  followed 
in  Missouri.  Citizens'  Ins.  Co.  of  Missouri  v.  Glasgow,  9  Misso.  Rep.  411.  See  Hale 
V.  New  Jersey  Steam  Navigation  Co.,  15  Conn.  539,  in  which  case  it  was  held  that 
the  circumstance  that  the  carriage  of  the  goods  was  by  a  steamboat  made  no  dili'er 
once  as  to  the  liability  of  a  common  carrier  for  a  loss  by  fire. 


436  MERCANTILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


storm,  (e)  If  a  vessel  be  not  heard  of  within  a  reasonable  time 
after  her  sailing  it  is  presumed  that  she  foundered,  (/)  and  the  as- 
sured may  recover  for  a  loss  bj  'perils  of  the  sea..  But  if  the  ship  be 
worm-eaten,  {g)  or  rat-eaten,  (A)  or  hove  down  on  the  beach  within 
the  tideway  to  repair,  and  thereby  bilged,  {i)  these  are  not  losses  by 
perils  of  the  sea. 

Fire. — How  the  fire  was  occasioned  is  immaterial,  whether  by 
a  common  accident,  or  lightning,  or  an  act  done  in  duty  to  the 
State,  {j)  But,  if  goods  be  put  on  board  in  a  damaged  condition, 
and  are,  in  consequence,  liable  to  effervesce,  and  generate  the  fire 
by  which  they  are  consumed,  the  underwriters  are  not  liable,  {h) 

Enemies. — This  word  is  used  in  contradistinction  to  '''■pirates^ 
rovers,  thieves,^''  afterwards  mentioned,  a  capture  by  whom  is  an 
act  of  depredation,  whereas  one  by  enemies  is  an  act  done  jure 
heUi.  Q)^  We  have  already  had  occasion  to  touch  upon  the  change 
of  property  by  capture,  and  to  state  that  the  mere  fact  of  capture 
does  not  of  itself  divest  an  owner's  property  in  the  thing  captured. 
Insurance,  however,  being  a  contract  of  indemnity,  the  insured  must 
be  reimbursed,  if  he  have  in  point  of  fact  suffered  a  loss,  and  the 
underwriter  cannot  protect  himself  by  any  technical  rules  about  the 

(c)  Lawrence  v.  Aberdein,  5  B.  A  A.  107. 

(/)  Park,  105,  106.  Green  j;.  Brown,  Str.  1199.  Cohen  t).  Hinckley,  2  Camp.  51. 
Koster  v.  Innes,  R.  &  M.  333.  See  Koster  v.  Reed,  6  B.  <fe  C.  19.  In  such  a  case,  if 
the  ship  reappear,  the  underwriters  maj^,  it  seems,  take  possession  of  her.  Houst- 
man  v.  Thornton,  1  Holt,  242. 

(g)  Park,  105.    Rohl  v.  Par,  1  Esp.  444. 

(A)  Hunter  v.  Potts,  4  Camp.  203. 

(i)  Thompson  v.  Whitmore,  3  Taunt.  227.  See  Rowcroft  v.  Dunsmore,  ibid.  228 
Philips  V.  Barber,  5  B  <fe  A.  161. 

{j )  Gordon  v.  Rimington,  1  Camp.  1 23.  Austin  v.  Drew,  6  Taunt.  436.  Busk  v. 
R.  E.  A.  Co.,  2  B.  &  A.  13.  Shaw  v.  Robberds,  6  Ad.  <fe  E.  75.  Hollingworth  v 
Brodrick,  7  Ad.  &  E.  40. 

(jfc)  Boyd  V.  Dubois,  3  Camp.  133.  ' 

[1)  See  Matthie  v.  Potts,  3  Bos.  &  P.  23. 


*  If,  after  the  commencement  of  the  voyage  insured,  a  war  breaks  out  between 
the  country  to  which  the  property  belongs  and  a  foreign  country,  the  policy  is  not 
vacated,  and  the  insurers  are  liable  for  a  loss  arising  out  of  a  state  of  war.  Saltus  v. 
United  Ins.  Co.,  15  John.  523. 


MARITIME  INSURANCE.  437 

The  Policy — its  Form  and  Construction. 

change  of  property,  (m)  If  indeed  the  vessel  be  recaptured,  and 
the  owners  become  entitled  to  restitution  on  payment  of  salvage, 
that  may,  under  some  circumstances,  change  into  a  partial  loss  one 
which  was,  'prima  facie^  total,  {n)  But,  even  when  the  vessel  is  pre- 
served, the  insured  have  a  right  to  be  indemnified  against  charges 
bona  fide  incurred  in  accomplishing  that  object ;  as  where  a  neutral 
ship  was  improperly  captured,  an  interlocutory  decree  pronounced 
against  her,  and  the  owners,  dreading  the  expense  and  delay  of 
appeal,  compromised  the  suit,  and  purchased  the  captor's  consent 
to  a  reversal.  (0)  An  insurance  against  British  capture  is  illegal,  as 
being  against  public  policy,  {p) 

Pirates^  Rovers,  and  Thieves.^ — The  meaning  of  the  word  pirate 

(m)  Goss  V.  Withers,  2  Burr.  694.  Hamilton  v.  Mendes,  ibid.  1209.  See  Milles  v. 
Fletcher,  Dougl.  219.  Roteh  v.  Edie,  6  T.  R.  413.  MTver  v.  Henderson,  4  M.  &  S. 
576.     Cologan  v.  L.  A.  Compy.,  5  M.  &,  S.  447. 

(»i)  Hamilton  v.  Mendes,  2  Burr.  1189.  Bainbridge  v.  Nelson,  10  East,  329. 
M'Masters  v.  Shoolbred,  1  Esp.  237.      Patterson  v.  Ritchie,  4  M.  &  S.  393.     Vide  post. 

(0)  Berens  v.  Rucker,  1  Bla.  313.     See  Wilson  v.  Foster,  6  Taunt.  25 ;  1  Marsh,  425. 

(p)  Furtado  v.  Rodgers,  3  B.  &  P.  191.  Ivellner  v.  Le  Mesurier,  4  East,  397. 
Gamba  v.  Le  Mesurier,  4  East,  407. 


*  In  3  Kent  Com.  303,  it  is  laid  down,  that  the  theft  insured  against  by  name, 
means  that  which  is  accompanied  by  violence,  and  not  simple  theft ;  and  in  support 
of  this  rule  he  cites  various  treatises,  both  of  English  and  Continental  writers,  on  the 
subject  of  Insurance.  But  in  the  case  of  the  Atlantic  Ins.  Co.  v.  Storrow,  5  Paige, 
292,  Chancellor  Walworth  expressed  a  contrary  opinion,  and  came  to  the  conclusion 
that  the  language  of  the  Continental  writers  on  this  subject  had  been  followed, 
without  adverting  to  the  difference  of  the  language  of  their  policies  from  that  which 
was  contained  in  those  of  England  and  America.  In  the  case  of  Marshall  v.  F.  &  M. 
Ins.  Co.,  1  Hump.  Ten.  R.  99,  in  which  this  point  was  directly  involved,  the  Court 
decided,  in  accordance  with  the  rule  laid  down  by  Cliancellor  Kent,  and  other 
learned  writers  on  the  subject  of  Insurance,  and  upon  their  authority,  which  the 
opinion  of  Chancellor  Walworth  referred  to  as  a  dictum,  was  not  considered  sufficient 
to  overthrow.  This  decision,  however,  was  made  confessedly  without  an  examina 
tion  into  the  subject,  upon  the  ground  that  the  rule  was  so  settled  by  the  elementary 
writers.  In  the  case  of  the  American  Ins.  Co.  v.  Bryan,  1  Hill,  25,  26  Wend.  563,  this 
question  was  examined  with  great  learning  and  ability,  and  the  Supreme  Court  and 
Court  of  Errors  of  New  York  both  decided,  that  the  word  thieves  in  a  policy,  covers 
a  loss  occasioned  by  a  simple  larceny,  unaccompanied  by  open  force  or  violence,  by 
persons  other  than  the  master  or  crew  of  the  ship  or  steamboat  in  which  the  goods 
were  transported. 


438  MERCANTILE  CONTRACTS. 

The  Policj' — its  Form  and  Construction. 

is  explained  in  4  Bl.  Comm.  72.  {q)  Generally  speaking,  be  is  one 
•who  commits  on  the  liigli  seas  those  acts  of  robbery  and  depredation 
which,  if  committed  on  land,  would  have  been  felonies. 

Jettison. — Jettison  is  a  throwing  of  goods  overboard,  ex  justa 
causa,  ex.  gr.^  to  prevent  their  capture  by  an  enemy.  (?-) 

Arrests,  Restraints,  and  Detainments  of  Kings,  Princes,  and 
Peojple.* — By  kings  and  princes  are  here  meant  all  potentates 
whether  at  peace  or  war  with  us.  (s)  The  term  people  signifies  the 
ruling  power  of  a  country  whatever  it  may  be,  and  v»  Jl  not  include 
a  crowd  of  riotous  individuals,  {t)  One  of  the  most  usual  species  of 
detainments  is  an  embargo,  which  is  an  arrest  laid  on  ships  or  mer* 
chandise  by  public  authority,  or  a  prohibition  of  State,  commonly 
issued  to  prevent  foreign  ships  from  putting  to  sea  in  time  of  war, 
and  sometimes  to  exclude  them  from  entering  our  ports. 

[q)  See  also  Com.  Dig.  Admiralty,  E.  8 ;  Hawk.  b.  2,  c.  38,  s.  11.  Kesbit  v.  Lush- 
ington,  4  T.  R.  783.     Regina  v.  Serva,  2  Car.  &  K.  53. 

(r)  Butler  v.  Wildman,  3  B.  <&  A.  398. 

(s)  Per  Lord  Mansfield  in  Goss  v.  Withers,  2  Burr.  696.  Mellish  v.  Andrews,  15 
East,  13.     Sewell  v.  R.  E.  A.  Compy.,  4  Taunt.  856. 

(t)  Nesbit  V.  Lushington,  4  T.  R.  183. 


*  This  claiise  refers  to  the  operations  of  the  sovereign  power  by  an  exercise  of 
the  vis  major,  in  its  sovereign  capacity,  controlling  or  divesting  for  the  time  the 
dominion  and  authority  of  the  owner  over  the  ship;  and  of  course  does  not  extend 
to  proceedings  of  a  mere  civil  nature  to  enforce  private  rights,  though  had  under  the 
authority  of  the  sovereign  power,  as  in  the  case  of  an  arrest  or  detainment  of  a  ship 
imder  admiralty  process,  to  recover  a  supposed  claim  for  salvage.  Bradlie  v.  Mary- 
land Ins.  Co.,  12  Pet.  402.  It  is  not  necessary  to  constitute  a  loss  by  this  peril,  that 
actual  physical  force  should  be  applied  to  the  subject  insured.  An  embargo  is  ad- 
mitted to  be  a  peril  within  the  policy.  And  it  seems  to  be  the  better  opinion,  that 
a  blockade,  although  not  an  arrest  or  detainment,  is  a  restraint,  and  embraced  by  that 
word  in  the  policy.  Olivera  v.  Union  Ins.  Co.,  3  Wheat.  183;  4  C.  R.  227.  1  Phil. 
an  Ins.  673.  And  so  a  vessel  detained  in  a  neutral  port,  from  which  she  could  not 
depart  without  imminent  danger  of  being  captured  by  cruisers  of  the  enemy  of  the 
country  to  which  she  belonged,  was  held  to  be  lost  Avithin  the  risk  of  restraint  of 
princes  or  of  men  of  war.  Saltns  v.  United  Ins.  Co.,  15  John.  523.  But  see  Brewer 
V.  Union  Ins.  Co.,  12  Mass.  170 ;  and  as  to  the  question  whether  a  blockade  of  the 
port  of  destination  is  a  loss  within  the  policy,  see  Richardson  v.  Maine  Ins.  Co.,  ft 
Mass.  102 ;  1  Phil,  on  Ins.  657   660 ;  Schmidt  v.  Unit.  Ins.  Co.,  1  John.  249. 


MARITIME  INSURANCE.  430 

The  Policy — its  Form  and  Construction. 

As  we  have  seen  that  the  insured  is  not  protected  against  British 
capture,  so  neither  is  a  foreigner  allowed  to  insure  against  British 
detention,  (u)  except  so  far  as  it  may  be  accidental  and  erroneous,  {v) 
Nor  can  a  foreigner  insure  against  the  act  of  his  own  government,  {lu) 
unless  the  underwriter  agree  to  make  such  insurance  with  full 
knowledge  of  the  country  of  the  insured  ;  (x)  for  a,  foreigner,  insured 
against  a  loss  of  that  description,  might  give  such  information  to 
his  own  government  as  would  produce  a  seizure,  the  blow  of  which 
would  fall  upon  the  British  underwriter.  It  seems,  however,  that  a 
British  subject  might  insure  against  British  embargo,  (y)  If  the  de- 
tention be  occasioned  by  the  gross  negligence  (z)  or  improper  conduct 
of  the  assured  himself,  ex.  gr.,  in  carrying  simulated  papers  without 
the  underwriter's  permission,  he  will  not  be  permitted  to  recover ; 
for  his  supineness  or  misconduct  is  a  breach  of  his  implied  warranty 
to  guard  the  assured  against  all  risks  covered  by  the  policy.  («) 
But  a  contravention  of  the  mere  revenue  laws  of  a  foreign  country, 
consented  to  by  the  underwriter,  will  not  vitiate  ;  for  our  courts  do 
not  take  notice  of  them,  {h)  If  the  vessel  be  deterred  from  pro- 
ceeding in  her  voyage  through  fear  of  an  embargo ;  (c)*  or  find  the 
port  of  her  destination  shut  against  her ;  (d)  or  be  permitted  to  land 
her  goods  (which  are  afterwards  seized)  in  the  usual  manner ;  (e) 
these  losses  are  not  within  the  policy ;  for,  in  the  former  cases, 


(m)  See  Touteng  v.  Hubbard,  3  B.  &  P.  291. 

(v)  Mullett  V.  Shedden,  13  East,  304. 

(«')  Campbell  v.  Innis,  4  B.  &  A.  423.     See  Conway  v.  Gray,  10  East,  536. 

(a;)  Simeon  v.  Bazett,  2  M.  &  S.  94.     S.  C.  5  Taunt.  824 ;  4  M.  <fe  S.  147. 

(j/)  See  Lord  Alvanley's  Opinion,  in  Touteng  v.  Hubbard,  3  B.  <fe  P.  291.  Green  v. 
Young,  1  Ld.  Raym.  840. 

(2)  Pipon  V.  Cope,  1  Camp.  434.  See  2  Vern.  176.  Horneyer  v.  Lusliington,  3 
Camp.  85.     Bell  v.  Carstairs,  14  East,  374. 

(a)  1  Camp.  436,  note. 

(6)  Planche  v.  Fletcher,  Dougl.  238.  Holman  v.  Johnson,  Cowp.  343.  See  Simeon 
V.  Bazett,  2  M.  &  S.  94 :  5  Taunt.  824. 

(c)  Foster  v.  Christie,  11  East,  205. 

(J)  Hadkinson  v.  Robinson,  3  B.  <fe  P.  388. 

(e)  Brown  v.  Carstairs,  Camp.  161.  See  Carruthers  v.  Gray,  15  East,  25;  3 
Camp,  142. 

*  King  V.  Delaware  Ins.  Co.,  6  Cranch,  71 ;  2  C.  R.  303.  Smith  v.  Universal  Ins, 
Co.,  6  Wheat.  176;  5  C.  R.  54.     Williams  v.  Suffolk  Ins.  Co.,  13  Pet.  415. 


440  JMERCANTILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


there  was  no  seizure ;  in  tlie  last,  none  until  the  voyage  had  deter- 
mined. But  the  underwriter  cannot  protect  himself  by  saying  that 
the  seizure  was  unjustifiable,  or  that  the  insured  had  a  remedy  ovei 
against  the  aggressors.  (/) 

Barratry  by  the  Master  and  Mariners. — Barratry  is  derived  from 
an  Italian  word,  which  signifies  to  cheat.  In  policies  it  includes 
every  species  of  fraud  or  knavery  in  the  master  or  mariners  of  the 
ship,  by  which  the  owners  are  injured.  {gY  Thus  barratry  may 
be  committed  by  a  wilful  deviation  in  fraud  of  the  owner,  (A)  by 
smuggling,  {i)  by  running  away'  with  the  ship,  {j)  by  sinking  or 
deserting  her,  or  by  defeating  or  delaying  the  voyage,  with  a 

(/)  Rotch  V.  Edie,  6  T.  R.  413.  MuUett  v.  Shedden,  13  East,  304.  Wilson  v. 
Forster,  6  Taunt.  25. 

{g)  Lockj-er  v.  Offley,  1  T.  R.  252.  Knight  v.  Cambridge,  Str.  581,  the  first  case  on 
the  subject.     Heyman  v.  Parish,  2  Camp.  149. 

(A)  Vallejo  v.  Wheeler,  Cowp.  143. 

(i)  See  Loekj-er  v.  Offley,  ubi  supra. 

(j)  Hibbet  v.  Martin,  1  Camp.  539.  Hucks  v.  Tliornton,  1  Holt,  30.  Toulrain  v. 
Inglis,  1  Camp.  421.     Toulmin  v.  Anderson,  1  Taunt,  227. 


*  In  Marcardier  v.  Chesapeake  Ins.  Co.,  8  Cranch,  39,  3  C.  R.  20,  the  Court  give 
substantially  the  same  definition  as  that  in  text;  but  in  the  Patapsco  Ins.  Co.  v. 
Coulter,  3  Pet.  222,  Mr.  Justice  Johnson,  in  delivering  the  opinion  of  the  Court, 
doubts  the  con-ectness  of  the  general  definitions  -which  have  been  given  of  the  term 
barratry/.  "They  all,"  he  says,  "agree  that  fraud  must  be  a  constituent  of  tlie  act  of 
barratry,  and  it  is  from  this  point  in  the  definitions  that  practically  all  the  difficulties 
arise.  The  question  seems  to  be  between  'dolus'  and  'culpa,'  which  of  those  two 
words  best  conveys  the  sense  of  the  law."  And  after  a  very  learned  examination 
into  the  derivation  of  the  word,  and  the  authorities  in  relation  to  its  meaning,  he 
arrives  at  the  conclusion  that  barratry  is  not  confined  to  moral  fraud,  and  that  prac- 
tically in  its  application  to  this  subject,  'culpa'  would  better  express  the  idea  than 
'  dolus.'  "  Negligence,"  he  says,  "  when  gross,  is  itself  evidence  of  barratry.  A 
master  of  a  vessel  who  sees  another  engaged  in  the  act  of  scuttling  or  firing  hia 
vessel,  and  will  not  rise  from  his  berth  to  pi-event  it,  is  prima  facie  chargeable  with 
barratry.  Although  a  mere  misfeasance,  it  is  a  breach  of  trust,  a  fault,  an  act  of 
infidelity  to  his  owners.  See  also  American  Ins.  Co.  v.  Bryan,  26  Wend.  563.  Amer- 
ican Ins.  Co.  V.  Dunham,  15  Wend.  11.  Stewart  v.  Tennessee  F.  <fe  M.  Ins.  Co.,  1 
Humph.  242.  The  nature  of  barratry,  and  the  circumstances  which  will  excuse  bar- 
ratrous acts,  were  very  much  discussed  by  the  Supreme  Court  of  Massachusetts  in 
Lawton  v.  Sun  Mutual  Ins.  Co.,  2  Cush.  500. 


MARITIJIE  INSURANCE.  441 

The  Policy — its  Form  and  Construction. 

criminal  intent.  (/:)  Even  dropping  an  anchor,  with  a  fraudulent 
intent,  is  barratry.  Q)  If,  by  reason  of  these,  or  other  similar  acts, 
the  subject  matter  of  insurance  is  detained,  lost,  or  forfeited,  the 
insured  will  be  entitled  to  recover  for  a  loss  by  barratry.  However, 
to  constitute  an  act  of  barratry  there  must  be  fraud;  it  must  arise 
ex  maleficio  ;  a  simple  deviation  through  ignorance,  unaccompanied 
with  fraud  or  crime,  will  not  be  barratry,  {m)  From  the  definition 
of  barratry  above  given,  it  follows,  that  it  can  be  committed  by  no 
one  but  the  master  and  mariners,  and  against  no  one  but  the  owner 
of  the  ship,  {ii)  a  term  which,  however,  comprehends  owners  pro  hac 
vice,  ex.  gr.,  general  freighters,  (o)  Of  course,  when  the  owner  of  the 
ship  is  also  master,  he  cannot  commit  barratry  against  himself,  (p) 
nor  can  an  act  performed  with  his  consent  be  barratrous  against 
him.  {q)  But  barratry  may  be  committed  against  the  freighter, 
though  with  the  consent  of  the  general  owner ;  (?•)  and  it  seems 
doubtful  whether  it  may  not  against  the  owners,  though  with  the 
consent  of  the  freighter,  (s)  And  though  an  act  cannot  be  bar- 
ratrous against  the  owner,  if  it  be  done  with  his  consent,  yet  an  act 
done  for  his  benefit,  if  without  his  consent,  may.  Thus  where  the 
master,  having  general  instructions  to  make  the  best  purchases  with 
dispatch,  went  to  an  enemy's  port  and  traded  there,  for  which  his 
ship  was  seized;  this  was  held  barratry,  although  his  only  object 
was  to  do  the  best  for  his  employer,  (t)  For  it  is  not  for  him  to  judge 
in  cases  not  intrusted  to  his  discretion,  or  to  suppose  that  he  is  not 
breaking  the  trust  reposed  in  him,  but  acting  meritoriously  when 
he  endeavors  to  advance  the  interest  of  his  owners  by  means  which 


(k)  Roscow  V.  Carson,  8  Taunt.  684.     Vide  Dixon  v.  Reid,  5  B.  tfe  A.  597. 

(l)  Per  Buller,  J.,  in  Ross  v.  Hunter,  4T.  R.  38. 

(?rt)  Per  Lee,  C.  J,  Stamma  v.  Brown,  cited  7  T.  R.  508,  per  Lord  EUenborough. 
Earle  v.  Rowcroft,  8  East,  126.  Phyn  v.  R.  E.  A.  Co.,  1  T.  R.  505.  Bottomley  v. 
Bovill,  5  B.  <fe  C.  212. 

(n)  Nutt  V.  Bordieu,  1  T.  R.  323. 

(o)  Vallejo  V.  Wheeler,  Cowp.  143.     Soares  v.  Thornton,  1  Taunt.  627. 

Ip)  Ross  V.  Hunter,  4  T.  R.  33. 

Iq)  Stamma  v.  Brown,  Str.  1173.     Nutt  v.  Bordieu,  1  T.  R.  323. 

(r)  Yallejo  v.  Wheeler,  Cowp.  143.     Soares  v.  Thornton,  7  Taunt.  627. 

(«)  In  Hobbs  V.  Hannam,  3  Camp.  93,  Lord  EUenborough  held  that  it  could  not; 
but  see  Boutflower  v.  Wilmer,  S.  N.  P.  963. 

(0  Earle  v.  Rowcroft,  8  East,  126.     See  Moss  v.  Byrom,  6  T.  R.  379. 


442  MERCANTILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


the  law  forbids,  and  wliich  his  owners  must  be  taken  also  to  have 
forbidden,  both  from  their  sense  of  public  duty  and  their  dread  of 
risk.  It  is  not  necessary  that  the  loss  should  be  contemporaneou? 
with  the  barratry ;  but  it  must  happen  during  the  voyage  insured. 
Thus  where  the  master,  during  the  voyage,  committed  barratry  by 
smuggling,  for  which  the  ship  was  seized,  but  not  till  after  she  had 
been  moored  twenty-four  hours  in  safety  at  her  destined  port,  the 
underwriter  was  discharged,  {a) 

Other  Perils. — These  general  words  are  inserted,  as  Molloy  re- 
marks, to  preclude  all  those  nice  questions  formerly  agitated  by 
civilians  and  common  lawyers,  and  may  be  useful  where  the  loss, 
though  one  against  which  the  assured  ought  to  be  indemnified, 
does  not  fall  within  any  of  the  other  classes  specified  in  the  policy. 
An  instance  of  this  may  be  found  in  Cullen  v.  Butler^  {v)  the  first 
case  in  which  the  effect  of  these  words  came  directly  into  question, 
where  the  crew  of  a  British  ship,  believing  the  ship  insured  to  be 
an  enemy,  fired  upon  and  sunk  her ;  this  loss  was  held  a  loss  by 
other  perils ;  so  where  a  ship,  placed  in  a  graving  dock  to  be  re- 
paired, was,  by  the  violence  of  the  wind,  thrown  over  on  her  side 
and  bilged,  {w) 

The  perils  and  losses  mentioned  in  the  policy  having  been  thus 
separately  considered,  there  remain  a  few  general  observations  on 
this  part  of  the  contract.  First,  the  underwriters  are  not  liable  for 
a  loss  which  is  necessarily  incidental  to  the  property,  rather  than 
occasioned  by  an  adventitious  cause,  such  as  loss  by  worms,  (x)*  or 

(m)  Lockyer  v.  Offley,  1  T.  R.  251.  (y)  5  M.  &  S.  461. 

(w)  Phillips  V.  Barber,  5  B.  <&  A.  161.     Accord.  Devaiix  *.  J' Anson,  5  Bingh.  N.  C. 
619.    See  Butler  v.  Wildman,  3  B.  &  A.  398. 
{x)  Rohl  V.  Parr,  1  Esp.  444. 


*  In  the  case  of  Hazard  v.  New  England  Ins.  Co.,  8  Pet.  557,  the  Circuit  Court, 
Story,  Judge,  had  instructed  the  jury  that,  if  "in  the  Pacific  Ocean  worms  ordinarily 
assail  and  enter  the  bottoms  of  vessels,  then  the  loss  of  a  vessel  destroyed  by  worms, 
would  not  be  a  loss  within  the  policj^ ;"  and  it  was  said  by  the  Supreme  Court  of  the 
United  States,  that  "  in  the  form  in  which  the  instruction  under  consideration  was 
given,  this  Court  think  there  is  no  error.  If  it  be  desirable  to  be  insured  against  thia 
active  agent  which  infests  southern  seas,  it  may  be  specially  named  in  the  jjolicy."  8 
Pet.  585.     See  also  Martin  v.  Salem  Marine  Ins.  Co.,  2  Mass.  420. 


MARITIME  INSURANCE.  443 


The  Policy — its  Form  and  Construction. 


rats,  {y)  or  the  self-ignition  of  damaged  hemp.  (2)  Secondly,  there 
is  a  class  of  losses  which  seems  not  to  fall  within  the  contemplation 
of  the  policy,  but  only  to  entitle  the  loser  to  be  reimbursed  by  the 
owner  of  the  ship ;  (a)  as,  for  instance,  where  the  captain  is  obliged 
to  sell  part  of  the  goods  for  the  repair  of  the  ship,  ij))  Thirdly,  in 
policies  on  freight,  if  the  goods  laden  still  exist,  and  the  ship  con- 
tinue capable  of  carrying  them,  the  underwriter  is  not  liable, 
although  the  master  sell  or  leave  them  behind  on  account  of  the 
great  expense  which  would  attend  carrying  them  forward;  for 
though  he  may  in  doing  so  have  exercised  a  prudent  discretion, 
yet  it  would  be  dangerous  to  allow  him,  by  any  exercise  of  his  dis- 
cretion, to  cast  the  loss  of  freight  from  the  shoulders  of  his  owner 
on  those  of  the  underwriter,  (c)*  Fourthly,  a  loss  is  properly  as- 
cribed to  a  particular  peril,  if  that  peril  be  the  immediate  cause  of 
the  loss,  though  another  cause  may  have  contributed ;  as  where  a 
merchant  vessel  was  taken  in  tow  by  a  ship  of  war,  and  thus 
exposed  to  a  tempestuous  sea,  {d)  this  loss  was  properly  ascribed  to 
the  perils  of  the  sea ;  so,  where  an  enemy  chases  the  ship  and  takes 
her,  the  loss  is  one  by  capture,  though  that  enemy  would  not  have 
overtaken  her  had  not  her  rate  of  sailing  been  checked  by  sea- 
damage,  (e)     In  these  and  many  other  instances,  (/)  the  maxim 


(y)  Hunter  v.  Potts,  4  Camp.  203. 
(,z)  Boyd  V.  Dubois,  3  Camp.  133. 

(a)  See  judgment  of  Baylej',  J.,  and  Abbott,  J.,  in  Powell  v.  Gudgeon,  6  M.  & 
S.  43Y. 

(b)  Powell  v.  Gudgeon,  ttbi  supra.     Sarguy  v.  Hobson,  2  B.  &  C.  Y. 

(c)  Mordy  v.  Jones,  4  B.  <fe  C.  394,     Brocklebank  v.  Sugrue,  1  M.  &  Rob.  102. 

(d)  Hagedorn  v.  Whitmore,  1  Stark.  157. 

(e)  Livie  v.  Janson,  1 2  East,  648,  per  Lord  Ellenborough,  Green  v.  Emslie,  Peake, 
212. 

(/)  Vide  Hann  v.  Corbett,  2  Bingh.  205.  Bondrett  v.  Hentigg,  Holt,  149.  Hay- 
man  V.  ParisV,  2  Camp.  150.  Walker  v.  Maitland,  5  B.  &  A.  ITI.  Hodgson  v.  Mal- 
colm, 2  N.  R.  336.  Gordon  v.  Rimington,  1  Camp.  123.  Redman  v.  Wilson,  14  K 
&  W  4'76. 


*  Jordan  v.  Warren  Ins.  Co.,  1  Story  321 ;  McGaw  v.  Ocean  Ins.  Co.,  23  Pick.  405; 
Griswold  v.  New  York  Ins.  Co.,  3  John.  321  ;  Center  v.  American  Ins.  Co.,  7  Cow.  564{ 
S.  C.  4  Weud.  45. 


444  MERCANTILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


equally  applies,  In  jure  causa  proxima  non  remota  spectator,  {g)" 
Fifthly,  when  two  causes  contribute  equally  to  the  loss,  it  may  be 
ascribed  to  either.  Thus,  if  a  ship  be  barratrously  delivered  to  the 
enemy,  the  loss  may  be  ascribed  either  to  barratry  or  capture ;  (A) 
as,  in  the  case  of  Hagedorn  v.  Whiimore,  above  cited,  it  probably 
might  have  been  to  seizure  and  detention  as  well  as  to  the  perils  of 
the  sea.  Where  two  causes,  however,  both  contribute  to  the  loss, 
but  unequally,  the  maxim  injure  causa  proxima  non  remota  spectatur 
applies.  And,  if  the  proximate  cause  of  the  loss  be  not  reducible 
to  some  one  of  the  perils  mentioned  in  the  policy,  the  underwriters 
will  not  be  chargeable  with  it :  for  instance,  if  the  vessel  insured  be 
driven  against  another  ship  by  stress  of  weather,  this  is  an  injury 
by  perils  of  the  sea,  and  the  insurer  must  make  it  good ;  but  if,  in 
the  collision,  she  do  some  damage  to  the  other  ship,  a  positive  rule 


ig)   Vide  Be  Vaux  v.  Salvador,  4  Ad.  &  E.  420. 

(/<)  Arcangelo  v.  Thompson,  2  Camp.  620.    Toulmin  v.  Anderson,  1  Taunt.  22Y ;  1 
Holt,  30.     And  see  Butler  v.  Wildman,  3  B.  &  A.  398. 


*  This  principle  has  been  fully  recognized  in  the  United  States,  in  the  case  of  the 
Patapsco  Ins.  Co.  v.  Coulter,  3  Pet.  222,  where  the  loss  was  by  fire,  and  barratry  was 
also  insured  against,  the  Court  held  that  the  negligence  of  the  master  and  crew  was 
no  defence,  though  the  remote  cause  of  the  loss.  In  the  case  of  the  Columbian  Ins. 
Co.  of  Alexandria  v.  Lawrence,  10  Pet.  507,  the  Court,  after  deciding  that  in  cases  of 
insurances  against  fire  on  land,  they  cover  losses  occasioned  by  the  mere  faults  and 
negligence  of  the  assured  and  liis  servants,  unaffected  by  any  fraud  or  design,  inti- 
mate an  opinion  that  in  marine  policies,  "a  loss  whose  proximate  cause  is  one  of  the 
enumerated  risks  in  the  polic}-,  is  chargeable  to  the  underwriters ;  although  the 
remote  cause  may  be  traced  to  the  negligence  of  the  master  and  mariners."  And  in 
the  case  of  Waters  v.  Louisville  Merchants'  Ins.  Co.,  11  Pet.  213,  this  opinion  was 
acted  on  and  fully  confirmed,  the  Court  holding,  that  in  a  marine  policy,  when  the 
risk  of  fire  is  taken,  and  the  risk  of  barratry  is  not,  a  loss  by  fire  remotely  caused  by 
negligence,  is  a  loss  within  the  policj'.  This  decision  is  in  accordance  with  the 
English  cases.  Bush  v.  Royal  Exc.  Ass.  Co.,  2  Barn.  &  Aid.  79 ;  Walker  v.  Maitland, 
5  Barn.  &  Aid.  174.  Some  of  the  previous  decisions  in  the  State  courts  were  to  the 
contrary.  Grim  v.  Phoenix  Ins.  Co.,  13  John.  451.  Cleveland  v.  Union  Ins.  Co.,  8 
Mass.  308.  Lodwick  v.  Ohio  Ins.  Co.,  5  Ohio  R.  436.  Fulton  v.  Lancashire  0.  Ins.  Co., 
7  Ohio  R.  pt.  2,  5.  But  since  the  decision  of  the  Supreme  Court  of  the  United  States, 
the  two  last  cited  eases  have  been  overruled,  Perrin  v.  Protection  Ins.  Co.,  11  Ohio 
R.  147,  and  the  doctrine  in  that  decision  will  probably  bo  generally  adopted.  See 
Williams  v.  Suffolk  Ins.  Co.,  3  Sumn.  276.  Copeland  v.  New  England  Marine  Ins. 
Co.,  2  Mete.  432. 


MARITIME  INSURANCE.  445 


The  Policy — its  Form  and  Construction. 


of  the  Court  of  Admiralty  prescribes  that  the  loss  sustained  by 
both  shall  be  added  together,  and  the  aggregate  equally  divided. 
Now,  in  this  case,  if  the  ship  insured  have  done  more  damage  than 
she  has  received,  and  her  owners  are  therefore  obliged  to  pay  the 
balance,  this  is  neither  a  necessary  nor  proximate  effect  of  the  perils 
of  the  sea :  it  grows  out  of  a  provision  of  the  law  of  nations,  and 
cannot  be  charged  upon  the  underwriters,  (t)* 


(i)  De  Vaux  v.  Salvador,  4  Ad.  &  E.  420. 


*  The  point  mentioned  here,  and  the  case  cited,  came  under  the  consideration  of 
the  Supreme  Court  of  the  United  States,  in  the  case  of  Peters  v.  The  Warren  Ins.  Co., 
14  Pet.  99,  and  that  court  arrived  at  a  conclusion  directly  opposite  to  that  of  the 
King's  Bench,  in  the  case  of  De  Vaux  v.  Salvador. 

The  ship  Paragon,  which  "svas  insured  against  the  usual  risks,  and  among  others, 
that  of  the  perils  of  tlie  seas,  proceeding  from  Hamburgh  down  the  Elbe,  with  a  pilot 
on  board,  came  in  contact  with  a  galliot  and  sunk  her.  The  Paragon  was  herself 
injured  by  the  collision,  and  put  into  a  port  within  the  jurisdiction  of  Hamburgh  for 
repairs.  Whilst  Ij'ing  there  she  was  proceeded  against  in  the  Marine  Court  of  Ham- 
burgh for  the  injury  to  the  galliot,  which  court  decided  that  the  collision  was  not  the 
result  of  fault  or  carelessness  on  either  side,  and  that  therefore,  according  to  the 
marine  law  of  Hamburgh,  the  loss  was  a  general  average  loss,  and  to  be  borne  equally 
by  each  party.  Under  this  decision,  as  the  galliot  had  been  the  most  injured  by  the 
collision,  the  Paragon  was  compelled  to  pay  to  the  owners  of  the  galliot  twenty-six 
hundred  dollars.  In  an  action  against  the  insurer,  the  Supreme  Court  of  the  United 
States  held,  that  under  these  circumstances,  the  contributory  amount  paid  by  the 
Paragon,  on  accoimt  of  the  collision,  was  a  direct,  positive,  and  proximate  effect  from 
the  accident,  in  such  sense  as  to  render  the  defendants  liable  therefor.  And  Mr. 
Justice  Story,  in  delivering  the  opinion  of  the  Court,  said:  "In  a  just  view  of  the 
matter,  the  collision  was  the  sole  proximate  cause  of  the  loss;  and  the  decree  of  the 
court  did  but  ascertain  and  fix  the  amount  chargeable  upon  the  Paragon,  and  attached 
thereto,  at  the  very  moment  of  the  collision.  The  contribution  was  a  consequence  of 
the  collision,  and  not  a  cause.  It  was  an  incident  inseparably  connected,  in  contem- 
plation of  law,  with  the  sinking  of  the  galliot,  and  a  damage  immediate,  direct,  and 
positive  from  the  collision."     14  Pet.  109. 

In  the  case  of  Hall  v.  The  Washington  Ins.  Co.,  2  Story  Rep.  176,  the  same  learned 
judge  extended  the  same  principle  to  a  case  where  the  injury  caused  by  the  collision 
was  the  result  of  negligence,  and  the  damages  were  voluntarily  paid  on  a  compromise. 
In  this  case,  the  ship  Columbia,  through  the  negligence  or  fault  of  her  mate  and  crew, 
came  into  collision  with  the  bark  Ritchie,  by  which  both  vessels  sustained  damage, 
and  the  master  of  the  Columbia,  in  behalf  of  the  owners,  paid  to  the  owners  of  the 
Ritchie  a  certain  sum  by  way  of  compromise  for  the  damage  sustained  by  tlie  latter 
vessel ;  and  it  was  held,  that  the  underwriters  on  the  Columbia  were  liable  for  the 
sum  so  paid,  as  well  as  the  damages  for  the  repairs  and  looses  by  the  collision  to  the 


446  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

Date  and  Subscription. — The  date  and  subscription,  including 
a  receipt  for  the  premium,  are  inserted  as  follows :  "  And  so  we, 
the  assurers,  are  contented,  and  do  hereby  promise  and  bind  our- 


Columbia.  "  The  insurance,"  says  Judge  Story,  "  does  not  attach  merely  to  the  extent 
of  the  direct  injury  sustained  by  the  very  thing  insured."  "Any  and  every  expense 
borne  by  and  chargeable  ujjon  the  owner  of  the  thing  insured,  as  a  direct  and  imme- 
diate consequence  of  a  peril  insured  against,  is  covered  by  the  policy."  "  It  makes  no 
-difference  whether  the  ship  was  liable  at  all  for  the  loss,  if  the  loss  was  a  peril  in- 
sured against,  and  the  owner  was  compellable  to  pay  the  loss,  as  happening  by  and 
in  consequence  of  the  peril.  There  are  many  expenses  incurred  by  the  owner,  in 
consequence  of  a  peril  insured  against,  which  constitute  no  charge  in  rem,  and  yet 
the  underwriters  are  bound  to  pay  the  same,  as  the  fees  of  proctors  and  counsel  in 
cases  of  capture,  of  notaries  in  making  protest,  the  costs  of  a  survey,  duties,  ex- 
penses and  charges  paid  in  a  port  of  necessity,  or  the  expenses  and  charges  of  a  sale 
of  damaged  goods.  These  are  all  incidents  to  the  original  peril  or  loss,  and  they 
must  be  borne  by  the  underwriters,  although  they  constitute,  strictly  speaking,  no 
lien  in  rem.'"  2  Story  R.  189.  This  case,  on  a  first  view,  may  appear  to  carry  the 
liability  of  the  insurers  very  far,  but  it  will,  we  think,  on  consideration,  be  found,  as 
stated  by  the  learned  judge,  to  be  a  legitimate  result  of  the  cases  of  Waters  v.  Louis 
ville  Merchants'  Ins.  Co.,  11  Pet.  213,  and  Peters  v.  Warren  Ins.  Co.,  14  Pet.  99. 

The  views  taken  by  Judge  Stoi-y  in  Hall  v.  Washington  Insurance  Company, 
were  in  effect  overruled  by  the  Supreme  Court  of  the  United  States  in  the  recent 
ca-se  of  the  General  Mutual  Insurance  Company  v.  Sherwood,  14  How.  351.  That 
case  directly  presented  the  question,  whether  under  a  policy  insuring  against  the 
usual  perils,  including  barratry,  the  underwriters  are  liable  to  repay  to  the  insured, 
damages  paid  by  him  to  the  owners  of  another  vessel  and  cargo,  suffered  in  a  col- 
lision, occasioned  by  the  negligence  of  the  master  or  mariners  of  the  vessel  insured. 
The  Court  regarded  it  as  an  important  fact,  tending  to  show  the  practical  construc- 
tion which  the  contract  had  received  from  merchants  and  underwriters,  that  until 
the  ease  of  De  Vaux  v.  Salvador,  no  such  claim  seemed  ever  to  have  been  made. 
Where  the  loss  is  inflicted  by  a  collision,  or  is  by  law  a  necessary  consequence  of  it, 
the  underwriter,  it  was  admitted,  could  not  set  up  the  negligence  of  the  servants  of 
the  assured  as  a  defence.  But  in  the  case  before  the  court,  it  was  not  the  underwriter 
who  was  seeking  to  go  behind  the  cause  of  loss,  and  to  defend  himself  by  showing 
that  this  cause  was  produced  by  negligence.  "The  insured  himself  goes  behind  the 
collision,  and  shows  as  the  sole  reason  why  he  has  paid  the  money,  that  the  negli- 
gence of  his  servants  compelled  him  to  pay  it.  It  is  true  that  an  expense,  attached 
by  the  law  maritime  to  the  subject  insured,  solely  as  a  consequence  of  a  peril,  may 
be  considered  as  proximately  caused  by  that  peril.  But  where  the  expense  is 
attached  to  the  vessel  insured,  not  solely  in  consequence  of  a  peril,  but  in  con- 
sequence of  the  misconduct  of  the  servants  of  the  assured,  the  peril  per  se  is  not  the 
efficient  cause  of  the  loss,  and  cannot,  in  any  just  sense,  be  considered  its  proximate 
cause.  In  such  a  case,  the  real  cause  is  the  negligence,  and  unless  the  policy  can  be 
»o  interpreted  as  to  insure  against  all  losses  directl}'  referable  to  the  negligence  of 


MARITIME  IXSURANCE.  447 


The  Policy — its  Form  and  Construction. 


selves,  each  for  his  own  part,  our  heirs,  executors,  and  goods,  to 
the  insured,  for  the  true  performance  of  the  premises,  confessing 
ourselves  paid  the  consideration  due  unto  us  for  this  assurance,  by 

the  assured,  at  and  after  the  rate  of .    In  witness  whereof,  we, 

the  assurers,  have  subscribed  our  names  and  sums  assured  in 
London." 

The  insertion  of  the  amount  of  premium  is  required  by  stat. 
35  Geo.  3,  c.  63 ;  and  the  acknowledgment  of  receipt  herein  con- 
tained has  been  held  conclusive  between  the  assured  and  insurer 
in  the  absence  of  fraud,  (j)  The  insertion  of  the  amount  insured 
is  not  required  otherwise  than  by  the  stamp  laws,  (^')  but  is  never 
omitted  in  practice ;  in  conformity  to  which  the  underwriter  also 
annexes  the  date  to  his  subscription.* 


{j)  Dalzell  V.  Mair,  1  Camp.  532.    See  Foy  v.  Bell,  3  Taunt.  493.     De  Gaminde  v. 
Pigou,  4  Taunt.  246.     Mavor  v.  Simeon,  3  Taunt.  49*7. 

(k)  35  Geo.  3,  c.  63 ;  and  see  now  1  &  8  Vict.  c.  21.    Dowell  v.  Moon,  4  Camp.  166. 


the  master  and  mariners,  such  a  loss  is  not  covered  by  the  policy.  We  are  of  opinion 
the  policy  cannot  be  so  construed.  When  a  peril  of  the  sea  is  the  proximate  cause 
of  the  loss,  the  negligence  which  caused  that  peril  is  not  inquired  into ;  not  because 
the  underwriter  has  taken  upon  himself  all  risks  arising  from  negligence,  but  because 
he  has  assumed  to  indemnify  tlie  insured  against  losses  from  particular  perils,  and  the 
assured  has  not  warranted  that  his  servants  will  use  due  care  to  avoid  them."  The 
views  thus  announced  were  not  considered  inconsistent  with  the  case  of  The  Paragon. 
14  Petei's,  99. 

*  Tlie  date  of  a  policy  of  insurance,  like  that  of  other  written  instriiments,  is  not 
conclusive  evidence  of  the  time  of  the  transaction ;  and  this,  when  material,  may  be 
proved  notwithstanding  the  existence  of  a  written  date.  And  a  policy  executed 
without  any  written  date  would,  nevertheless,  be  valid.  Lee  v.  Massachusetts  F.  & 
M.  Ins.  Co.,  6  Mass.  208. 

A  policy  bearing  date  on  the  day  the  premium  was  paid  and  the  contract  con- 
cluded, takes  effect  fi'om  that  day,  although  not  delivered  until  several  daj's  after- 
wards.    Liglitbody  v.  North  American  Ins.  Co.,  23  Wend.  18. 

"  Where  a  policy  has,  in  fact,  been  executed,  and  notice  of  its  execution  has  been 
given  to  the  insured,  its  actual  deliveiy  is  not  essential  to  the  completion  of  the  con- 
tract. The  insurer,  whether  an  individual  or  an  incorporated  company,  would  not 
be  allowed  to  retract  a  consent  thus  confessed  to  have  been  given,  but  would  be  con- 
sidered as  holding  the  policy  for  the  benefit  of  the  insured,  and  bound  to  deliver  it 
at  his  request.  Should  a  loss  occur,  and  the  policy  then  be  withheld  from  the  in- 
sured, it  would  not  be  necessary  for  him  to  seek  the  aid  of  a  court  of  equity.  He 
would  have  a  complete  remedy  in  an  action  at  law."     1  J.  Duer,  66.     An  action  of 


448  MERCANTILE  CONTRACTS. 

Tlie  Policy — its  Form  and  Construction. 

Memorandum. — The  memorandum  was  first  introduced  into  po- 
licies about  the  year  1749.  {I)  It  is  inserted  to  protect  the  under- 
writer from  liability  to  small  averages,  i.  e.,  partial  losses  which 
might  be  claimed  in  respect  of  certain  perishable  commodities.  It 
is  as  follows : — "  N".  B.  Corn,  (m)  fish,  salt,  (n)  fruit,  flower,  and  seed, 
,  are  warranted  free  from  average,  unless  general  (o)  or  the  ship  be 
stranded.  Sugar,  tobacco,  hemp,  flax,  hides,  and  skins,  are  war- 
ranted free  from  average  under  five  pounds  per  cent. ;  and  all  other 
goods,  also  the  ship  and  freight,  are  warranted  free  from  average 
under  three  pounds  per  cent,,  unless  general,  or  the  ship  be  strand- 
ed." This  memorandum  protects  the  underwriter  from  making 
good  any  partial  loss  whatever  upon  the  class  of  articles  first  spe- 
cified, and  any  loss  under  five  per  cent,  on  the  class  secondly  speci- 
fied ;  unless^  in  either  case,  the  loss  were  incurred  in  consequence 
of  a  general  average,  or  the  ship  be  stranded. " 

(l)  So  stated  by  Mr.  Dunning,  arguendo  in  Wilson  v.  Smith,  3  Burr.  1551,  and  by 
Mr.  R.  V.  Richards,  5  M.  &  W.  573. 

(»i)  This  word  comprehends  peas,  Mason  v.  Skurry,  Park,  179,  and  malt.  Moody 
V.  Surridge,  2  Esp.  633,  but  not  rice,  Scott  v.  Bourdillon,  2  K  R.  213. 

(n)  This  does  not  comprehend  saltpetre.  Journu  v.  Bourdieu,  Park,  179,  per  "Wil 
son,  J. 

(o)  For  an  account  of  general  average,  see  chap,  on  Contracts  of  AiFreightment, 
sect.  5. 


trover  would  be  the  proper  remedy  in  such  a  case.  1  J.  Duer,  109,  note  6.  See 
Kohn  V.  Ins.  Co.  of  North  America,  1  Wash.  C.  C.  93.  Ocean  Ins.  Co.  v.  Carrington, 
3  Conn.  R.  357. 

*  The  legal  effect  of  the  memorandum  is  to  protect  the  underwi'iter  from  all  par- 
tial losses.  Nothing  short  of  a  total  extinction,  either  physical  or  in  value,  of  memo- 
randum articles  at  an  intermediate  port,  would  entitle  the  insured  to  turn  the  case 
into  a  total  loss,  when  the  voyage  is  capable  of  being  performed.  And  when  the 
commodity  specifically  remains,  though  of  no  value,  it  is  not  quite  settled  whether 
under  the  like  circumstances  an  abandonment  for  a  total  loss  can  be  made.  Marcar- 
dier  v.  Cliesapeake  Ins.  Co.,  8  Cranch,  39  ;  3  C.  R.  20.  Moreau  v.  U.  S.  Ins.  Co.,  1 
Wheat.  219 ;  3  C.  R.  550. 

When  a  part  of  memorandimi  articles  of  only  one  species  is  lost,  it  is  a  partial 
loss,  and  excluded  by  the  memorandum.  Biaj's  v.  Chesapeake  Ins.  Co.,  7  Cranch,  415  ; 
2  C.  R.  552.  In  this  case  the  insurance  was  on  a  cargo  of  hides,  "  warranted  free 
from  average,  unless  general."  A  part  were  sunk  and  totally  lostj  another  part 
greatly  injured  and  sold,  the  residue  were  carried  to  the  poi-t  of  destination.  The 
insurers  were  held  to  be  protected  by  the  memorandum  clause  from  any  liability  for 


MARITIME  INSURANCE.  449 

The  Policy — its  Form  and  Construction. 

The  reason  of  the  exception  where  the  ship  has  been  stranded, 
is,  that,  in  such  a  case,  the  underwriters  agree  to  ascribe  the  loss 
to  the  stranding,  as  being  the  most  probable  occasion  of  the  dam- 
age, though  the  fact  cannot  be  ascertained ;  and,  accordingly,  it  is 
now  clearly  settled,  that  every  average  or  partial  loss  becomes  a 
charge  upon  the  underwriters,  where  a  stranding  has  taken  place, 
whether  the  loss  has  been  in  reality  occasioned  by  the  stranding, 
or  no.  (p)  In  consequence  of  this,  the  true  sense  of  the  word 
"stranding"  has  become  a  matter  of  importance.  The  rule  laid 
down  by  Lord  Tenterden  in  Wells  v.  Hopivood,  and  considered 
by  him  deducible  from  all  the  cases  on  the  subject,  is,  "  That  where 

(p)  Per  Lord  Tenterden,  in  Wells  v.  Hopwood,  3  B.  &  Ad.  34. 


the  loss.  And  so  in  a  case  where  there  was  an  insurance  on  a  cargo  consisting  of 
lemons  and  oranges,  and  the  whole  of  the  oranges  were  lost  by  a  peril  insured 
against,  the  insurers  were  held  not  to  be  responsible,  under  the  usual  memorandum, 
warranting  the  imderwriters  free  from  particular  average  on  "fruit,"  under  which 
the  lemons  and  oranges  were  considered  to  be  embraced.  Humphreys  v.  Union  Ins. 
Co.,  8  Mason,  429.  These  decisions  were  recognized  and  followed  in  the  case  of 
Wadsworth  v.  Pacific  Ins.  Co.,  4  "Wend.  33 ;  and  the  Chancellor,  in  his  opinion  on  that 
case,  says,  "  It  must  now  be  considered  a  settled  rule  of  American  Insurance  law, 
that  the  underwriter  is  not  answerable  for  any  partial  loss  on  memorandum  articles, 
except  for  general  average,  unless  there  is  a  total  loss  of  the  whole  of  the  particular 
species,  whether  the  particular  article  is  shipped  in  bulk,  or  in  separate  boxes  or 
packages."    See  also  Guerlain  v.  Columbian  Ins.  Co.,  7  John.  527. 

A  policy  of  insurance  contains  a  clause,  by  which  it  is  agreed,  in  effect,  that  sucli 
and  such  articles  are  warranted  free  of  average  unless  general,  and  such  and  such 
other  articles  free  of  average  under  certain  rates — as  15,  10,  ^i  2)er  cent. — unless  gen- 
eral :  held,  that  where  payment  is  claimed  upon  this  policy,  for  an  injury  from  one  of 
the  perils  insured  against  to  goods  within  one  of  the  warranties,  in  order  to  ascer- 
tain whether  the  loss  is  so  great  as  to  make  the  underwriters  liable,  notwithstand- 
ing the  warranty,  the  amount  of  damage  is  to  be  compared,  not  with  the  total  value 
of  all  the  goods  insured,  nor  with  the  value  of  the  varioiis  articles  to  which  the 
same  warranty  or  rate  of  average  applies,  taken  together,  but  witli  the  value  of 
that  one  of  the  several  articles  specified  in  the  warranty  to  which  the  damage  has 
occurred.     Louisville  F.  &  M.  Ins.  Co.  v.  Bland,  9  Dana,  143,  148. 

Under  the  exceptions  of  losses  under  a  certain  rate,  as  five  per  cent.,  if  the  ag- 
gregate losses  "  during  the  voyage,"  though  happening  at  different  successive  periods, 
amount  to  five  per  cent.,  the  imderwriters  are  liable.  Donnell  v.  Col.  Ins.  Co.,  2 
Sumn.  366.     2  Phil,  on  Ins.  500. 

As  to  the  stranding  of  a  ship,  see  Potter  v.  Suffolk  Ins.  Co.,  2  Sumn.  197.     Lake  «. 
Columbus  Ins.  Co.,  13  Ohio,  48. 
29 


450  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

a  vessel  take  the  ground  in  the  ordinary  and  usual  course  of  navi- 
gation and  management,  in  a  tide-river,  or  harbor,  upon  the  ebbing 
of  the  tide,  or  from  natural  deficiency  of  water,  so  that  she  may 
float  again  upon  the  flow  of  the  tide,  or  increase  of  water,  such  an 
event  is  not  to  be  considered  a  stranding  within  the  sense  of  memo- 
randum. But  where  the  ground  is  taken  under  any  extraordinary 
circumstances  of  time  or  place,  by  reason  of  some  unusual  or  acci- 
dental occurrence,  such  an  event  shall  be  considered  a  stranding 
within  the  meaning  of  the  memorandum."  And  his  Lordship  was 
further  of  opinion  that  the  fact  of  the  vessel's  not  receiving  injury 
from  such  a  grounding  was  of  no  consequence. 

In  the  case  just  cited,  the  ship  was  moored  in  a  tide-harbor 
against  the  quay,  with  her  head  fastened  to  the  opposite  side  of  the 
harbor  by  a  rope ;  at  the  first  ebb  she  took  the  mud,  but  at  the 
second,  the  stretching  of  the  rope  and  a  strong  wind  caused  her  to 
ground  upon  a  bank,  where  she  was  strained,  and  her  seams  opened, 
and  received  some  water,  whereby  the  cargo  was  damaged,  but  at 
high  tide  they  closed  again,  and  the  vessel  was  ultimately  unin- 
jured. These  circumstances  were  held  by  three  Judges,  Parke,  J., 
disseniiente,  to  constitute  a  stranding  within  the  meaning  of  the  po- 
licy. In  Kingsford  v.  Marshall^  {q)  another  recent  case  upon  this 
subject,  the  vessel  on  the  ebbing  of  the  tide  took  the  ground  cohere 
it  was  intended  that  she  shoidd,  but,  in  so  doing,  struck  against  some 
hard  substance,  which  made  two  holes  in  her  bottom,  and  damaged 
ner  cargo ;  this  was  held  not  to  constitute  such  a  stranding  as  would 
subject  the  underwriters  to  average ;  and  the  Lord  Chief  Justice, 
in  delivering  judgment,  mentioned  the  case  of  Wells  v.  Hopwood^ 
and  said  it  was  decided  on  the  principle  that  the  taking  the  ground 
was  occasioned  by  an  extraneous  and  accidental  cause;  but  that  in 
the  case  before  him,  the  grounding  was  such  as  the  master  and  creiu 
intended,  that  is,  merely  by  the  ebbing  of  the  tide  in  the  ordinary 
course  of  navigation.  These  two  instances  will  serve  to  show  the 
reader  how  nice  the  distinction  between  what  is,  and  what  is  not  a 
stranding,  has  become,  (r)     To  constitute  a  stranding,  the  ship  must 

{q)  8  Bingh.  458. 

(r)  See  further,  Bishop  v.  Pentland,  "7  B.  &  C.  214.  Hearne  v.  Edmunds,  1  B.  & 
B.  888.  Carruthers  v.  Sydebotham,  4  M.  &  S.  11.  Rayner  v.  Godmond,  5  B.  &  A. 
225. 


MARITIME  INSURANCE.  45I 


The  Policy — its  Foi'm  and  Construction. 


be  stationary:  the  striking  on  a  rock,  wiiere  the  vessel  remained  a 
minute  and  a  half  only,  was  thought  not  to  be  a  stranding,  though 
she  thereby  received  an  injury,  which  eventually  proved  fatal,  (s) 
And  though  it  is  not  necessary  that  the  injury  to  the  property  in- 
sured, for  which  a  compensation  is  claimed,  should  have  been  occa- 
sioned by  the  stranding,  still  that  event  must  have  happened  before 
the  risk  upon  the  property  insured  had  altogether  determined ;  thus, 
where  the  subject  matter  of  insurance  consisted  of  hides,  which 
were  damaged  by  a  peril  of  the  sea  so  much  that  they  were  neces- 
sarily sold  during  the  voyage,  and  the  ship  was  afterwards  strand- 
ed, it  was  held  that  the  insured  could  not  recover  for  a  total  loss, 
as  he  had  not  abandoned,  and  could  not  recover  for  an  average 
loss,  as  the  hides  were  warranted  "  free  of  particular  average,  unless 
the  ship  be  stranded,"  and  that  the  stranding  had  not  taken  place 
until  the  risk  upon  the  hides  had  been  determined,  [t]  The  strand- 
ing of  a  lighter,  into  which  the  goods  had  been  transhipped  for 
the  purpose  of  landing  them,  is  not  such  a  stranding  as  will  justify 
this  condition,  even  although  risk  of  craft  be  expressly  guarded 
against  by  the  policy,  {u)  It  has  been  decided  in  a  late  case,  that 
the  underwriter  is  liable,  if  the  aggregate  of  averages,  however  mi- 
nute each  average  may  be  ^^er  se,  come  up  to  three  per  cent,  upon 
the  whole  on  property  warranted  free  from  average  under  three  per 
cent.  The  Court,  however,  said  that,  perhaps,  usage  would  be  ad- 
missible to  show  that  the  contrary  was  intended  ;  but  there  was  no 
evidence  of  usage  in  the  case  before  them,  {v) 

As  to  the  distinction  between  a  total  loss  of  an  integral  part  of 
the  cargo  and  a  particular  average  guarded  against  by  the  memo- 
randum, see  Hills  v.  London  Assurance  Corporation,  {iv) 

Stamp. — A  policy  of  insurance  may  be  duly  stamped  at  the 


(s)  MacDougle  v.  R.  E.  A.  Co.,  1  Stark.  130. 

(t)  Roux  V.  Salvador,  1  Hodg.  49  ;  1  Bingh.  N.  C.  526.  This  case  -n-as  reversed  in 
Camm.  Scacc.  upon  the  ground  that  abandonment  was  unnecessary,  hut  the  decision 
of  the  C.  P.  on  the  second  point  seems  to  have  been  approved  of.  Ro..x  v.  Salvador 
8  Bingh.  N.  C.  266. 

(u)  Hoffman  v.  Marshal,  2  Bingh.  N.  C.  383. 

(t>)  Blackett  v.  R.  E.  A.  Compy.,  2  Tyrwh.  266 ;   2  C.  &  J.  244. 

(to)  Hills  V.  London  Assurance  Corporation,  5  M.  &  W.  569. 


452  MERCAXTILE  COXTRACTS. 

The  Policy — its  Form  and  Construction. 

time  when  it  is  effected :  it  cannot  be  legally  stamped  afterwards,  (x) 
But  policies  of  mutual  insurance,  i.  e.,  policies  by  wliich.  divers  per- 
sons agree  to  insure  one  another,  may  be  stamped  with  additional 
stamps,  if  not  underwritten  to  an  amount  exceeding  the  sum  war 
ranted  by  the  former  stamps,  (y) 

By  35  Geo.  3,  c.  63,  s.  13,  it  is  provided,  "  That  the  act  shall 
not  extend  to  prohibit  the  making  of  any  alteration  which  may 
lawfully  be  made,  in  the  terms  and  conditions  of  any  policy  of  in- 
sm^ance  duly  stamped,  after  the  same  shall  have  been  underwritten, 
or  to  require  any  additional  stamp  duty  by  reason  of  such  altera- 
tion, so  that  such  alteration  be  made  before  notice  of  the  determina- 
tion of  the  risk  originally  insured,  and  so  that  the  thing  insured 
shall  remain  the  property  of  the  same  persons,  and  so  that  such 
alteration  shall  not  prolong  the  term  insured  beyond  the  period 
allowed  by  this  act,  and  so  that  no  additional  or  further  sum  shall 
be  insured  by  means  of  such  alteration."  This  clause  receives  a 
liberal  interpretation,  {z)  A  mere  extension  of  the  time  of  sailing 
is  within  it.  (o)  So  is  a  memorandum  waiving  the  warranty  of  sea- 
worthiness, (b)  "Where  a  policy  "  on  ship  and  outfit"  was  altered 
by  inserting  "ship  and  goods,"  it  was  held,  that  the  insured  could 
not  recover  on  the  policy  as  altered,  for  want  of  a  new  stamp,  (c) 
since  the  words  "  tJmig  insured^''  required  one  identical  and  con- 
tinued subject  matter  of  insurance ;  nor  on  the  policy  as  it  before 
stood,  by  reason  of  the  alteration ;  but  when  the  alteration  in  the 
subject  matter  of  insurance  is  to  rectify  a  mere  mistake,  as  where  a 
broker  intrusted  to  effect  a  policy  on  goods,  effected  it  on  ship,  no 
new  stamp  is  necessary.  (cZ)  A  memorandum  to  a  policy  on  "  hemjD, 
marked  E.,  and  valued,  with  warranty  to  sail  before  August  20," 
withdrawing  the  mark  of  the  hemp  and  warranty  of  saiHng,  in 

(x)  35  Geo.  3,  c.  63.     Roderick  i'.  Hovil,  3  Camp.  103. 

{y)  9  Geo.  4,  c.  49. 

(2)  Per  Lord  Tenter  den,  in  Brocklebank  v.  Sugrue,  post. 

{a)  Kensington  v.  Inglis,  8  East,  273.     Hubbard  i^.  Jackson,  post. 

(b)  Weir  V.  Aberdeen,  2  B.  &  A.  320. 

(c)  Hill  V.  Patten,  8  East,  373,  cited  Bathe  v.  Taylor,  15  East,  415.  French  v.  Pat- 
ten, 9  East,  351,  on  the  same  policy,  cited  Reed  v.  Deere,  7  B.  <fe  C.  261. 

{d)  Sawtell  v.  Loudon,  5  Taunt,  359.  See  Robinson  v.  Touray,  1  M.  &  S.  217. 
Kershaw  v.  Cox,  3  Esp.  246.  Byrom  v.  Thompson,  11  Ad.  (fe  E.  31.  Cariss  v.  Tatter- 
sall,  2  M.  &.  Gr.  890. 


MARITBIE  IIS'SURAXCE.  453 


The  Policy — its  Form  and  Construction. 


consideration  of  four  guineas,  does  not  render  an  additional  stamp 
necessary ;  (e)  nor  does  the  alteration  of  a  voyage  from  "Stock- 
holm to  Swinemunde,"  to  one  "  from  Stockholm  to  Swinemunde, 
Konigsberge,  or  Memel;"(/)  nor  of  a  risk  "at  and  from  Liver- 
pool to  Quebec,"  to  one  "from  Liverpool  to  St.  John's,  ISTew 
Brunswick."  {g)  But  the  terms  of  the  original  policy  cannot  be 
so  altered  by  any  memorandum  as  to  bring  it  into  a  class  re- 
quiring a  higher  duty,  without  affixing  the  stamp  thereby  re- 
quired. (A) 

The  rate  of  stamp  duty  payable  on  policies  of  marine  insu- 
rance is  regulated  by  stat.  7  &  8  Vict.  c.  21. 

Warranties. — TVe  now  pass  to  the  consideration  of  warranties. 
"  A  warranty  in  a  policy  of  insurance  is  a  condition  or  contingency, 
and  unless  that  be  performed  there  is  not  any  contract :  it  is  per- 
fectly immaterial  for  what  purpose  it  was  introduced ;  but,  being 
inserted,  the  contract  does  not  exist  unless  it  be  literally  complied 
with,  {i)  and,  in  this  necessity  for  a  literal  compliance,  it  differs  from 
a  representation^  which  it  is  sufficient  to  perform  suhstantially.  War- 
ranties are  either  express — i.  e.,  appearing  in  the  body  or  margin,  {j) 
or  at  the  bottom  [k)  of  the  policy,  or  in  some  writing,  which  is  by 
reference  incorporated  with  it ;  il) — or  implied^  i.  e.,  understood  to 
exist  in  every  policy  unless  expressly  negatived.  Any  thing  may, 
of  course,  be  expressly  warranted ;  but  those  things  which  are  most 
usually  so,  are, 

1.  The  time  of  sailing. 

2.  The  safety  of  the  ship  at  a  particular  time. 


(c)  Hubbard  v.  Jackson,  4  Taunt.  169. 

(/)  Ramstrom  v.  Bell,  5  M.  &  S.  267. 

(g)  Brocklebank  v.  Sugrue,  1  B.  <fc  Ad.  81. 

{h)  Per  Lord  Tenterden,  in  Brocklebank  v.  Sugrue. 

(i)  Per  Lord  Mansfield,  C.  J.,  1  T.  R.  345.  And  therefore  it  has  been  thougnt  the 
underwriter,  in  an  action  on  a  policy,  cannot,  after  paying  money  into  Court,  rely 
upon  a  breach  of  warranty,  for  the  paj'ment  admits  that  the  insured  has  a  right  t» 
recover  something,  -which  he  could  not  if  there  had  been  a  breach  of  warranty 
Harrison  v.  Douglas,  3  Ad.  &  E.  396,  tamen  qucere. 

(j)  Bean  v.  Stupart,  Dougl.  11.     De  Hahn  v.  Hartlej',  1  T.  R.  343. 

ik)  Blackhurst  v.  Cockell,  3  T.  R.  360. 

(l)  Worsley  v.  Wood,  6  T.  R.  710.     Routleige  v.  Burrell,  1  H.  Bl.  254. 


454  MERCANl'ILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


8.  That  she  shall  depart  with  convoy. 
4.  That  the  property  is  neutral. 
6.  Freedom  from  seizure  in  port. 
Let  us  consider  these  in  order. 

1.  Time  of  Sailing. — When  a  ship  is  warranted  to  sail  on  a  par- 
ticular day,  that  means  that  she  shall  be  upon  her  voyage  on  that 
day,  for  which  purpose  she  must  be  completely  unmoored ;  it  will 
not  be  sufficient  that  she  had  her  cargo  on  board,  and  was  only  pre- 
vented from  sailing  by  stress  of  weather,  (m)  But  if  she  hona  fide 
set  sail  for  the  purpose  of  completing  her  voyage,  that  will  be 
enough,  {n)^  although  she  be  detained  beyond  that  day  at  another 
part  of  the  same  river  or  territory,  ex.  gr.,  by  an  embargo  (o)  or  by 
stress  of  weather.  It  must,  however,  be  observed,  that  a  warranty 
to  sail  is  not  complied  with,  by  a  vessel's  raising  her  anchor,  getting 
under  sail  and  moving  onwards,  unless,  at  the  time  of  performing 
these  acts,  she  has  every  thing  read}''  for  the  performance  of  the 
voyage,  and  these  acts  are  done  as  the  commencement  of  it,  nothing 
remaining  to  be  done  afterwards ;  {p)  for  instance,  if  she  have  not 
her  clearances,  or  have  not  taken  in  her  entire  cargo,  she  cannot  be 
said  to  have  sailed,  within  the  meaning  of  the  warranty.  Noi 
must  her  sailing  be  a  merely  colorable  one,  for  the  purpose  of  com- 
plying with  the  letter  of  the  warranty,  and  not  in  real  furtherance 
of  the  intended  voyage,  {q) 

If  the  warranty  be  to  depart^  or  to  "sail  from  a  place,"  which 
seems  to  bear  the  same  sense  as  depart^  i^r)  it  is  necessary  not  only 


(?m)  Nelson  v.  Salvador,  1  M.  &  M.  309. 

(«)  Wright  V.  Shiffner,  11  East,  515;  2  Camp.  247.  Lang  v.  Anderdon,  3  B.  <fe  O. 
495. 

(o)  Bond  V.  Nutt,  Cowp.  601.  Tlielusson  v.  Fergiisson,  Dougl.  361.  Cochrane  v. 
Fisher,  2  C.  &  M.  581;  4  Tyrwh.  424.  S.  C.  in  Cam.  Scacc,  1  C.  M.  <fe  R.  809;  ft 
Tyrwh.  499. 

{p)  Lang  V.  Anderdon,  3  B.  &  C.  495.  Pittegrew  v.  Pringle,  3  B.  tfe  Ad.  514 
Graham  v.  Barras,  5  B.  &  Ad.  1011. 

{q)  Cochrane  v.  Fisher,  2  C.  <fe  M.  581 ;    4  Tyrwh.  424. 

(r)  See  Lang  v.  Anderdon,  ubi  sup. 

*  S.  P.  20  Pick.  2*75,  Bowen  v.  Hope  Ins.  Co. 


MARITIME  mSURANCE.  455 


The  Policy — its  Form  and  Construction. 


that  tlie  ship  should  set  sail  on  the  voyage^  but  also  that  she  should 
be  out  of  port  on  or  before  the  day.  (s)*  To  sail  is  to  set  sail  on  the 
voyage  ;  to  depart  is  to  depart /rom  some  particular  place. 

2.  Safety  of  a  Ship  on  a  Particular  Day. — AVe  have  already  ob- 
served that  a  warranty  of  the  safety  of  the  ship  on  a  particular  day 
is  often  inserted,  in  order  to  restrain  the  force  of  the  expression, 
"  lost  or  not  lost,^^  that  if  the  ship  be  safe  at  any  tir'>e  in  that  day  the 
warranty  is  complied  with,  (/) 

3.  To  depart  with  Convoy. — This  is  a  warranty  usual  in  time  of 
war,  when  a  departure  with  convoy  is,  from  motives  of  public 
policy,  in  general,  also  enforced  by  statute,  {u)  A  convoy  is  a  naval 
force  under  the  command  of  a  person  appointed  by  the  government 
of  the  country  to  which  the  vessel  insured  belongs.  The  appoint- 
ment by  government  is  essential ;  for  a  ship  of  war  accidentally 
bound  on  the  same  voyage  with  the  vessel  insured,  is  not  a  sufficient 
convoy,  {v)  But  a  convoy  appointed  by  the  admiral  command- 
ing in  chief  on  a  foreign  station  is  one  appointed  by  government,  {w) 
The  terms  of  the  warranty  are,  sometimes  to  depart  with  convoy^  at 
other  times  with  convoy  for  the  voyage.  These  two  forms  of  expres- 
sion mean  precisely  the  same,  and  render  a  departure  with  convoy 
for  the  voyage  necessary,  (x)  But,  as  it  sometimes  happens  that  gov- 
ernment appoints  a  convoy  to  accompany  the  ships  for  part  only 
of  their  voyage,  and  then  to  be  succeeded  by  another,  or  to  detach 
a  portion  of  itself  from  the  main  body,  to  bring  them  up  to  a  par- 
ticular point;  the  warranty  will  be  complied  with  if  the  vessel  sail 
with  the  first  convoy,  and  proceed  with  the  force  so  appointed  or 

(s)  Moir  V.  R.  E.  A.  Co.,  3  M.  &  S.  461 ;  6  Taunt.  245,  And  see  the  remarks  o: 
Abbott,  C.  J.,  in  Lang  v.  Anderdon,  and  of  Ld.  Denman,  C.  J.,  in  Fisher  v.  Cochrane, 
5  Tyrwh.  501. 

\t)  Blackhurst  v.  Cockell,  3  T.  R.  360. 

{u)  See  Stat.  43  Geo.  3,  c.  57,     38  Geo.  3,  c.  1Q. 

(v)  Hibbert  v.  Pigou,  Park,  498. 

(w)  Ibid.      Vide  Audley  v.  DufF,  2  B.  &  P.  Ill, 

(x)  Jeffrey  v.  Legendra,  3  Lev,  321.     Lilly  v.  Ewer,  Dougl.  72. 

*  S.  P.  3  Hill,  118,  Union  Ins.  Co.  v.  Tysen. 


456  MERCANTILE  COISTTRACTS. 

The  Policy — its  Form  and  Construction. 

detaclied.  (?/)  Indeed,  as  government  alone  can  appoint  convoys, 
the  question  whether  a  convoy  be  or  be  not  sufficient,  must  to  a 
great  extent  depend  upon  its  orders.  (2)  It  may  be  impossible  to 
procure  a  convoy  either  precisely  from  the  port  of  departure,  or 
precisely  to  that  of  destination ;  (a)  for  instance,  no  convoy  ever 
sails  from  the  port  of  London,  (b)  In  such  cases,  the  rule  is,  that 
if  the  vessel  sail  with  convoy  from  the  place  of  rendezvous  ap- 
pointed for  vessels  bound  from  her  lading  port,  and  to  the  nearest 
point  to  which  she  can  be  conducted  by  the  convoy  appointed  for 
vessels  going  to  her  place  of  destination,  that  is  sufficient.  A  war 
rawty  to  depart- with- convoy  is  not<;omplied  with,  unless  the  mas- 
ter, if  by  due  diligence  he  can,  obtain  sailing  instructions  before 
the  ship  leaves  the  place  of  rendezvous ;  for  the  value  of  convoy, 
in  a  great  measure,  arises  from  its  taking  the  ships  under  control, 
as  well  as  protection ;  but  that  control  cannot  commence  till  sailing 
instructions  have  been  obtained,  nor  can  it  be  enforced,  otherwise 
than  by  their  means,  (c)  Moreover,  the  meaning  of  the  warranty  is 
that  the  ship  shall  not  only  depart  with  convoy,  but  keejJ  loith  it 
during  the  whole  voyage,  except  in  cases  of  absolute  impossibility, 
such  as  being  driven  by  a  tempest  to  some  foreign  port,  where  no 
convoy  can  be  had.  {d) 

4.  Neutral  Property. — In  war  time  it  is  also  usual  to  warrant  the 
subject  of  insurance  to  be  neutral  property^  which  only  means  that 
it  is  neutral  at  the  commencement  of  the  risk,  not  that  it  shall  con- 
tinue so  during  the  rest  of  the  vo3^age.  (e)  Indeed,  if  the  ship  for- 
feit her  neutrality  by  the  misconduct  of  those  on  board,  the  war- 
ranty will  have  been  brDken  as  to  her ;  (/)  for  when  a  ship  is  war- 


(2/)  Abbott,  353,  8th  ed.  Smith  v.  Redshaw,  Park,  510.  De  Garay  v.  Claggett, 
ibid.  511.     Manning  v.  Gist,  Marsh.  269.     Audley  y.  Duff,  2  B.  <fe  P.  111. 

(2)  See  remarks  of  Heath,  J.     Audley  v.  Duff,  ubi  supra. 

(a)  D'Eguino  v.  Bewicke,  2  H.  BI.  551.  Lethulier's  case,  Sal.  443.  Gordon  v. 
Morlej^  Str.  1265. 

(6)  Abbott,  353,  8th  ed. 

(c)  See  Anderson  v.  Pitcher,  2  B.  &  P.  164.     Webb  v.  Thompson,  1  B.  <fe  P.  5. 

(J)  Jeffrey  v.  Legendra,  3  Lev.  320 ;  Carth.  216  ;  Sal.  443 ;  1  Show.  320 ;  4  Mod.  58 

(t)  Eden  v.  Parkinson,  Dougl.  732.     Tyson  v.  Gurney,  3  T.  R.  477. 

(/)  Garrels  v.  Kensington,  8  T.  R.  230.  See  Carruthers  v.  Gray,  3  Camp.  142. 
15  East,  35,  as  to  goods. 


MARITIME  INSURANCE.  457 


The  Policy — its  Form  and  Construction. 


ranted  neutral^  that  means,  first,  that  she  sliall  belong  to  the  subject 
of  a  neutral  state ;  and,  secondly,  that  she  shall  be  navigated  ac- 
cording to  the  law  of  nations,  and  the  particular  treaties  subsisting 
between  the  country  to  which  she  belongs  and  the  belligerents: 
and,  therefore,  if  by  such  a  treaty  it  have  been  agreed  that  those 
ships  only  shall  be  considered  neutral  which  are  furnished  with 
particular  documents,  whoever  warrants  her  neutrality  must  take 
care  that  she  have  those  documents  on  board;  {g)  but  it  is  not  ne- 
cessary that  she  should  be  navigated  in  conformity  to  the  ex  'parte 
ordinance  of  one  of  the  belligerents  in  which  her  own  nation  has 
not  concurred.  (A)  The  sentence  of  a  foreign  Court  of  Admiralty, 
or  other  court  having  jurisdiction  over  questions  of  prize,  and  ad- 
judging the  vessel  to  be  good  prize,  on  a  ground  within  their  juris- 
diction, will,  if  such  ground  falsify  the  warranty^  ii)  be  conclusive 
evidence  that  it  has  been  broken ;  and  that,  though  it  appear  on 
the  face  of  such  sentence  that  the  court  arrived  at  its  conclusion 
through  rules  of  evidence  established  by  particular  ordinances  of 
its  own  country,  and  inadmissible  on  general  principles,  {j)  But 
if  the  ground  of  condemnation  be  stated  obscurely,  (JS)  or  the  sen- 
tence adjudge  the  ship  prize,  not  because  she  was  enemy's  property, 
but  for  reasons  leading  to  a  contrary  conclusion ;  (l)  or  if  it  appear 
that  it  was  founded  solely  on  the  violation  of  an  ex  parte  ordinance 
to  which  the  neutral  state  had  not  assented ;  {m)  in  such  cases  the 
sentence  is  not  conclusive  evidence  of  a  breach  of  the  warranty. 

5.  Freedom  from  Seizure  in  Port  of  Discharge. — A  clause  is  some- 
times inserted  to  exempt  the  underwriters  from  responsibility  in 

{g)  Rich  V.  Parker,  7  T.  R.  705.  Baring  v.  Christie,  5  East,  398.  Collectanea 
Juridica,  vol.  i.  p.  33. 

(/<)  Pollard  V.  Bell,  8  T.  R.  434.  Bird  v.  Appleton,  8  T.  R.  562.  Price  v.  Bell,  1 
East,  663.     Collectanea  Juridica,  vol.  i.  p.  33. 

{i)  Baring  v.  Clagget,  3  B.  <fe  P.  201.  Lothian  v.  Henderson,  3  B.  <fe  P.  499. 
Bolton  V.  Gladstone,  5  East,  155.  Siffken  ■».  Lee,  2  K  Rep.  489.  Garrels  v.  Kensing- 
ton, 8  T.  R.  230. 

{j)  Bolton  V.  Gladstone,  2  Taunt.  85.  Baring  v.  R.  E.  A.  Compy.,  6  East,  99. 
Geyer  v.  Aguilar,  7  T.  R.  081. 

{k)  Bernard!  v.  Motteaux,  Dougl.  574.  Fisher  v.  Ogle,  1  Camp.  418.  Dalgleish 
I'.  Hodson,  7  Bingh.  495. 

(I)  Calvert  v.  Bovil,  7  T.  R.  523.     Dalgleish  v.  Hodson,  uhi  supra. 

(m)  Bird  v.  Appleton,  8  T.  R.  502. 


458  MERCANTILE  CONTRACTS. 


The  Policy — its  Form  and  Construction. 


case  of  confiscation^  seizure^  or  capture  in  joort.  The  principal  diffi- 
culties wliicli  arise  on  it,  respect  the  question,  When  is  a  seizure,  pro- 
perly speaking,  in  port  f  These  cases  will  greatly  depend  upon  their 
own  peculiar  circumstances.  A  disposition  lias  been  evinced  to 
liold  the  word  port  to  include  any  place  where  the  vessel  was  in- 
tended to  be  discharged ;  {n)  but  if  a  vessel,  when  seized,  be  neither 
within  the  caput  portus,  nor  within  that  part  of  the  haven  where 
ships  usually  unload,  the  underwriter  is  not  discharged  by  this 
warranty,  (o)  Whether  the  vessel  was  at  her  port  of  discharge  or 
not,  is  a  question  entirely  for  the  jury,  {p)  It  has  been  ruled,  that 
where  this  warranty  is  inserted,  the  underwriters  are  discharged,  if 
the  insured  deviate  from  the  usual  course  of  the  voyage  in  order  to 
avoid  the  excepted  peril,  {q)  This  doctrine  appears  hard  on  the 
insured,  who,  if  there  were  no  warranty,  would  be  entitled  to  re- 
cover, (r)* 


(m)  Jarman  v.  Cope,  2  Camp.  615  ;  13  East,  394.  Dalgleish  v.  Brooke,  15  East, 
295,  ■which  seems  at  variance  with  Brown  v.  Tierney,  1  Taunt.  517.  Maydhew  v. 
Scott,  3  Camp.  205.  Oom  v.  Taylor,  ibid.  20-4.  See  Cockey  v.  Atkinson,  2  B.  <fe  A. 
460. 

(o)  Keyser  v.  Scott,  4  Taunt.  660.  Levy  v.  Yaughan,  4  Taunt.  887.  Mellish  v. 
Stainforth,  3  Taunt.  499. 

(p)  Kersey  v.  Scott,  4  Taunt.  660.  Reyner  v.  Peai'son,  4  Taunt.  662.  Levin  v. 
Newnham,  4  Taunt.  722. 

{q)  O'Reilly  v.  R.  E.  A.  Co.,  4  Camp.  246. 

(r)  O'Reilly  v.  Gonne,  4  Camp.  249. 

*  In  the  United  States  a  clause  is  frequently  inserted  in  the  policy,  "  that  the  as- 
surers shall  not  be  liable  for  any  charge,  damage,  or  loss  which  may  arise  in  conse- 
quence of  seizure  or  detention  for  or  on  account  of  illicit  trade,  or  trade  in  articles 
contraband  of  war."  A  seizure  or  detention,  to  come  within  this  exception,  must  be 
for  a  legal  and  justifiable  cause.  It  must  be  bona  fide,  -and  upon  a  reasonable  ground. 
If  there  has  not  been  an  actual  illicit  or  contraband  trade,  there  must  be  at  least  a 
well-founded  suspicion  of  it,  a  probable  cause  to  impute  guilt,  and  justify  further  pro- 
ceedings and  inquiries;  and  this  is  what  the  law  terms  a  legal  and  justifiable  cause 
for  the  seizure  or  detention.  Carrington  v.  Merchants'  Ins.  Co.,  8  Pet.  495,  516. 
"Where  barratry  is  also  insured  against,  and  the  vessel  is  lost  through  the  barratrous 
act  of  the  master,  in  attempting  an  illicit  trade  by  smuggling  a  few  articles  in  hia 
possession,  the  insurers  are  liable,  notwithstanding  this  clause  against  illicit  trade. 
The  illicit  trade  must  be  carried  on  by  the  assured  himself,  or  with  his  knowledge 
or  assent.  He  is  not  affected  by  the  acts  of  the  master  or  mariners.  American  Ina. 
Co.  V.  Dunham,  15  AVend.  9 ;  S.  C.  12  Wend.  463. 


MARITIME  INSURANCE.  459 


The  Policy — its  Form  and  Construction. 


Implied  Warranties. — The  implied  warranties  are, 

1.  Not  to  deviate. 

2.  Seaworthiness. 

8.  That  the  insured  will  use  reasonable  diligence  to  guard 
against  the  risks  covered  by  the  policy,  (s) 

1.  Kot  to  deviate/^ — A  deviation  from  the  proper  course  and 


(s)  See  Pipon  v.  Cope,  1  Camp.  434,  and  the  editor's  note,  Law  v.  Ilollingsworth, 
7  T.  R.  160.     Bell  v.  Carstairs,  14  East,  374;  see  post,  p.  345,  n. 


*  A  deviation  is  defined  in  1  Phill.  on  Ins.  480,  to  be  "  the  increasing  or  varj-ing 
the  risks  insured  against,  without  necessity  or  reasonable  cause."  He  does  not  class 
"not  to  deviate"  among  implied  warranties.  ''A  deriation  is  essentially  different 
from  a  breach  of  warranty,  which  is  the  violation  of  an  expressed  or  implied  engage- 
ment on  the  part  of  the  assured,  whereas  tlie  superinducing  of  additional  and  extra 
ordinary  risks,  or  the  change  of  the  risks  insured  against,  is  not  a  violation  of  any 
agreement,  express  or  implied."  1  Phill.  on  Ins.  484.  "  The  true  reason  why  a  devi- 
ation discharges  the  insurer  is  not  the  increase  of  the  risk,  but  that  the  party  con- 
tracting has  voluntarily  substituted  another  voj-age  for  that  which  was  insured. 
This  change  of  the  voyage  determines  the  contract  from  the  time  it  happens." 
Stetson  V.  Massachusetts  Mut.  Fire  Ins.  Co.,  4  Mass.  288.  "If,  for  example,"  says  Mr. 
Phillips,  "  the  vessel  unnecessarily  delaj's,  or  goes  out  of  the  usual  course  of  the  V03'- 
age,  she  is  not  after  that  time  exposed  to  the  identical  sea  perils  to  wliich  she  would 
have  been  exposed  had  she  pursued  the  voyage  expeditiously  in  the  usual  course." 
1  Phill.  485.  See  also  Keeler  v.  Firemen's  Ins.  Co.,  3  Hill,  250,  257.  Maryland  Ins. 
Co.  V.  Leroy,  7  Cranch,  26  ;  2  C.  R.  402. 

It  is  said  in  1  Phill.  571,  that  "  in  river  navigation,  as  in  that  of  the  ocean,  the 
underwriters  are  answerable  for  the  perils  enumerated  only  as  far  as  the  navigation 
is  conducted  iu  the  usual  course."  Citing  Gazzan  v.  Ohio  Ins.  Co.,  1  Wright,  202, 
Jolly  V.  Ohio  Ins.  Co.,  1  Wright,  539.  In  this  case,  where  a  steamboat  was  lost  in 
ascending  the  Mississippi  river,  by  attempting  to  run  through  a  chute  or  cut-off,  it 
was  said  by  Lane,  J.,  "  The  proof  is,  that  navigators  pass  their  craft  through  this  cut- 
off or  chute  at  high  water,  to  cut  off.  the  distance  and  gain  time.  Such  deviations 
are  always  at  the  risk  of  the  navigators.  It  is  obvious  that  there  is  less  danger  of 
grounding  in  the  main  channel  of  the  river  than  elsewhere ;  and  if  the  pilot  or  cap- 
tain, for  his  own  gain  or  convenience,  depart  from  this  channel,  as  the  gain  is  his,  if 
he  succeed,  the  loss  is  his,  if  he  fail.  This  is  not  the  case  of  error  in  judgment  in  an 
emergency,  for  which  the  navigator  might  not  be  responsible,  but  one  of  voluntary 
deviation,  and  a  consequent  voluntary  taking,  by  the  navigator,  of  the  risk." 

It  would  seem  difficult  to  sustain  the  doctrine  here  contended  for ;  and  the  course 
of  navigation  it  would  require  is  certainly  not  that  which  is  ordinarily  pursued  on 
the  Mississippi  river.  And  in  the  case  of  Keeler  v.  Firemen's  Ins.  Co.,  3  Ilill,  256,  it 
is  said,  "  It  is  moreover  quite  difficult  to  perceive  how  deviation  can  be  predicated 


460  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 


track  of  the  voyage  insured,  {t)  discharges  the  underwriter,  not  ai 
initio^  huifrom  the  time  of  the  deviation;  so  that  he  is  liable  for  any 
damage  which  had  previously  accrued,  {u)  but  is  freed  from  subse- 
quent responsibility.  A  deviation  happens,  where  there  is  a  wilful 
and  unnecessary  departure  from  the  due  course  of  the  voyage,  for 

{t)  As  to  this,  see  ante,  under  the  liead  Voyage  Inmred. 
(«)  Green  v.  Young,  2  Raym.  840 ;  Sal.  444. 


of  river  navigation  in  almost  any  case,  and  especially  under  such  a  policy  as  this. 
It  is  a  policy  on  time,  covering  all  and  any  adventures  to  and  fro  in  the  whole  region 
of  the  coasting  trade,  from  Albany  round  to  Boston,  and  thence  to  the  Chesapeake 
Bay,  at  the  pleasure  of  the  owners.  That  the  vessel  could  be  said  to  deviate  by  pur- 
suing any  track  witiiin  these  limits,  it  would,  I  apprehend,  be  difficult  to  show.  A 
deviation  proper  is  always  relative  to  the  geographic  line  fixed  by  the  policy.  But 
if  this  had  tied  up  her  course  from  Albany  to  Georgetown  or  Alexandria,  she  being 
in  the  Potomac,  crowding  sail  for  her  port  of  destination,  though  so  unskilfully  as  to 
go  in  the  wrong  channel — one  that  was  never  taken  before  for  such  a  purpose — yet 
BO  long  as  she  kept  the  general  course  of  the  river,  slie  had  not,  I  apprehend,  deviated 
■within  the  sense  of  the  law." 

It  was  also  said  that  it  was  not  material  to  the  decision  of  that  case  to  inquire 
"whether  there  may  not  be  a  deviation,  in  such  a  case,  by  delay  or  other  acts, 
wlierebj'  the  party  can  be  said  to  have  voluntarily  substituted  another  voyage  for 
that  described."  That  there  maybe  a  deviation  in  river  navigation  by  such  acts  has 
been  held  in  several  cases.  Tiius,  a  steamboat  insured  for  six  months  to  navigate 
the  Mississippi,  against  the  perils  of  the  river,  «fcc.,  took  in  tow  a  brig,  and  it  was 
held  to  be  a  deviation,  there  being  nothing  in  the  policy  which  expressly  authorized 
it.  Hermann  v.  Western  M.  tfe  F.  Ins.  Co.,  15  Curry's  La.  Rep.  516.  Natchez  Ins, 
Co.  V.  Stanton,  2  Sra.  &,  Marsh,  340.  See  also  Stewart  v.  Tenn.  F.  <fe  M.  Ins.  Co.,  1 
Humph.  242. 

As  to  an  intention  to  deviate  not  carried  out,  see  Marino  Ins.  Co.  of  Alexandria  v. 
Tucker,  3  Cranch,  557,  1  C.  R.  561 ;  Ilobart  v.  Norton,  8  Pick.  159;  1  Piiill.  on  Ins. 
556.  Unnecessary  delay  during  the  course  of  the  voyage.  Coffin  v.  Newburyport 
Mar.  Ins.  Co.,  9  Mass.  436.  Usage  to  stop  or  go  out  of  the  way,  Oliver  v.  Marj-- 
land  Ins,  Co.,  7  Cranch,  487,  2  C,  R.  580;  Columbian  Ins.  Co.  v.  Catlett,  12  Wheat. 
883,  G  C.  R.  341.  Liberty  to  touch  at  a  port,  Maryland  Ins.  Co.  v.  Leroy,  7  Cranch, 
26,  3  C.  R.  402.  Deviation  from  a  mistake  of  the  master.  Brazier  v.  Clap,  5  Mass.  1 ; 
from  necessity,  7  Cranch,  26,  where  it  is  said  that  a  deviation  from  necessity  "must 
be  strictly  commensurate  with  the  vis  major  producing  it;"  to  avoid  capture,  Robin- 
Bon  V.  Marine  Ins.  Co.,  2  John.  89;  Post  u  Phoenix  Ins.  Co.,  10  John.  79;  stress  of 
weather,  Suydam  v.  Marine  Ins.,  2  John.  138.  No  stoppage  on  the  high  seas  for  the 
purpose  of  saving  life  is  or  can  be  deemed  a  deviation  from  the  voyage,  so  as  to  dis- 
charge the  insurance  on  ship  or  cargo,  but  any  further  stoppage  for  the  purpose  of 
saving  property,  is  a  deviation  from  the  voyage,  and  discharges  the  underwriters 
Bond  V.  The  Cora,  2  AVash.  C.  C.  80.     The  Henry  Eubank,  1  Sumn.  424, 


MARITIME  mSURANCE.  4QI 


The  Policy — its  Form  and  Construction. 


any,  even  the  sliortest,  time.  Thus,  if  the  master  touch  at  a  port 
for  a  purpose  unconnected  with  the  voyage ;  {v)  or  at  a  port  not  in 
the  course  of  the  voyage,  though  only  a  few  leagues  out  of  the  way ; 
or  one  at  which  it  is  not  usual  to  touch,  although  the  ship  must  pass 
it ;  (iv)  or  stay  an  unusual  time ;  (x)  or  if,  when  there  are  several 
tracks,  he  select  one  in  particular  foi  a  purpose  foreign  to  the  voy- 
age, instead  of  that  which  is  safest  and  most  eligible ;  (?/)  or  having 
liberty  to  touch  at  one  port,  touch  at  another,  (2)  or  touch  at  the 
port  mentioned  in  his  liberty,  but  for  an  unauthorized  purpose ;  (a) 
all  these  are  deviations ;  and,  though  there  is  no  objection  to  a 
policy  on  part  of  a  voyage,  {b)  yet,  if  a  policy  be  on  the  whole  voy- 
age, a  deviation,  which  happened  even  before  the  making  of  the 
policy,  will  be  fatal,  (c)  In  determining  whether  there  have  been 
a  deviation,  regard  is  always  to  be  paid  to  the  object  of  the  voyage, 
and  the  usage  of  trade  with  respect  to  such  voyages,  (d)  Thus,  if 
it  be  usual  to  stop  long  at  a  port,  or  to  go  out  of  the  way,  the  un- 
derwriter is  considered  as  understanding  that  usage,  (e)  But,  as 
has  been  frequently  observed,  no  usage  can  be  set  up  against  the 
express  language  of  a  policy ;  and  the  policy  often,  in  express 
terms,  grants  liberty  to  the  insured  to  perform  acts  which,  but  for 


[v)  Hammond  v.  Reid,  4  B.  &.  A.  72.     Solly  v.  Whitmore,  5  B.  <k  A.  45. 

{w)  Fox  V.  Black,  Bea.  315.  Townson  v.  Gwyon,  ibid.  Salisbury  v.  Townson, 
Park,  454. 

{x)  Williams  v.  Shee,  3  Camp.  469.  Redman  v.  London,  3  Camp.  503.  Unreason- 
able  would,  perhaps,  be  a  more  correct  expression  than  unusual.  In  the  case  of  a 
seeking  ship,  a  reasonable  time  for  the  purposes  of  the  adventure,  to  be  determined 
by  the  state  of  thing;  at  the  port  where  the  ship  happens  to  be,  must  be  allowed. 
That  state  of  things  n.ay  render  the  time  of  the  detention  unusual,  jct  it  will  not 
discharge  the  underwriters,  unless  it  be  also  unreasonable.  Phillips  v.  Irving,  7  M. 
&  Gr.  325.  In  the  i^rosecution  of  an  ordinary  voy.age,  an  unusual  stay  would  be  im- 
reasonable. 

(y)  Middlewood  v.  Blakes,  1  T.  R.  1G2, 

(z)  Elliot  V.  Wilson,  7  Bro.  P.  C.  459 ;  4  Bro.  P.  C.  470,  Tomlin's  ed. 

(a)  Bottomley  v.  Bovill,  5  B.  &  C.  210.  Langhorn  v.  AUnutt,  4  Taunt.  511.  See 
Inglis  V.  Vaux,  3  Camp.  437. 

(b)  Taylor  v.  Wilson,  15  East,  324.    Driscol  v.  Pasmore,  1  B.  &  P.  200. 

(c)  Redman  v.  London,  3  Camp.  503.     Robertson  v.   Marjoribanks,  2  Stark.  573. 

(d)  Comyns'  Dig.  Merchant,  E.  9.  Stewart  v.  Bell,  5  B.  &  A.  238.  Delauy  « 
Stoddart,  1  T.  R.  22.     Salvador  v.  Hopkins,  3  Burr.  1706. 

(e)  Bond  v  Gonsales,  Salk.  445,  cited  1  Burr.  348. 


462  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

that  liberty,  would  amount  to  deviations ;  (/)  but  care  must  be 
taken  not  to  exceed  the  liberty ;  {g)  and  even  an  expressed  liberty 
is  construed  with  reference  to  the  main  object  of  the  voyage.  Thus, 
under  a  liberty  to  touch  and  stay  at  any  port  or  ports  whatever, 
the  stay  must  be  for  some  purpose  connected  with  the  furtherance 
of  the  adventure,  (li)  Where  a  ship  was  insured  from  Lisbon  to 
England,  with  liberty  to  call  at  any  one  port  in  Portugal,  it  was 
held  that  this  must  mean  some  port  in  the  course  of  the  voyage  to 
England ;  {i)  and,  as  we  have  seen  that  a  voyage  to  A.  B.  and  C. 
means  a  voyage  to  them  in  the  order  mentioned  in  the  policy,  so 
where  liberty  is  given  to  touch  at  several  specified  ports,  they  must, 
if  more  than  one  is  visited,  be  taken  in  the  order  named  in  the 
]3olicy.  [j )  Nor  must  the  stay  at  any  of  them  be  unreasonable  ;  (Jc) 
but  wlien  a  ship  has  liberty  to  touch  at  a  port,  she  has  also  liberty 
to  trade  there,  provided  that  no  extra  delay  be  thereby  occasioned.  {I) 
If  the  vessel,  in  time  of  war,  cruise  for  a  prize,  (m)  that  is  a  devia- 
tion, unless  she  have  express  liberty  to  do  so,  A  liberty  to  chase  is 
different  from  one  to  cruise  for  prizes :  and  a  liberty  to  chase,  cap- 
ture, and  man,  will  not  justify  a  lying  in  wait  nine  days  for  a 
prize,  (n)  nor  a  delay  for  the  purpose  of  bringing  her,  when  cap- 
tured, into  port :  in  order  to  that,  there  should  be  a  liberty  to  con- 
voy prizes,  (o)  A  liberty  to  cruise  for  six  weeks,  means  for  six 
weeks  successively,  {p  ) 


(/)  Vide  Barclay  v.  Sterling,  5  M.  &  S.  6.  Leathly  v.  Hunter,  1  Tyrwh.  859  ;  Y 
Bingh.  517.     Mellish  v.  Andrews,  16  East,  312  ;  2  M  &  S.  27  ;  5  Taunt.  496. 

(<7)  See  Hamilton  v.  Sheddon,  3  M.  &  W.  49. 

(/t)  Langhorn  v.  Allnutt,  4  Taunt.  511.  See  Jarratt  v.  Ward,  1  Camp.  263.  "Wil- 
liams V.  Shee,  3  Camp.  463,  504.  Bottomley  v.  Bovill,  5  B.  &  C.  210.  Hamilton  v. 
Sheddon,  3  M.  &  W.  49. 

(i)  Hogg  V.  Horner,  Marsh.  197  ;  but  see,  for  qualifications  of  this  doctrine,  Met- 
calf  V.  Parry,  4  Camp.  123.     Bragg  v.  Anderson,  4  Taxint.  229. 

(J)  Gardner  v.  Senhouse,  3  Taunt.  16.     Vide  ante,  429. 

{k)  Williams  v.  Shee,  3  Camp.  469,  504.     Phillips  v.  Irving,  7  M.  &,  Gr.  325. 

{I)  Raine  v.  Bell,  9  East,  195.     Laroche  v.  Oswin,  12  East,  131. 

(w)  Cock  V.  Townsend,  Beawes,  316;  Paik,  448.  See  Phelps  v.  Auldjo,  2  Camp. 
350.     Jolly  V.  Walker,  Beawes,  316.     Parr  v.  Anderson,  6  East^  202. 

(n)  Hibbert  v.  Halliday,  2  Taunt.  428. 

(o)  Lawrence  v.  Sydebotham,  6  East,  45. 

(  p)  Syers  v.  Briggs,  Dougl.  509. 


MARITIME  INSURANCE.  4G3 


The  Policy — its  Form  and  Construction. 


An  unreasonable  delay  in  sailing  to  the  port  or  place  at  which, 
the  risk  is  to  commence,  is  in  the  nature  of  a  deviation,  and  dis- 
charges the  underwriter,  {q) 

But  the  policy  will  not  be  avoided  by  a  mere  intention  to  de 
viate,  never  carried  into  effect ;  {r)  and  there  are  circumstances 
under  which  an  actual  deviation  will  be  excused ;  these  are,  where 
the  deviation  is  occasioned  by  necessity,  or  some  imperative  obli- 
gation, ex.  gr.,  to  take  in  provisions  to  save  the  crew  from  starving, 
or  jDrocure  repairs  for  the  safety  of  the  ship  ;  for  there  is  a  liberty 
implied  in  every  policy  to  do  that  which  is  necessary  for  the 
preservation  of  the  vessel  and  the  lives  of  those  on  board 
her.  (.s)  The  ordinary  occasions  by  which  a  deviation  is  justified, 
are — 

''  To  join  convoy^  for  it  may  be  a  measure  of  necessary  prudence  ; 
and  a  captain,  unless  expressly  prohibited,  may  always  do  when  in- 
sured what  it  would  be  necessary  to  do  if  uninsured,  (t)  'Stress  of 
weather,  (u)  Want  of  repairs,  (v)  ^  The  approach  of  an  enemy,  {iv) 
^'  Succoring  distress,  {x)  JjCisily ^  Muiiyiy^  desertion,  sickness  of  the  crew, 
or  any  other  inevitable  accident ;  {y)  for  instance,  when  the  vessel 
was  carried  out  of  her  course  by  a  King's  ship,  (z)  But,  though 
necessity  ^^^ill  justify  a  deviation,  yet  it  is  plain,  on  principles  of 
common  sense  as  well  as  law,  that  such  necessity  must  not  have 
been  occasioned  by  the  insured's  own  fault,  (a)  and  that  the  voyage 

(q)  Mount  v.  Laikin,  8  Bingli.  108.  Palmer  v.  Marshall,  8  Bingh.  V9.  See  Free- 
inan  v.  Taylor,  8  Bingh.  124.  So  of  too  long  a  stay  at  a  port  where  she  has  liberty 
to  stay.     Hamilton  v.  Sheddon,  8  M.  &  W.  49. 

(r)  Kewley  v.  Ryan,  2  H.  Bl.  343.  Foster  v.  Wilmer,  2  Str.  1249.  Heselton  v. 
Allnutt,  1  M.  &  S.  46.     See  Hare  v.  Travis,  1  B.  &  G.  14. 

(.s)   Vide  Urquhart  v.  Barnard,  1  Taunt.  450.     Lavabre  v.  "Wilson,  Dougl.  284. 

(t)  D'Aguilar  v.  Tobin,  1  Holt,  185.    See  Warwick  v.  Scott,  4  Camp.  62. 

(u)  Delany  v.  Stoddart,  1  T.  R.  22.    Smith  v.  M'Neil,  2  Dow.  588,  544." 

{v)  Motteaux  v.  L.  A.  Compy.,  1  Atk.  547.  See  O'Reilly  v.  Gonne,  4  Camp. 
249. 

(w)  O'Reilly  v.  Gonne,  ubi  supra. 

(x)  Per  Lawrence,  J.,  6  East,  54. 

(y)  DriscoU  v  Bovill,  1  B.  <fe  P.  313.  DriseoU  v.  Pasraore,  200.  Elton  v.  Brogden, 
2  Str.  1264.     See  Warwick  v.  Scott,  4  Camp.  62.     Woolf  v.  Claggett,  3  Esp.  258. 

(z)  Scott  V.  Thompson,  1  K  R.  181. 

(a)  Phelps  V.  Auldjo,  2  Camp.  350.  Forshaw  v.  Chabert,  3  B.  <fe  B.  158.  Wooli, 
V  Claggett,  3  Esp.  258. 


464  MERCANTILE  COXTRACTS. 

The  Policy — its  Form  and  Construction. 

of  necessity  must  be  pursued  iu  the  sliortest  and  most  expeditious 
manner,  {h) 

2.  Seaworthiness. — It  is  a  condition  implied  in  every  policy,  that 
the  ship  shall  be  seaworthy  when  the  voyage  commences  ;  (c)  this  con- 
dition does  not  attach  till  her  sailing,  and  therefore  if  she  be  in- 
sured at  and  from  a  port,  she  is  protected  while  in  the  port,  though 
in  want  of  repairs,  {d)  "  The  rule  of  law  is,  that  the  assured  is 
bound  to  have  the  ship  seaworthy  at  the  commencement  of  the 
voyage.  He  is  bound,  therefore,  to  have  her  properly  equipped 
with  sails  (e)  and  anchors,  (/)  with  a  sufficient  crew,  {g)  and  a  master 
of  competent  skill  and  ability  to  navigate  her  when  she  sails  at  the 
commencement  of  the  voyage,  and  if  she  sail  from  a  port  where 
there  is  an  establishment  of  pilots,  and  the  nature  of  the  naviga- 
tion require  one,  the  master  must  take  a  pilot  on  board,  iji)  Sea- 
worthiness is  a  term  which  always  refers  to  the  service  in  which  the 
ship  is  engaged  ;  therefore,  a  vessel  may  be  seaworthy  if  designed 
for  one  service,  which  would  not  be  so  if  designed  for  another.  (^) 
Although  the  general  rule  is,  that  if  the  ship  be  not  seaworthy  at 


{b)  Lavabre  v.  "Wilson,  Dougl.  277. 

(c)  See  Watts  v.  Morris,  1  Dowl.  32.  Douglas  v.  Scougall,  4  Do-w.  269.  "Wilkie 
V.  Geddes,  3  Dow.  57.  Rich  v.  Parker.  7  T.  R.  705.  Shore  v.  Bental,  7  B.  &  C.  798. 
"Wedderburne  v.  Bell,  1  Camp.  1. 

{d)  Annen  v.  Woodman,  3  Taunt.  299. 

(e)  "Wedderburne  v.  Bell,  1  Camp.  1. 

(/)  Wilkie  V.  Geddes,  3  Dow.  57. 

(^)  Shore  V.  Bental,  7  B.  &  C.  798,  n.  Forshaw  v.  Chabert,  3  B.  &  B.  158.  The 
omission  in  the  case  of  English  seamen  to  bind  them  by  an  agreement  pursuant  to  5 
&.  6  "Wm.  4,  c.  19,  has  been  held  not  to  render  the  ship  unseaworthy,  Raymond  v. 
Smith,  7  M.  &  Gr.  457. 

(/i)  The  provisions  of  the  legislature  respecting  pilots  are  so  minute  that  it  is  con- 
sidered better  to  refer  the  reader  to  Abbott  on  Shipping,  for  a  full  account  of  them, 
than  to  attempt  any  abridgment.  See  6  Geo.  4,  c.  126,  s.  56.  See  on  the  question  in 
what  cases  the  warranty  would  be  broken  by  not  having  a  pilot,  Phillips  v.  Head- 
lam,  2  B.  <fe  Ad.  380.  Law  v.  HoUingsworth,  7  T.  R.  160.  But  Law  v.  HoUingsworth 
cannot  now  be  relied  on  as  authoritj',  per  Park,  B.,  in  delivering  judgment,  Dixon  v. 
Sadler,  5  M.  &  W.  405,  and  see  the  report  of  the  same  case  in  error,  8  M.  <&  "W.  900, 
where  L.  C.  J.  Tindal  suggests  that  the  decision  in  Law  v.  HoUingsworth  may  per- 
haps be  sustained  on  the  ground  of  an  implied  warranty  to  comply  with  the  express 
provisions  of  a  statute. 

(i)  Hucks  V.  Thornton,  1  Holt,  30. 


MARITIME  INSURANCE.  4(55 


The  Policy — its  Form  and  Construction. 


the  commencement  of  the  voyage,  the  policy  will  be  avoided,  yet 
there  appears  to  be  an  exception  in  cases  where  the  unseawor- 
thiness results  from  a  mistake  or  accident,  which  is  remedied  as 
soon  as  it  is  discovered,  and  before  any  loss  has  been  occasioned  by 

it.  or 


(j)  "Weir  V.  Aberdeen,  2  B.  &  A.  320. 


*  The  case  of  Weir  v.  Aberdeen,  here  cited  by  the  author,  was  referred  to  by  Mr. 
Justice  Story,  in  McLanahan  v.  Universal  Ins.  Co.,  1  Pet.  184,  who,  however,  gave  no 
opinion  on  the  point,  merely  observing  that  it  was  an  important  doctrine,  and  well 
worthy  of  discussion,  when  it  should  come  directly  in  judgment.  The  same  case  was 
also  referred  to  in  Paddock  v.  Franklin  Ins.  Co.,  11  Pick.  234,  and  it  is  there  said  that 
the  circumstance  in  Weir  v.  Aberdeen,  "that  the  insurance  was  at  and  from  the  port, 
80  that  the  policy  attached  and  the  risk  commenced  before  sailing,  was  not  expressly 
relied  upon,  or  made  the  avowed  ground  of  the  decision ;  but  such  was  the  fact,  and 
would  seem  to  reconcile  it  with  the  course  of  decisions  ;"  and  that  a  similar  case  had 
occurred  in  Pennsylvania.     Garrigues  v.  Coxe,  1  Binn.  592, 

In  the  case  of  Paddock  v.  Franklin  Ins.  Co.,  "  it  was  considered  as  the  well  settled 
rule  of  law,  tliat  if  the  vessel  is  not  seaworthy  at  the  commencement  of  the  voyage, 
the  policy  never  attaches ;  there  is  no  insurable  subject  on  which  it  can  act;  the  par- 
ties stand  towards  each  other  as  if  no  such  contract  had  been  made ;  and  all  the 
consequences  follow,  which  must  follow  from  treating  such  a  contract  as  a  nullity. 
The  insurer  can  claim  no  premium :  the  assured  can  claim  no  loss.  Of  course  it  is 
entirely  immaterial,  whether  the  peril,  by  means  of  which  the  vessel  was  lost,  was 
caused  or  increased  by  the  defect  in  which  the  imputed  unseaworthiness  consists,  or 
whether  it  proceeded  from  a  cause  wholly  distinct."  Copeland  v.  New  England 
Marine  Ins.  Co.,  2  Mete.  432,  437. 

In  the  case  of  Copeland  v.  New  England  Marine  Ins.  Co.,  2  Mete.  439,  after  refer- 
ring to  the  cases  of  Paddock  v,  Franklin  Ins.  Co.,  11  Pick.  234,  Hazard  v.  New  Eng 
land  Marine  Ins,  Co.,  1  Sumn.  218,  and  the  same  case,  8  Pet.  557,  it  is  said,  "Upon 
these  principles  and  authorities,  we  consider  it  a  rule  of  the  law  of  insurance,  as 
settled  here,  that  in  addition  to  the  implied  warranty,  which  applies  to  the  state  of 
the  vessel  at  the  commencement  of  the  voyage,  and  must  be  strictly  complied  with 
as  a  condition  precedent,  it  is  the  duty  of  the  assured,  from  time  to  time,  during  the 
voyage,  to  repair  and  keep  her  in  a  suitable  condition  for  the  service  in  which  she  is 
engaged ;  and  if  they  fail  to  do  so,  and  a  loss  happens,  which  is  attributable  to  that 
cause,  the  assured,  and  not  the  underwriters,  must  sustain  it.  And  altJiough  there 
are  some  recent  English  cases  which  seem  to  wear  a  different  aspect,  or  leave  the 
point  in  doubt,  yet,  upon  a  full  consideration  and  comparison,  we  are  inclined  to 
think  they  are  not  opposed  to  this  doctrine."  Citing  Law  v.  HoUingsworth,  7  T.  R. 
160 ;  Busk  v.  Royal  Ex.  Assu.  Co.,  2  B.  &  Aid.  73 ;  Walker  v.  Maitland,  5  B.  <fe  Aid. 
171 ;  Bishop  v.  Pentland,  7  B.  &  C.  219;  Shore  v.  Bentall,  7  B.  &  C,  798,  note;  Phil- 
lips V.  Headlam,  2  Barn,  &  Adolph.  380 ;  HoUingsworth  v.  Bi'odrick,  7  Adolph.  <is 
Ellis,  40 ;  and  Dixon  v.  Sadler,  5  Mees.  &  Welsh.  405. 
80 


466  MERCANTILE  CONTKACTS. 


The  Policy — its  Form  and  Construction. 


Nor  does  the  warranty  of  seaworthiness  apply  to  any  period, 
except  the  commencement  of  the  voyage,  and,  therefore,  if  she 
become  unseawortby  during  the  course  of  it,  the  warranty  does 


The  distinction  will  be  noticed,  "between  unseaworthiness  at  the  beginning, 
which  is  a  breach  of  warranty,  and  a  defect  arising  on  the  voyage,  which  is  not 
repaired,  through  the  fault  of  the  owner,  and  for  which  the  owner  is  responsible  if 
the  loss  is  from  that  cause.  But  the  owner,  or  his  agents,  must  know  of  the  defect, 
or  there  is  no  fault."  And  thus,  if  a  vessel,  in  the  course  of  her  voyage,  put  into  a 
port  where  repairs  can  be  made,  and  afterwards  sail  therefrom  with  a  defect  in  her 
bottom,  produced  during  the  voyage  by  the  perils  of  the  seas,  and  which  causes  her 
to  founder,  the  insurers  are  liable  for  the  loss  unless  the  captain  had  reasonable 
cause  to  suspect  the  existence  of  the  defect  when  the  vessel  was  in  such  port,  or  had 
reasonable  cause  to  believe  that  she  could  not  proceed  safely  home  without  having 
the  same  repaired.  Starbuck  v.  New  England  Marine  Ins.  Co.,  19  Pick.  198.  See 
also  Deblois  v.  Ocean  Ins.  Co.,  16  Pick.  303.  American  Ins.  Co.  v.  Ogden,  15  Wend. 
636,  S.  C.  20  Wend.  287. 

When  an  event  happens  after  the  voyage  has  commenced,  rendering  a  vessel 
unseaworthy,  a  difficulty  may  occur  in  determining  whetlier  the  neglect  of  the 
master  to  restore  her  to  the  proper  state  is  of  that  character  for  which  the  owners 
are  responsible,  or  is  covered  by  the  rule  that  the  insurers  are  liable  for  a  loss  of 
which  any  of  the  risks  insured  against  is  the  immediate  cause,  though  the  neglect  of 
the  master  or  crew  may  have  been  the  remote.  This  difficulty  appears  to  have  been 
felt  in  the  case  above  cited,  2  Mete.  432,  443.  The  judge  who  delivered  the  opinion 
of  the  majority  of  tlie  Court  in  that  case,  after  referring  to  Dixon  v.  Sadler,  6  Mees. 
&  Welsh.  405,  and  the  opinion  of  Mr.  Baron  Parke,  who  stated  it  as  the  result  of  the 
modern  cases,  and  as  the  opinion  of  the  Court,  "that  the  absence,  from  any  cause  to 
which  the  owner  was  not  privy,  of  the  master  or  any  part  of  the  crew,  or  of  the 
pilot  who  maj'  be  considered  as  the  temporary  master,  after  tliey  had  been  on  board, 
must  be  on  the  same  footing  as  the  absence,  from  a  similar  cause,  of  any  part  of  the 
necessary  stores  or  equipments  originally  put  on  board;  the  great  principle  estab- 
lished by  the  more  recent  decisions  is,  that  if  the  vessel,  crew,  and  equipments  be 
originally  sufficient,  the  assured  has  done  all  that  he  contracted  to  do,  and  is  not 
responsible  for  the  subsequent  deficiency  occasioned  by  any  neglect  or  misconduct 
of  the  master  or  crew ;"  proceeds  to  say,  "  If  this  is  to  be  taken  as  limited  to  the 
cases  where  the  master,  officers,  and  crew  act  in  their  own  proper  sphere,  as  practi- 
cally managing  and  conducting  the  navigation,  and  where  the  master  does  not  stand 
in  the  relation  of  representative  and  agent  of  the  owners,  we  think  it  not  inconsis- 
tent with  the  general  principle,  leaving  the  owner  still  bound  by  the  acts  of  the 
master,  so  far  as  by  law  and  the  usage  of  navigation  he  is  the  representative  of  the 
owners,  executing  their  express  or  implied  orders,  and  doing  all  such  acts  as  an 
owner  himself  might  and  would  do,  if  present." 

In  this  case,  2  Mete.  432,  the  master  becoming  incompetent  from  insanity,  it  was 
held  to  be  the  duty  of  the  mate  to  take  command  of  the  vessel,  and  that  he  had  a 
right  to  resort  to  all  lawful  means  to  establish  himself  in  the  command ;  but  it  waa 
'urther  held,  that  if,  from  want  of  judgment,  or  even  culpable  negligence,  he  omita 


MARITIME  IISrSURANCK  467 


The  Policy — its  Form  and  Construction. 


not  apply.  Unseaworthiness  for  want  of  a  particular  description 
of  crew,  is  indeed  an  exception  to  this  rule,  since  one  crew  may 
be  necessary  at  one  part  of  the  voyage  and  another  at  another.     It 


60  to  do,  and  the  vessel  sails  under  the  master's  command,  and  is  stranded,  the 
underwriters  are  not  discharged. 

In  the  same  case,  2  Mete.  445,  it  is  said,  that  "by  the  established  rules  of  the 
maritime  law,  as  adopted  by  all  commercial  agents,  certainly  by  England  and  the 
United  States,  a  vessel  sent  on  a  voyage  to  sea  is  not  only  to  have  a  competent 
master,  but  a  competent  mate,  whose  duties  and  powers  are  as  distinctly  defined  and 
well  established  as  those  of  the  master." — "He  must  be  competently  skilled  in 
theoretic  and  practical  navigation  and  general  seamanship,  for  the  duty  of  taking 
command  in  case  of  exigency.  And  a  vessel  cannot  be  deemed  seaworthy  which  has 
not  on  board  some  person  capable  of  navigating  her  beside  the  master."  2  Mete. 
446.  And  it  was  also  held,  that  a  vessel  which  is  insured  on  a  voyage  out  and 
home,  and  which  departs  with  officers  and  a  crew  competent  for  the  voyage,  does 
not  become  unseaworthy  by  reason  of  the  master's  becoming  incompetent  at  the 
foreign  port  to  command  the  vessel ;  and  if  the  vessel  sails  from  such  port  under  his 
command,  and  is  lost  on  the  homeward  passage,  the  underwriters  are  not  dis- 
charged, although  the  loss  may  have  been  caused  by  the  master's  incapacity.  This 
decision  was  on  the  ground  that  on  the  master's  becoming  incompetent,  the  mate 
was  de  facto  master,  and  therefore  in  this  respect  the  vessel  was  not  unseaworthy. 
But  the  rule  that  there  must  be  on  board  the  vessel  a  mate,  or  some  person  other 
than  the  master,  of  competent  skill  in  navigation,  would  of  course  apply  only  to 
long  or  foreign  voyages,  and  not  to  the  coasting  trade.  In  relation  to  which  it  has 
been  considered  doubtful  whether  it  is  necessary  that  even  the  master  should  be  a 
scientific  navigator,  capable  of  making  an  observation  to  find  the  latitude.  Tread- 
well  V.  Union  Ins.  Co.,  6  Cow.  270.  See  also  as  to  the  point  that  seaworthiness 
refers  to  the  service  in  which  the  vessel  is  engaged,  McLanahan  v.  Universal  Ins. 
Co.,  1  Pet.  184,  where  it  is  said,  'What  is  a  competent  crew  for  the  voj^age ;  at 
■what  time  such  crew  should  be  on  board ;  what  is  proper  pilot  ground ;  what  is  the 
course  and  usage  of  trade  in  relation  to  the  master  and  crew  being  on  board  when 
the  ship  breaks  ground  for  the  voyage ;  are  questions  of  fact  dependent  upon 
nautical  testimony;  and  are  incapable  of  being  solved  by  a  court,  without  assuming 
to  itself  the  province  of  a  jury,  and  judicially  relying  on  its  own  skill  in  maritime 
affairs;"  and  Paddock  v.  Franklin  Ins.  Co.,  11  Pick.  232. 

If  the  vessel  was  seaworthy  when  the  policy  attached  and  the  risk  commenced, 
the  legal  presumption  is,  that  she  so  continued.  Martin  v.  Fishing  Ins.  Co.,  20  Pick. 
389,  396.  And  where  a  vessel  has  sailed,  apparently  in  a  seaworthy  condition,  and 
has  never  been  heard  from,  as  such  an  event  is  of  rare  occurrence,  and  the  extraor- 
dinar}'  perils  and  dangers  to  which  she  is  exposed  are  very  great,  the  law,  in  the 
absence  of  other  proof,  will  presume  that  the  loss  was  occasioned  by  some  of  those 
perils.     11  Pick.  237. 

Where  the  unseaworthiness  of  a  vessel  is  relied  on,  either  as  a  ground  of  defence 
to  avoid  a  recovery  for  a  loss,  or  to  establish  a  claim  for  a  return  of  premium,  the 
burthen  of  proof  is  on  the  party  affirming  the  unseaworthiness,  the  presumption  of 


468  MERCA^'TILE  CONTRACTS. 

The  Policj- — its  Form  and  Construction. 

is  obvious,  for  instance,  that  the  necessity  for  a  pilot  can  only  be 
an  occasional  one.  (^•)  But,  generally  speaking,  it  is  sufficient  if 
the  vessel  be  seaworthy  at  the  commencement  of  the  voyage,  nor 
is  the  obligation  of  the  assured  as  to  her  seaworthiness  more  exten- 
sive in  the  case  of  a  time  policy.  (/) 

In  a  case  in  which  the  underwriters  were  held  responsible  for 
the  loss  of  the  ship  occasioned  by  the  wilful  (but  not  barratrous) 
act  of  the  master  and  crew  in  throwing  overboard  the  ballast, 
"  the  great  principle  (said  Parke,  B.,  delivering  judgment)  estab- 
lished by  the  more  recent  decisions,  is,  that  if  the  vessel,  crew  and 
equipments  be  originally  sufficient,  the  assured  has  done  all  that 
he  contracted  to  do,  and  is  not  responsible  for  the  subsequent  de- 
ficiency occasioned  by  any  neglect  or  misconduct  of  the  master  or 
crew ;  and  this  principle  prevents  many  nice  and  difficult  inquiries, 
and  causes  a  more  complete  indemnity,  which  is  the  object  of  the 
contract  of  insurance."  This  judgment  was  afterwards  affirmed  in 
the  Exchequer  Chamber.  (?>z)     This  implied  warranty,  however, 

(i)  HoUingsworth  v.  Brodrick,  T  Ad.  &  E.  40. 
{I)  Dixon  V.  Sadler,  5  M.  &  W.  405. 
(m)  8  M.  &.  W.  895. 


law  being  that  the  vessel  was  seaworthy.  Taylor  v.  Lowell,  3  Mass.  347;  11  Pick. 
237.  See,  however,  Tidmarsh  v.  Washington  F.  &  M.  Ins.  Co.,  4  Mason,  441,  and  2 
Phill.  on  Ins.  757. 

But  where  the  proof  shows,  in  point  of  fact,  that  the  vessel  sprung  a  leak  by  the 
starting  of  a  butt  or  other  internal  defect,  without  any  accident  or  stress  of  weather, 
but  by  the  ordinary  pressure  of  the  cargo,  and  the  action  of  the  wind  and  sea,  the 
ordinary  presumption  of  seaworthiness  is  rebutted.  11  Pick.  237.  Talcot  v.  Com. 
Ins.  Co.,  2  John.  124;  id.  130.     See  Potter  v.  Suffolk  Ins.  Co.,  2  Sumn,  197. 

As  to  the  distinction  referred  to  in  the  text,  where  the  insurance  is  at  and  from 
a  port,  see  Taylor  v.  Lowell,  3  Mass.  331 ;  Merchants'  Ins.  Co.  v.  Clapp,  11  Pick.  56, 
65,  where  it  is  said,  "  The  implied  warranty  is  the  same  in  an  insurance  on  gooda 
and  freight,  as  it  is  in  an  insurance  upon  the  vessel.  It  is,  that  the  vessel  shall  be 
in  a  navigable  state  at  the  time  she  sails.  This  is  a  reasonable  construction  of  the 
implied  warranty,  but  it  woiild  be  most  unreasonable  to  extend  it  back  to  the  time 
when  the  vessel  is  in  port.  Many  repairs  may  be  made  during  the  lading  of  the 
cargo ;  and  to  require  the  vessel  to  be  completely  repaired,  before  she  could  take  on 
board  any  part  of  her  cargo,  would  occasion  much  unnecessary  delay  and  expense, 
and  could  be  of  no  possible  benefit,  that  I  can  conceive,  to  the  underwriter."  See 
also  11  Pick.  234;  Deblois  v.  Ocean  Ins.  Co.,  16  Pick.  303;  Garrigues  v.  Coxe,  1  Bin. 
592. 


MARITIME  IXSURAXCE.  4(59 


The  Policy — its  Form  and  Construction. 


may  be,  and  sometimes  is,  dispensed  witli  by  an  admission  of  the 
fact  of  seaworthiness,  or  an  agreement  on  the  part  of  the  under- 
writers in  the  policy,  that  the  ship  shall  be  considered  to  be  sea- 
worth}^,  and  in  the  absence  of  fraud  thej^  will  be  liable,  though 
the  vessel  sink  from  unseaworthiness  the  day  after  the  policy  was 
effected.  (?i) 

8.  The  insured  impliedly  warrants  that  he  will  guard  with 
reasonable  diligence  against  the  risks  covered  by  the  policy,  so  that 
a  loss  shall  not  happen  through  his  own  default  and  negligence ;  (0) 
thus,  he  must  take  care  in  case  of  a  policy  on  ship,  that  she  be 
documented  according  to  her  national  character  for  every  ship 
must  have  some  national  character,  and  the  underwriters  will  not 
be  liable,  if  a  loss  happen  from  the  default  of  the  insured  in  being 
unprovided  with  those  documents  which  are  required  by  the 
general  law  of  nations,  or  by  particular  treaties ;  (^j)  thus,  as  the 
carrying  of  simulated  papers  is  an  offence  against  the  law  of 
nations,  if  a  ship  carry  them,  and  be  condemned  on  that  ground, 
the  warranty  of  documentation  is  infringed,  and  the  underwriters 
are  not  liable ;  {q)  but,  as  in  the  case  of  express  warranty  of  neu- 
tral property,  so  in  the  cases  now  under  consideration,  disobedience 
to  the  mere  ex  parte  ordinance  of  a  foreign  state,  does  not  vitiate 
the  policy,  (r)  There  is  this  difference  between  an  express  warranty 
of  the  ship's  national  character,  and  that  which  we  are  now  con- 
sidering, viz.,  that,  in  the  case  of  an  express  warranty,  if  the  ship  be 
not  properly  documented  at  the  time  of  sailing,  the  underwriters 
are  discharged ;  (s)  whereas  a  breach  of  the  implied  warranty  does 


(n)  Parfitt  v.  Thompson.  13  M.  &,  W.  392. 

(o)  Pipon  V.  Cope,  1  Camp.  434,  et  notam.  Law  v.  Hollingsworth,  7  T.  R.  160. 
Bell  V.  Carstairs,  14  East,  374.  In  Dixon  v.  Sadler,  8  M.  &  W.  895,  Tindal,  C.  J., 
suggested  that  there  might  be  an  implied  warranty  to  navigate  according  to  the 
express  provisions  of  a  statute,  and  that  Law  v.  Hollingsworth  might  be  sustainable 
on  that  ground. 

{p)  Bell  V.  Carstairs,  14  East,  374.  See  Xonuen  v.  Kettlewell,  16  East^ 
186. 

iq)  Oswell  I'.  Vigne,  15  East,  70.     Flindt  v.  Scott,  5  Taunt.  674. 

(r)  Xonnen  v.  Reid,  16  East,  176.  See  Le  Cheminant  v.  Pearson,  4  Taunt.  367 
Sawell  V.  R.  E.  A.  Co.,  4  Taunt.  859. 

{i)  Rich  V.  Parker,  7  T.  R.  705. 


470  MERCANTILE  CONTRACTS. 

The  Policy — its  Form  and  Construction. 

not  discliarge  the  uuderwriter,  unless  a  loss  actually  happen  in 
consequence,  (t) 

The  obligation  to  have  the  ship  projDcrly  documented  may  be 
waived,  as,  for  instance,  by  a  liberty  to  carry  simulated  papers,  (w) 
Nor  is  any  warranty  of  documentation  implied  in  an  insurance 
upon  goods,  {v)  unless  they  belong  to  the  owner  of  the  ship,  for 
then  there  is.  (tf)* 

(t)  See  Bell  v.  Carstairs,  14  East,  374,  per  Ld.  Ellenborough,  and  Price  v.  Bell,  1 
"East,  663.  It  has  been  sometimes  said,  as  in  Bell  v.  Carstairs,  ubi  supra,  that  there 
was  710  warranty  of  docnmentatioii ;  but  that,  I  t.hink,  annylo  cbe  understood  to  mean 
no  express  warranty ;  for  it  seems  clear  that  the  cases  support  the  opinion  in  Mr. 
Campbell's  notes  to  Pipon  v.  Cope,  1  Camp.  434,  that  the  insured  impliedly  warrants 
to  guard  the  insurer  with  reasonable  diligence  against  the  risks  insured ;  and  that, 
if  a  loss  happen  in  consequence  of  insufficient  documentation,  that  liiplied  warranty 
will  be  broken,  and  the  breach  a  defence.  Perhaps  the  nature  of  the  implied  war- 
ranty under  which  these  cases  fall,  would  be  more  correctly  expressed  by  saying 
that  the  insured  warrants  that  a  loss  shall  not  happen  through  his  own  default.  Thus 
in  Hollingsworth  v.  Brodrick,  1  Ad.  &  E.  40,  we  find  Lord  Denman  saying,  "  I  own  I 
feel  a  doubt  whether,  if  it  were  distinctly  averred  that  a  ship  had,  by  gross  negli- 
gence, been  brought,  during  the  voyage,  to  a  condition  in  which  she  would  not  be 
insurable,  that  might  not  be  a  defence.  It  is  certainly  a  new  and  perhaps  a  danger- 
ous one,  but  I  think,  if  it  were  clearly  made  out,  the  assured  could  not  say  that  the 
loss  was  by  perils  insured  against." 

(m)  Bell  V.  Bromfield,  15  East,  364.     Simeon  v.  Bazett,  2  M.  &  S.  94. 

(v)  Dawson  v.  Atty,  7  East,  367.     Carruthers  v.  Gray,  15  East,  35;  3  Camp.  142. 

(to)  Bell  V.  Carstairs,  14  East,  374.     Horneyer  v.  Lushington,  3  Camp.  85. 


*  In  the  learned  treatise  on  Marine  Insurance  by  Mr.  J.  Duer,  it  is  said,  "  It  is 
probably  not  to  be  doubted  that  a  policy  of  insurance,  as  a  mercantile  instrument, 
may,  by  express  words,  be  rendered  negotiable  in  the  same  sense  as  a  bill  of  ex- 
change or  a  bill  of  lading ;  that  is,  so  as  to  vest  in  the  holder  the  right  of  maintain- 
ing an  action  in  his  own  name  for  the  recovery  of  a  loss;  subject,  indeed,  to  every 
legal  defence  that  may  arise  from  the  nature  or  terms  of  the  contract;  but  dis- 
charged of  all  eqxiities,  such  as  a  right  of  set-off,  subsisting  alone  between  the 
original  parties."  2  J.  Duer,  51.  But  the  opinion  of  the  Court  in  the  case  of  Jessel 
V.  The  Williamsburgh  Ins.  Co.,  3  Hill,  88,  appears  to  be  inconsistent  with  this  idea. 
"  We  know  of  no  principle,"  say  the  Court  in  that  case,  "  upon  which  the  assignee 
of  a  policy  of  insurance  can  be  allowed  to  sue  upon  it  in  his  own  name.  The 
general  rule  applicable  to  personal  contracts  is,  that,  if  assigned,  the  action  for  a 
breach  must  be  brought  in  the  name  of  the  assignor,  except  where  the  defendant 
has  expressly  promised  the  assignee  to  respond  to  him.  In  Granger  v.  The  Ploward 
Ins.  Co.,  5  Wend.  200,  202,  the  point  now  raised  was  discussed,  and,  we  think, 
decided  against  the  present  plaintiff.     The  argument  that  the  policy  in  question 


MARITIME  INSURANCE.  47] 


The  Policy — its  Form  and  Construction. 


It  was  supposed  that  the  underwriter  might  be  exempt  from  a 
loss  of  goods  stowed  on  deck,  upon  the  above  ground,  that  such 
loss  had  happened  by  the  merdiani's  own  default.     However,  the  Q. 

originally  contemplated  an  assignment,  would  be  equally  cogent  in  all  cases,  for 
aught  we  see,  of  a  promise  in  form  to  one  and  his  ass i gnu ;  and  yet  it  is  settled  that 
the  latter  words  do  not  impart  a  negotiable  qualitj-  to  the  promise,  so  as  to  enable 
the  assignee  to  sue  upon  it  in  his  own  name.  Skinner  v.  Somes,  14  Mass.  R.  107,  108." 
The  case  of  Jessel  v.  Williamsburgh  Ins.  Co.  was  an  action  on  a  fire  policy,  and  the 
underwriters  had  given  their  written  assent  to  the  assignment.  See  post,  "Fire  In- 
surance," note. 

A  policy  of  insurance  is  a  personal  contract  of  indemnit}',  not  an  incident  to  the 
subject  insured;  and  it  does  not  pass  with  a  transfer  of  the  property.  If  the  assured 
parts  with  his  interest  in  the  subject  insured,  the  contract  from  that  time  is  dissolved. 
But  the  transfer  of  the  property  may  be  accompanied  by  an  assignment  of  the 
policy,  which  then,  it  is  held,  inures  to  the  benefit  of  the  purchaser.  Powell  v. 
Innes,  11  Mees.  &  Wels.  10.  Carroll  v.  Boston  Marine  Ins.  Co.,  8  Mass.  515.  Gordon 
V.  Mass.  F.  <k  M.  Ins.  Co.,  2  Pick.  249,  258. 

In  the  usual  form  of  policies,  there  are  clauses  restricting  both  a  transfer  of  the 
interest  in  the  subject  insured,  and  an  assignment  of  the  policy.  As  to  the  effect 
and  construction  of  which,  see  Lazarus  v.  Commonwealth  Ins.  Co.,  5  Pick.  76.  S.  C. 
19  Pick.  81.     Smith  v.  Saratoga  M.  F.  Ins.  Co.,  1  Hill,  497. 

Indepeudent  of  these  clauses,  it  seems  generally  admitted,  that  marine  policies 
are  assignable  in  equity,  like  other  personal  contracts  or  choses  in  action ;  and  that 
the  consent  or  knowledge  of  the  underwriters  is  not  required  to  render  the  assign- 
ment valid.  Spring  v.  South  Carolina  Ins.  Co.,  8  Wheat.  2G8 ;  5  C.  R.  434.  Wake- 
field v.  Martin,  3  Mass.  558.  2  J.  Duer,  57,  58.  Ellis  on  Ins.  76.  1  Phill.  on  Ins 
34,  Z6.     Delaney  v.  Stoddart,  1  T.  R.  23. 

But  where  the  property  insured  is  absolutely  sold  or  transferred,  although  an 
assignment  of  the  policy  is  made  at  the  same  time,  it  seems  somewhat  difficult  to 
understand  how  a  contract  to  indemnify  the  vendor,  can  be  changed  into  one  to 
indemnify  the  vendee,  without  the  consent  of  the  underwriters.  It  is  said,  that  "  an 
averment  that  the  party  originally  assured  was  interested  at  the  time  of  the  loss,  is 
indispensable ;  and  when  the  property  has  been  sold  or  transferred,  can  only  be 
supported  by  evidence  that  he  agreed  to  keep  the  policy  alive,  as  a  trustee  for  the 
purchaser,  of  which  agreement,  the  assignment  and  delivery  over  of  the  policy,  are 
sufficient  evidence.  2  J.  Duer,  54,  note  (a).  Powell  v.  Innes,  11  Mees.  &  Wels.  10. 
The  question,  whether  the  agreement,  thus  proved,  supports  the  averment,  might, 
perhaps,  deserve  inquiry.  The  agreement,  it  would  seem,  ought  rather  to  have  been 
that  the  vendor,  in  respect  of  the  insurance,  agreed  to  hold  the  property  as  trustee 
of  the  purchaser. 

It  is  said  that  an  assignment  of  a  marine  policy  "may  accompany,  and  be  an 
incident  to,  a  transfer  of  the  property  insured ;  or  be  a  separate  and  independent 
act."  2  J.  Duer,  57.  The  same  writer  seems  inclined  to  limit  the  application  of  the 
clause  restricting  an  assignment  of  the  policy,  to  cases  where  it  is  accompanied  by  a 
transfer  of  the  property.     "When  an  assignment,  or  pledge  of  the  policy,  is  of  such 


472  MERCANTILE  CONTRACTS. 


Results  of  Contract. 


B.  has  decided  that  the  mere  unexphaiaed  fact  of  their  being  so 
stowed,  is  not,  in  se,  conclusive  of  such  a  default,  (x) 


Section  IV. — Results  of  Contract. 

Havino-  now  finished  the  consideration  of  the  form  and  con- 
struction of  the  contract,  we  proceed  to  inquire  respecting  its  re- 
suit:  this  will,  of  course,  be  either  the  safety  or  the  loss  of  the 
thing  insured.  In  case  of  its  safety,  little  matter  for  discussion 
ariscl  In  case  of  loss  by  any  of  the  perils  insured  against,  the 
first  consideration  is,  whether  the  loss  be  a  total  or  a, partial  one; 
for,  as  insurance  is  a  contract  of  indemnity,  the  insured,  if  he  have 
suffered  only  a  partial  loss,  will  be  entitled  only  to  a  partial  pay- 
ment from  the  insurer.  We  will,  therefore,  now  inquire  respect 
ing  the  distinction  between  these  two  classes  of  loss,  and  what  is, 
properly  speaking,  a  total  loss,  what  only  a.  partial  one. 

Total  Loss. — A  total  loss  is  of  two  sorts:  it  is  either  totalizer  se, 
or  such  as  may  be  rendered  total  by  abandonment,  which  is  a  relin- 
quishment of  whatever  may  be  saved  to  the  insurer.  The  object 
of  an  abandonment  is  to  prevent  the  insured  from  reaping  an  undue 
benefit  from  the  policy,  which  is  a  contract  of  indemnity,  and  under 
which,  therefore,  he  must  not  retain  any  part  of  the  subject  matter 
insured  if  he  call  on  the  underwriter  to  settle  with  him  for  a  total 
loss  of  it. 

{x)  Milward  v.  Hibbert,  3  Q.  B.  120. 


a  character  as  not  at  all  to  affect  the  insurable  interest  originally  meant  to  be 
covered,  nor  to  work  any  change  in  the  control  or  disposition  of  the  property  in- 
sured, it  cannot  possibly  affect  the  interest  of  the  underwriters ;  and  therefore, 
although  embraced  by  the  words  of  the  clause,  is  not  within  its  reasonable  pur- 
view."    2  J.  Duer,  65. 

And  it  has  been  held  that  the  reasons  which  induce  the  insurance  companies  to 
insert  clauses  in  their  policies  restraining  an  assignment,  have  no  existence  or  appli- 
cation after  the  risks  have  ceased,  and  the  assignment  is  made  of  a  right  to  recover 
for  a  loss  wh-ch  had  occurred.  Brichta  v.  N.  Y.  Lafayette  Ins.  Co.,  2  Hall,  372.  2 
J.  Duer,  65. 


MARITIME  INSURANCE.  473 


Results  of  Contract. 


A  total  loss  of  the  former  description  takes  place,  when  no  part 
of  the  subject  matter  of  insurance  exists  in  the  hands,  or  for  the  ben- 
efit, of  the  insured,  or  in  such  a  state  as  to  be  fit  for  any  useful  pur- 
pose. Thus,  the  loss  will  be  total  ^^er  5e,  not  merely  if  the  ship  insured 
be  consumed  by  fire,  or  destroyed  by  perils  of  the  sea,  or  by  some 
other  means  cease  to  exist  in  specie  ;  but  also  in  case  of  seizure,  de- 
tention, barratry,  and  so  forth,  if  the  dominion  of  the  seizors  con- 
tinue, the  loss  is  total  without  abandonment,  {yf^     And,  though  it 


(2/)  MuUett  V.  Shedden,  13  East,  304.    Mellish  v.  Andrews,  15  East,  13.    Bondrett 
V.  Hentigg,  1  Holt,  149.     Dixon  v.  Reid,  5  B.  &  A.  597. 


*  It  appears  to  be  an  established  doctrine  in  the  United  States,  that  an  abandon- 
ment once  rightfully  made,  is  conclusive  between  the  parties,  and  the  rights  flowing 
from  it  are  not  divested  by  any  subsequent  events,  which  change  the  situation  of  the 
property,  and  make  that  which  was  a  total  loss  at  the  time  of  abandonment,  a  par- 
tial loss  only.  And  the  right  of  abandonment  is  to  be  decided  by  the  actual  facts  at 
the  time  of  the  abandonment,  and  not  merely  by  the  information  of  the  assured ; 
and,  consequently',  if  the  facts  do  not  then  warrant  it,  no  prior  or  subsequent  events 
will  give  it  any  greater  efficacy.  The  rule  in  the  English  courts  is  different ;  there 
it  has  been  held,  that  if  an  abandonment  be  rightfully  made,  it  is  not  absolute,  but 
may  be  controlled  by  subsequent  events ;  so  that  if  the  loss  has  ceased  to  be  total  at 
any  time  before  action  brought,  the  abandonment  becomes  inoperative.  Peele  v. 
Merchants'  Ins.  Co.,  3  Mason,  36.  Bradlie  v.  Maryland  Ins.  Co.,  12  Pet  378,  397. 
Rhinelander  v.  Ins.  Co.  of  Pennsylvania,  4  Cranch,  29  ;  2  C.  R.  13.  Marshall  v.  Dela- 
ware Ins.  Co.,  4  Cranoh,  202 ;  2  C.  R.  84.  Pezant  v.  National  Ins.  Co.,  15  Wend.  460 
The  right  of  abandonment  as  to  a  ship  was  considered  in  a  case  just  cited,  Peele  v. 
Merchants'  Ins.  Co.,  by  Judge  Story,  and  after  an  elaborate  examination  into  the 
English  and  American  cases  on  the  subject,  he  says,  "If  there  be  anj-  general  princi- 
ple that  pervades  and  governs  tliem,  it  seems  to  be  this,  that  the  riglit  to  abandon 
exists,  whenever  from  the  circumstances  of  the  case,  the  ship,  for  all  the  useful  pur- 
poses of  a  ship  for  the  voyage,  is,  for  the  present,  gone  from  the  control  of  the  own- 
er, and  the  time  when  she  will  be  restored  to  him  in  a  state  to  resume  the  voyage  is 
uncertain  or  unreasonably  distant,  or  the  risk  and  expense  are  disproportioned  to 
the  expected  benefit  and  object  of  the  voyage.  In  such  a  case,  the  law  deems  the 
ship,  though  having  a  phj-sical  existence,  as  ceasing  to  exist  for  purposes  of  utility, 
and  therefore  subjects  her  to  be  treated  as  lost.  3  Mason,  65.  See  also  American 
Ins.  Co.  V.  Ogden,  15  "Wend.  538;  S.  C.  20  Wend.  287.  Cincinnati  Ins.  Co.  v.  Bake- 
well,  4  B.  Monroe,  541. 

In  the  case  of  Mareardier  v.  The  Chesapeake  Ins.  Co.,  8  Cranch,  39,  3  C.  R.  20,  it 
is  said  by  the  same  learned  judge,  in  delivering  the  opinion  of  the  Court,  "It  seems 
now  clear  that  a  technical  total  loss  may  arise  from  the  mere  deterioration  of  a  cargo 
by  any  of  the  perils  insured  against,  if  the  deterioration  be  ascertained  at  an  inter- 
mediate port  of  necessit}-,  short  of  the  port  of  destination.     In  such  case,  although 


474  MERCANTILE  CONTRACTS. 


Results  of  Contract. 


has  been  said  that  a  loss  by  perils  of  the  sea  cannot  be  total  if  the 
thing  exist  in  specie,  yet,  that  must  be  taken  only  to  mean,  if  it 
exist  for  any  useful  purpose ;  for  if  a  ship  be  so  battered  as  to  he 

the  ship  be  in  a  capacity  to  perform  the  voyage,  yet  if  the  voyage  be  not  worth  pur 
Buing,  or  the  thing  insured  be  so  damaged  and  spoiled  as  to  be  of  little  or  no  value, 
the  insured  has  no  right  to  abandon  the  projected  adventure,  and  throw  upon  tho 
underwriter  the  unprofitable  and  disastrous  subject  of  insurance."  See  also  Colum 
Man  Ins.  Co.  v.  Catlett,  12  Wheat.  383  ;  6  C.  R.  541. 

It  has  been  said,  that  there  can  be  no  abandonment  on  the  groimd  of  a  technical 
total  loss,  after  the  ship  has  completed  the  voyage  for  which  she  was  insured,  however 
great  may  have  been  the  injury  which  she  sustained  during  its  progress ;  and  so,  if 
the  goods  insured  specifically  remain,  and  are  actually  landed  at  the  port  of  delivery, 
however  damaged  in  the  voyag;  the  injury  will  amount  to  but  a  partial  loss;  unlesa 
they  be  rendered  of  no  value,  and  altogether  useless,  for  then  the  loss  is  total.  Pezani 
V.  The  National  lus.  Co.,  15  Wend.  453,  458.  Parage  v.  Dale,  3  John.  Cas.  156.  Mar 
shall  Ins.  486.  But  it  is  said  by  Mr.  Phillips,  after  referring  to  the  case  of  Parage  v. 
Dale,  that  "  there  appears  to  be  no  reason  why  the  ship  may  not  be  abandoned  at 
the  port  of  destination,  if  she  arrives  there  in  a  disabled  state,  not  capable  of  being 
repaired  or  not  worth  repairing."  He  cites  Ralston  v.  Union  Ins.  Co.,  4  Bingh.  386, 
and  Peters  v.  Phoenix  Ins.  Co.,  3  Serg.  &,  Rawle,  25,  and  quotes  the  remark  of  Mr. 
Justice  Yates  in  the  last  case,  that  "if  the  vessel  received  her  death  wound  during 
the  voyage  insured,  it  was  of  no  moment  when  the  loss  was  ascertained,  although 
siibsequently  to  her  arrival  at  the  port  of  destination."  See,  however,  the  comments 
on  the  same  cases,  15  Wend.  459,  500. 

It  is  a  general  rule  in  the  United  States,  that  if  the  ship  or  goods  insured  be 
damaged  to  more  than  half  of  the  value,  by  any  peril  insured  against,  the  assured  may 
abandon  and  recover  for  a  total  loss.  This  rule,  it  seems,  is  not  practised  upon  in 
England;  the  expense  of  repairs  is  one  ground  of  abandonment  in  the  courts  there, 
but  they  have  adopted  no  specific  proportion.  2  Phil,  on  Ins.  2*71,  273,  2d  edit.  3 
Kent.  Com.  329. 

In  respect  to  the  mode  of  ascertaining  the  value  of  the  ship,  and  of  course  whether 
she  is  injured  to  the  amount  of  half  her  value,  the  true  basis  of  the  calculation  is  the 
value  of  the  ship  at  the  time  of  the  disaster ;  and  that,  if  after  the  damage  is  or  might 
be  repaired,  the  ship  is  not,  or  would  not  be  worth,  at  the  place  of  the  repairs,  dou- 
ble the  cost  of  the  repairs,  it  is  to  be  treated  as  a  technical  total  loss.  The  valua- 
tion of  the  vessel  in  the  policy,  or  the  value  at  the  home  port,  or  in  the  general 
market  of  other  ports,  constitutes  no  ingredient  in  ascertaining  whether  the  injury 
by  the  disaster  is  more  than  one-half  the  value  of  the  vessel  or  not.  For  the  like 
reason,  the  ordinary  deduction  in  cases  of  a  partial  loss  of  one-third  new  for  old, 
from  the  repairs,  is  equally  inapplicable  to  cases  of  a  technical  total  loss,  by  any 
injury  exceeding  one-half  the  value  of  the  vessel.  Bradlie  v.  Maryland  Ins.  Co.,  12 
Pet.  3*78.  Patapsco  Ins.  Co.  v.  Southgate,  5  Pet.  604.  Peele  v.  Merchants'  Ins.  Co., 
3  Mason,  27. 

But  in  New  York  and  Massachusetts,  it  has  been  held,  in  contradiction  to  the 
opinion  of  the  Supreme  Court  of  the  United  States,  as  above  stated,  that  the  valua 


MARITBIE  INSURANCE.  475 


Results  of  Contract 


rather  a  congeries  of  planks,  than  a  ship  ;  (s)  or  if  the  cargo  be  so 
damaged  as  to  exist  only  in  the  shape  of  a  nuisance ;  (a)  in  such 
cases  the  loss  is  total  without  abandonment. 

It  was  indeed  decided  by  the  Court  of  Common  Pleas,  that, 
where  the  property  continues  to  exist  and  be  of  some  value  under 
its  original  denomination,  but  is  sold  on  account  of  the  impossibility 

(2)  Cambridge  v.  Anderson,  2  B.  <fe  C.  691 ;  1  R.  &  M.  60.     Sed  vide  Bell  v.  Nixon, 
1  Holt,  423,  425,     Martin  v.  Crockatt,  14  East,  465. 

(a)  Djson  v.  Rowcroft,  3  B.  &  P.  474.     Cologaa  v.  L.  A,  Comp.,  5  M.  &  S.  447. 


tion  of  the  vessel  in  the  policy  is  to  be  taken  as  the  true  value,  and  that  the  deduc- 
tion of  one-third  new  for  old  is  to  be  made  from  the  estimated  amount  of  repairs,  as 
in  cases  of  a  partial  loss.  American  Ins.  Co.  v.  Ogden,  20  Wend.  297.  Deblois  v. 
Ocean  Ins.  Co.,  16  Pick.  312.  Orrok  v.  Commonwealth  Ins.  Co.,  21  Pick.  456.  Hall 
V.  Ocean  Ins.  Co.,  21  Pick.  472. 

An  abandonment  must  be  on  sufficient  ground,  and  the  accident  occasioning  it 
described  with  certainty,  so  as  to  enable  the  underwriter  to  determine  whether  he 
is  bound  to  accept.  The  true  cause  must  be  stated,  and  when  the  assured  relies  on' 
matter  which  was  not  a  justifiable  cause,  he  is  bound  by  it,  and  cannot  avail  himself 
of  a  subsequent  accident  without  making  a  new  abandonment.  Suj'dam  v.  Marine 
Ins.  Co.,  1  John.  181. 

The  same  case  of  necessity  which  justifies  a  sale  by  the  master  will,  in  general, 
authorize  an  abandonment,  as  to  which,  see  ante,  note,  page  239.  As  to  the  option 
to  abandon ;  Smith  v.  Manufacturers'  Ins.  Co.,  7  Mete.  448.  Gracie  v.  N.  Y.  Ins.  Co., 
8  John.  244.  As  to  the  necessity  of  abandonment  before  a  recovery  for  a  total  loss, 
in  all  cases,  unless  tlie  loss  is  in  fact  total ;  7  Mete.  448.  Pierce  v.  Ocean  Ins.  Co., 
18  Pick.  91.  As  to  abandonment  after  a  vessel  is  repaired  and  pursuing  her  voy- 
age, which  it  seems  will  not  be  allowed,  whatever  has  been  the  cost  of  the  repairs ; 
Dickey  v.  N  T  Ins.  Co.,  4  Cow.  244,  S.  C.  3  Wend.  658.  Depau  v.  Ocean  Ins.  Co.,  5 
Cow.  63.  Humphreys  v.  Union  Ins.  Co.,  3  Mason,  429.  As  to  whether  the  inability 
of  the  master  to  obtain  funds  to  make  repairs  will  justify  an  abandonment;  Ameri- 
can Ins.  Co.  V.  Ogden,  15  Wend.  532,  S.  C.  20  Wend.  287.  As  to  when  an  abandon- 
ment has  been  made  within  a  reasonable  time,  which,  it  seems,  is  a  question  for  the 
jury;  Chesapeake  Ins.  Co.  v.  Stark,  6  Cranch,  268,  2  C.  R.  367.  Maryland  Ins.  Co.  v. 
Ruden,  6  Cranch,  338,  2  C.  R.  392.  Livingston  v.  Maryland  Ins.  Co.,  7  Cranch,  506, 
2  C.  R.  589.  As  to  form  of  notice  of  abandonment;  6  Cranch,  268,  2  C.  R.  367.  12 
Wheat.  383,  6  C.  R.  548.  Patapsco  Ins.  Co.  v.  Southgate,  5  Pet.  604.  As  to  accept- 
ance of  abandonment ;  Peele  v.  Merchants'  In.s.  Co.,  3  Mason,  27.  Cincinnati  Ins. 
Co.  V.  Bakewell,  4  B.  Monroe,  541.  Peele  v.  Suffolk  Ins.  Co.,  7  Pick.  254.  Bell  v.  Smith, 
2  John.  98.  Revocation  or  waiver;  Columbian  Ins.  Co.  v.  Ashby,  4  Pet.  139.  Ogden 
V.  Firemen's  Ins.  Co.,  10  John.  177;  12  John.  25.  Effect  of  abandonment;  6  Pet. 
622.  4  B.  Monroe,  541.  Comegys  v.  Vasse,  1  Pet.  193,  213.  As  to  freight;  Ham- 
mond V.  Essex  F.  &  M.  Ins.  Co.,  4  Mason,  196. 


476  MERCANTILE  CONTRACTS. 

Results  of  Contract. 

of  preserving  it  up  to  the  termination  of  the  voyage,  the  insured,  if 
they  desire  to  treat  the  loss  as  total,  must  abandon.  (Z))*  That  de« 
cision  was,  however,  reversed  in  the  Exchequer  Chamber,  and  the 
rule  laid  down  in  the  judgment  there  delivered  is  as  follows :  "  If 
goods  once  damaged  by  the  perils  of  the  sea,  and  necessarily  landed 
before  the  termination  of  the  voyage,  are,  by  reason  of  the  damage, 
in  such  a  state,  though  the  species  be  not  utterly  destroyed,  that  they 
cannot  with  safety  be  reshipped  into  the  same  or  any  other  vessel ; 
if  it  be  certain  that,  before  the  termination  of  the  original  voyage, 
the  species  itself  would  disappear,  and  the  goods  assume  a  new 
form,  losing  all  their  original  character ;  or  if,  though  imperishable, 
they  are  in  the  hands  of  strangers,  not  under  the  control  of  the  as- 
sured ;  if,  by  any  circumstances  over  which  he  has  no  control,  they 
can  never,  or  within  no  assignable  period,  be  brought  to  their  orig- 
inal destination,  the  circumstances  of  their  existing  in  specie  at  that 
forced  termination  of  the  risk  is  of  no  importance.  The  loss  is,  in 
its  nature,  total  to  him  who  has  no  means  of  recovering  his  goods, 


{b)  Roux  V.  Salvador,  1  Bingli.  N.  C.  526 ;  3  Bingh.  N.  C.  266.  See,  however, 
Doyle  V.  Dallas,  1  M.  &  Rob.  48.  Gardner  v.  Salvador,  1  M.  &  Rob.  117.  In  Barr  v. 
Gibson,  3  M.  &  W.  390,  the  Court  of  Exchequer  took  a  distinction  between  the  loss 
of  a  ship  which  would  render  her  incapable  of  being  conveyed  as  such,  and  a  loss 
which  would  be  total  within  the  meaning  of  a  policy,  saying  that  the  loss  consisted 
in  its  loss  for  beneficial  purposes. 

*  In  the  recent  case  of  Knight  v.  Faith,  15  Ad.  &  Ell.  N.  S.  649,  the  necessity  of 
abandonment  in  cases  of  constructive  total  loss  was  affirmed,  and  a  general  miscon- 
ception of  the  doctrine  established  in  Roux  v.  Salvador  pointed  out.  The  Court  dis- 
pensed with  the  notice  of  abandonment  in  that  case,  on  the  ground  that  by  the  vir- 
tual destruction  of  the  subject  matter,  there  was  an  absolute  total  loss,  and  not  a  mere 
constructive  loss.  Lord  Abinger,  in  his  judgment,  referring  to  the  cases  in  wiiich  the 
party  may  elect  to  consider  the  loss  as  total,  j^i'oceeds :  "As  the  thing  insured,  or 
a  portion  of  it,  still  exists,  and  is  vested  in  him,  the  very  principle  of  the  indemnity  re- 
quires  that  he  should  make  a  cession  of  all  his  right  to  the  recovery  of  it."  "  There  is 
reason  to  apprehend,"  says  Lord  Campbell,  in  the  case  of  Knight  v.  Faith,  "  that  great 
frauds  have  been  committed  in  distant  parts  under  pi-etence  that  ships  insured  have 
received  an  injury  which  renders  it  '.mprudent  to  repair  them ;  and  such  frauds 
would  be  much  facilitated,  if  the  owners  were  not  required  to  make  any  communi- 
cation to  the  insurer  until  they  came  upon  him  peremptorily  to  demand  payment  of 
the  full  sum  subscribed  in  the  policy."  The  case  of  American  Insurance  Company 
V.  Francia,  9  Barr's  Pa.  Rep.  490,  is  in  accordance  with  this  decision.  Contra,  Mu- 
tual Safety  Ins.  Co.  v.  Cohen,  3  Gill.  459. 


MARITIME  INSURANCE  477 

Results  of  Contract. 


whether  his  inability  arise  from  their  annihilation,  or  from  any 
other  insuperable  obstacle." 

Even  where  a  total  loss  has  occurred,  by  the  sale  of  the  goods, 
a  question  may  possibly  arise,  whether  the  assured  have  not,  by 
electing  to  take  the  proceeds  instead  of  making  his  claim  on  the 
underwriters,  forfeited  his  claim  to  recover  a  total  loss,  if  he  have 
thereby  altered  the  position  of  the  facts,  so  as  to  affect  the  interests 
of  the  underwriter,  (c) 

When  the  loss  is  not  total  per  se,  the  right  to  abandon  depends 
on  its  amount.  The  doctrine  formerly  held  on  this  subject  was,  as 
succinctly  stated  in  2  Wms.  Saund.  203,  c.  note  19,  that,  when  the 
voyage  was  lost,  or  the  expense  of  pursuing  it  exceeded  the  benefit 
arising  from  it,  and,  therefore,  it  was  not  worth  pursuing,  in  such 
case  the  insured  might  abandon.  But  this  doctrine  is  narrowed  by 
late  decisions ;  {d)  and  it  does  not  seem  possible  to  imagine  a  case 
in  which  the  loss  of  the  voyage,  independently  of  some  great  jeo- 
pardy affecting  the  subject  matter  of  insurance,  would  entitle  the 
assured  to  abandon.  At  the  same  time,  the  property  may  be 
in  jeopardy,  which,  though  a  partial  preservation,  realization,  re- 
covery, or  recapture  of  it  may  possibly  take  place,  will  yet,  by 
rendering  it  improbable  that  there  should  be  any  effectual  restitu- 
tion, give  the  insured  a  right  to  abandon,  (e) 

In  cases  in  which  the  law  requires  an  abandonment^  not  "only 


(c)  See  Mitchell  v.  Edie,  1  T.  R.  608,  commented  on  in  Roux  v.  Salvador,  3  Bingli. 
K  C.  290. 

{d)  Anderson  v.  Wallis,  2  M.  &  S.  240.  Falkner  v.  Riteliie,  ibid.  293.  Naylor  v. 
Taylor,  9  B.  &  C.  718.  Thornley  v.  Hebson,  2  B.  <fe  A.  513.  Bainbridge  v.  Neilson, 
0  East,  329.     Brotherston  v.  Barber,  5  M.  &  S.  419. 

(e)  Holds\P'orth  v.  Wise,  7  B.  &  C.  794.  Benson  v.  Chapman,  6  M.  &  Gr.  792. 
Parry  v.  Aberdein,  9  B.  <fe  C.  411.  M'lver  v.  Henderson,  4  M.  &  S.  576.  Cologan  v. 
L.  A.  Compy.,  5  M.  &  S.  447.  Dixon  v.  Reid,  5  B.  <fe  A.  597.  Gernon  v.  R.  E.  A. 
Compy.,  6  Taunt.  883.  Idle  v.  R.  E.  A.  Compy.,  8  Taunt.  755 ;  3  B.  tfe  B.  151,  n.  a. 
Reade  v.  Benham,  3  B.  &  B.  147.  Meabourne  v.  Leckie,  4  D  <k  R.  207.  Cambridge 
V.  Anderton,  2  B.  <fe  C.  691.  Robertson  v.  Clarke,  1  Bingh.  445.  Robertson  v.  Carru- 
tliers,  2  Stark.  571.  Vide  Smith  v.  Robertson,  2  Dow.  474.  Doyle  v.  Dallas,  1  M.  & 
Rob.  48.  Gardner  v.  Salvador,  ibid.  116.  Robertson  v.  Clarke,  1  Bingh.  445.  Read 
V.  Bonham,  3  B.  <fe  B.  147.  See  Cambridge  v.  Anderton,  2  B.  &  C.  691.  Gernon  v. 
R.  E.  A.  Compy.,  6  Taunt.  383 ;  2  Marsh.  88.  Freeman  v.  E.  I.  Compy.,  5  B.  <fe  A. 
617.  See  Morris  v.  Robinson,  3  B.  &  C.  196.  Hudson  v.  Harrison,  3  B.  <&  B.  97.  Un 
derwood  v,  Robertson,  4  Camp.  138. 


478  MERCANTILE  COISTTRACTS. 

Results  of  Contract.  * 

the  thing  insured  or  part  of  it  is  supposed  to  exist  in  specie,  but 
there  is  a  prospect,  however  remote,  of  its  arriving  at  its  destina- 
tion, or  at  least  of  its  value  being  in  some  way  affected  by  the 
measures  that  may  be  adopted  for  the  recovery  or  preservation  of 

it."(/) 

In  Young  v.  Turing^  {g)  in  which  notice  of  abandonment  had 
been  given,  the  ship  was  cast  away  upon  the  Goodwin  Sands,  but 
might  have  been  refitted  ;  the  Lord  Chief  Justice  of  the  Common 
Pleas  told  the  jury  that  they  were  to  say,  whether,  imder  all  the 
circumstances  attending  the  ship  (among  which  was  her  national 
character),  a  man  of  prudence  and  discretion  uninsured  would  have 
repaired  her  or  not;  that,  if  he  would,  the  loss  was  partial;  if  he 
would  not,  total  And  that,  in  determining  this  question,  they 
were  to  take  as  the  value  of  the  ship  her  real  value,  not  the  sum  at 
which  she  was  valued  in  the  policy.  This  direction  was  uj)held  by 
the  Exchequer  Chamber,  and  in  a  similar  case  has  received  the 
sanction  of  the  House  of  Lords,  (h) 

AVhen  the  insured  are  entitled  to  abandon,  and  think  proper 
(for  they  are  in  no  case  obliged)  to  do  so,  they  must  give  notice  of 
abandonment  within  a  reasonable  time ;  (^)  since  it  would  be  unjust 
to  allow  them  to  take  the  chance  of  making  the  best  of  the  accident 
for  themselves,  and  only  abandon  to  the  underwriter  when  they 
found  that  did  not  answer ;  therefore  a  delay  from  September  6  to 
October  14  has  been  deemed  too  long,  {j)  So  where  the  ship  was 
surveyed  at  Kinsale  on  December  14,  notice  of  abandonment  given 
in  London  on  January  6  was  held  too  late,  the  ordinary  course  of 
communication  being  four  or  five  days,  (k)  However,  it  is  sufficient 
if  notice  be  given  in  a  reasonable  time  after  the  insured  have 
received  intelligence  of  the  loss,  and  had  an  opportunity  of  ascer- 


(/)  Per  cur.  in  Rdux  v.  Salvador,  3  Bingh.  K  C.  287.  And  see  Mellish  v.  An- 
drews, 15  East,  13.     MuUett  v.  Shedden,  13  East,  304. 

{(/)  Young  V.  Turing,  2  M.  &  Gr.  593.  See  also  Manning  v.  Irving,  1  C.  B.  168, 
and  in  error,  2  C.  B.  784. 

(A)  Irving  v.  Manning,  Dom.  Proc.  1847. 

(i)  Mitchell  V.  Edie,  1  T.  R.  608.  Hunt  v.  R.  E.  A.  Compy.,  5  M.  &  S.  47.  Mellish 
V.  Andrews,  15  East,  13.     Alwood  v.  Hencliall,  Park,  72. 

( j)  Barker  v.  Blakes,  9  East,  283. 

(A-)  Aldridge  v.  Bell,  1  Stark.  498.     See  Kelly  v.  Walton,  2  Camp.  155. 


MARITIME  IXSURAIVCR  479 


Results  of  Contract. 


taining  the  extent  of  damage.  {I)  A  notice  in  two  days  seems  in 
one  case  to  have  been  thought  clearly  sufficient,  (m) 

An  abandonment  cannot  be  partial :  it  must  be  of  the  whole 
thing  insured.  (71)  It  must  also  be  unconditional,  at  least,  unless  the 
underwriter  think  proper  to  accept  a  conditional  one.  (0)  It  must 
be  express  too,  and  positive;  a  request  to  the  underwriter  to  give 
directions  for  the  disposition  of  the  effects  insured,  and  to  settle  for 
a  total  loss,  is  not  sufficient,  (jy)  But  the  underwriter  may  waive  an 
informality  in  the  notice  of  abandonment  by  his  acquiescence,  and, 
it  has  been  thought,  even  by  lying  by,  and  making  no  objection  to 
it.  (5')     The  abandonment  may  be  by  parol,  (r) 

The  effect  of  an  abandonment  is  to  divest  the  property  of  the 
thing  abandoned  out  of  the  insured,  and  vest  it  in  the  insurer,  for 
whom  the  former  becomes  a  trustee.  (.?)  So  completely  has  it  this 
effect,  that,  where  a  ship  is  abandoned,  the  right  to  freight  which 
she  may  subsequently  earn  passes  to  the  insurer,  though  such 
freight  may  be  the  subject  of  another  insurance  with  other  under- 
writers; {t)  the  abandonment  operating  like  a  sale  or  assignment  of 
the  ship,  which  transfers  the  freight  as  an  incident,  {u)  But  the  in- 
surers, of  course,  only  receive  the  balance  which  may  remain,  after 
deducting  the  necessary  expenses  incurred  in  the  preservation  of 
the  property  abandoned  to  them,  (v) 


(/)  Read  v.  Bonham,  3  B.  &  B.  U1.  Gernon  v.  R.  E.  A.  Co.,  1  Holt,  i1 ;  6  Taunt.  383. 

(?«)  Anderson  v.  Wallis,  2  M.  &  S.  241.  (n)  Park,  229;  Marsh.  600. 

(0)  M'Masters  v.  Slioolbred,  1  Esp.  23Y. 

(p)  Parmeter  v.  Todliunter,  1  Camp.  541.  Da  Costa  v.  Xewnham,  2  T.  R.  407. 
Havelock  v.  Rockwood,  8  T.  R.  277.  Lockyer  v.  Offlej',  1  T.  R.  252.  Thelluson  v. 
Fletcher,  1  Esp.  73. 

{q)  Hudson  v.  Harrison,  3  B.  (fe  B.  97.  See  Da  Costa  v.  Newnham,  2  T.  R.  407. 
Hagedorn  v.  Whitmore,  1  Stark.  157. 

(r)  Read  v.  Bonhara,  3  B.  &  B.  149.  See,  however,  Lord  Ellenborough's  remarks 
as  to  the  propriety  of  using  writing,  and  inserting  the  word  abandon.  Parmeter  v. 
Todhunter,  1  Camp.  541. 

(s)  Randall  v.  Cochran,  1  Ves.  sen.  98.  Leatham  v.  Terry,  3  B.  .fc  P.  479.  Tliomp- 
son  V.  Roweroft,  4  East,  34. 

{t)  Case  V.  Davidson,  5  M.  <fe  S.  79 ;  2  B.  &  B.  379.  Thompson  v.  Roweroft,  4 
East,  34.     Sharp  v.  Gladstone,  7  East,  24. 

(?()  Kerswill  v.  Bishop,  2  Tyrwh.  602 ;  2  C.  &  J.  259.  Chinnery  v.  Blackburne,  1 
H.  Bl.  117.     See  Benson  v.  Chapman,  6  M.  &  Or.  792. 

(v)  Sharp  v.  Gladstone,  7  East,  24. 


480  MERCANTILE  CONTRACTS. 

Results  of  Contract. 


The  history  of  the  law  of  abandonment,  both  in  our  own  and 
foreign  countries,  will  be  found  learned!}^  discussed  in  the  judgment 
of  Lord  Abinger,  in  the  great  case  of  Roux  v.  Salvador,  {id) 

It  ought  to  be  observed  here,  before  quitting  the  head  of  total  loss, 
that  there  may  be  a  total  loss  of  an  integral  portion  of  the  cargo. 
As  where  the  insurance  was  on  several  hogsheads  of  sugar,  and 
each,  hogshead  was  separately  valued  and  insured,  a  loss  of  one  of 
them  was  held  to  be  a  total  loss  of  that  hogshead,  {x)  On  the  other 
hand,  where  a  part  of  each  hogshead  was  saved,  the  jury  having 
stated  their  opinion  that  the  loss  was  an  average,  the  court  held 
them  right  in  so  doing,  (y)  The  distinction  between  these  two 
classes  of  cases  is  explained  in  Hills  v.  London  Assurance  Corpora- 
tion, (2)  where  a  loss  of  wheat  pumped  out  with  water  in  foul 
weather,  was  held  only  an  average. 

Partial  Loss. — The  term  partial  loss  needs  no  explanation  :  it  is, 
bowever,  proper  to  remark,  that  a  loss  which  was  once  total,  may 
by  matter  ex  j^ost  facto  become  a  partial  one.  Thus,  if  a  ship  be 
captured,  the  loss  is  total,  and,  no  doubt,  if  she  continue  in  the 
power  of  the  enemy  up  to  the  time  of  bringing  the  action,  the 
insured  may  recover  for  a  total  loss.  But  if  she  escape,  or  be  re- 
captured, so  as  to  be  still  of  value,  that  which  was  once  a  total  loss 
becomes  a  partial  one.  (a)  So,  when  there  is  a  policy  on  freight, 
and  the  ship  is  detained  under  an  embargo,  the  loss  is  prima  facie 
total ;  yet,  if  the  embargo  be  taken'  off,  and  she  afterwards  earn 
freight,  it  becomes  partial,  il) 

With,  respect  to  the  mode  in  which  the  sum  to  be  paid  by  the 
underwriter,  on  account  of  a  partial  loss,  is  calculated;  if  the 
damage  was  suffered  by  the  ship,  and  has  been  repaired  by  the 
owner,  he  will  not  be  allowed  the  full  cost  of  repairing,  but  one- 
third  is  deducted  in  consideration  of  the  benefit  which  he  derives 


(w)  3  Bingh.  K  C.  282-290. 
(x)  Davy  v.  Milford,  15  East^  599. 
(y)  Hedburgh  v.  Pearson,  V  Taunt.  154  ;  2  Marsh.  432. 
(z)  Hills  v.  London  A.  Co.,  5  M.  &  W.  569. 

(a)  2  Wms.  Saunds.  203,  b.  n.  19.     Bainbridge  v.  Nelson,  10  East,  329.    Brothers- 
ton  V.  Barber,  5  M.  &  S.  418.     Patterson  v.  Ritchie,  4  M.  &  S.  393. 

(6)  Macarthy  v.  Abel,  5  East,  388.     Everth  v.  Smith,  2  M.  &  S.  2*78. 


MARITIME  IXSURAXCE  4S1 


Results  of  Contract. 


from  new  materials  in  lieu  of  old:(c)  if  by  tlie  goods,  the  mode 
adopted  is,  to  ascertain  the  difference  between  the  gross  proceeds 
of  the  goods,  on  their  arrival  at  their  destined  port,  and  what  would 
have  been  their  gross  proceeds  had  they  not  been  injured.  Then, 
as  what  would  have  been  their  gross  proceeds  if  sound,  is  to  their 
gross  proceeds  when  damaged,  so  is  their  original  value  to  a  fourth 
quantity,  which  fourth  quantity,  being  subtracted  from  the  original 
value,  will  give  the  sum  to  be  paid  by  the  underwriters,  {d)  Thus, 
suppose  the  original  value  was  100/. ;  that  the  cargo,  had  it  arrived 
safe  at  the  end  of  its  voyage,  would  have  fetched  200Z.,  but  in  its 
damaged  state  will  fetch  only  loOZ. ;  then  as  200  :  150  :  :  100 :  to 
the  sum  required,  which  will,  therefore,  amount  to  75/. ;  subtracting 
751.  from  100/.  the  original  value,  we  obtain  25/.  the  estimated  loss, 
whicli  must  be  made  good  by  the  underwriter.  The  reason  for 
adopting  the  original  value  as  the  basis  of  this  calculation  is,  that 
the  insurance  is  a  contract  of  indemnity,  and  the  assured  ought  not 
to  be  allowed  to  make  a  profit  by  it,  which  he  would  do  if  he  were 
to  receive  any  more  than  he  originally  paid.  The  mode  of  ascer- 
taining the  original  value  of  the  goods  in  the  case  of  an  open  policy, 
is,  to  take  the  invoice  price  at  the  loading  port,  and  add  to  that  the 
premium  of  insurance  and  commission ;  (e)  these  being  both  charges 
to  which  the  insured  has  actually  been  put,  on  account  of  the 
goods,  in  order  to  send  them  on  the  voj'age :  whether  a  payment 
on  the  shipment  of  the  goods  can  be  added  to  the  value,  is  a  ques- 
tion as  yet  undecided.  (/)  "When  the  policy  is  a  valued  one,  the 
parties  have  themselves  agreed  on  the  original  value  of  the-goods, 
and  the  standard  is  therefore  adopted  which  they  have  fixed  in  the 
policy,  (g)  If  the  policy  be  on  freight,  and  open,  which  is  un- 
common, the  usage  is  to  calculate  the  loss  upon  the  gToss,  not  on 
the  net  value.  (A) 

(c)  Poingdestre  v.  R.  E.  A.  Compj*.,  1  R.  <feM.  STS.  See  Da  Costa  v.  Xe-waliara,  2 
T.  R.  407.  See  the  qualificatioa  in  Pirie  v.  Steele,  2  M.  &  Rob.  49,  -whicli  excludes  tha 
new  for  the  old  deduction  in  cases  of  loss  occurring  during  the  ship's  first  voyage. 

((/)  Usher  v.  Noble,  12  East,  639.  Johnson  v.  Sheddon,  2  East^  581.  Lewis  v. 
Rucker,  2  Burr.  1167.     Hurry  v.  R.  E.  A.  Corapy.,  3  B.  <fe  P.  308. 

(e)  Langhorn  v.  AUnutt,  4  Taunt.  511. 

(/)  Winter  v.  Haldimand,  2  B.  <fe  Ad.  649. 

ig)  Lewis  v.  Rucker,  2  Burr.  1167.     See  12  East,  647. 

(A)  Palmer  v.  Blackburn,  1  Bingli.  61. 

31 


482  MERCAIvTILE  COXTRACTS. 

Results  of  Contract. 

Generally  speaking,  where  property  which,  has  been  partially 
deteriorated,  is  afterwards  totally  lost  to  the  insured,  and  the  pre- 
vious deterioration  thus  become  a  matter  of  perfect  indifference  to 
his  interest,  he  cannot  make  it  the  ground  of  a  claim  upon  the  un- 
derwriter; for  of  what  consequence  is  the  intermediate  condition 
of  the  thing,  if  he  be  never  to  receive  it  again  ?  But  there  may  be 
cases  in  which,  though  a  prior  damage  be  followed  by  a  total  loss, 
the  assured  may,  nevertheless,  have  rights  or  claims  in  respect  of 
that  prior  loss,  which  may  not  be  extinguished  by  the  subsequent 
total  loss.*  Actual  disbursements,  for  repairs  in  fact  made  in  con- 
sequence of  injuries  by  perils  of  the  seas,  previous  to  the  happening 
of  the  total  loss,  are  of  this  description ;  unless,  indeed,  they  are 
more  properly  to  be  considered  as  covered  by  that  authority  with 
which  the  assured  is  usually  invested  by  the  policy,  of  "suing, 
laboring,  and  travelling,  &c.,  for,  in,  and  about  the  defence,  safe- 
guard, and  recovery  of  the  property  insured,"  in  which  case,  the 
amount  of  such  disbursements  might  more  properly  be  recovered  as 
money  paid  for  the  underwriter  under  the  direction  and  allowance 
of  this  provision  of  the  policy,  than  as  a  substantive  average  loss, 
to  be  added  cumulatively  to  the  amount  of  the  total  loss  which  is 
afterwards  incurred.  For  such  disbursements  the  underwriter  is 
liable  over  and  above  the  amount  of  his  subscription.  ({)f 


(i)  Livie  v.  Janson,  12  East,  648.     Le  Cheminant  v.  Pearson,  4  Taunt.  367.      Vide 
tamen  De  Haux  v.  Salvador,  4  Ad.  <fe  E.  420. 


*  This  doctrine  was  considered  in  Knight  v.  Faith,  15  Ad.  &  Ell.  N.  S.  649.  In 
that  case  there  was  no  actual  total  loss,  but  a  constructive  total  loss,  for  which, 
however,  the  underwriters  were  not  responsible,  in  consequence  of  the  failure  of  the 
assured  to  give  notice  of  abandonment.  The  underwriters  were  held  liable  for  a 
partial  loss,  from  which  the  subsequent  loss  resulted.  Lord  Campbell  thus  stated 
the  principle.  "The  insurers  on  a  ship,  if  they  pay  a  total  loss,  certainly  are 
not  liable  in  respect  of  any  prior  partial  loss  which  has  not  been  repaired ;  and  if  a 
total  loss  occurs,  from  which  they  are  exempt,  they  are  not  liable  for  any  prior 
partial  loss,  which  in  that  event  does  not  prove  prejudicial  to  the  assured.  In  the 
case  before  the  Court,  the  partial  loss  caused  an  actual  prejudice  to  the  assured, 
and  therefore  was  not  merged  in  a  final  loss,  for  which  the  insured  were  not  liable 
to  pay. 

•j-  "Where  a  vessel  during  her  voj^age  puts  into  a  port  of  necessity',  and  is  re- 
paired, and  afterwards  proceeds  on  her  voj-age,  and  is  totally  lost,  the  insured  ie 


MARITIME  INSURANCE.  483 

Procsedings  after  a  Loss. 


Section  Y. — Proceedings  after  a  Loss. 

Adjustment— When  a  loss  has  taken  place,  unless  the  under- 
writer can  deny  his  liability  to  make  it  good,  he  usually  proceeds 
to  adjustment^  which  is  the  settling  and  ascertaining  the  amount 
which  the  assured,  after  allowances  and  deductions  are  made,  is 
entitled  to  receive  under  the  policy,  and  fixing  the  proportion 
which  each  underwriter  is  liable  to  pay:  it  operates  as  an  ad- 
mission of  all  the  facts  necessary  to  constitute  the  underwriter 
responsible,  (/)  but  it  is  not  conclusive  upon  him ;  and,  though  it 
is  incumbent  on  an  underwriter  who  has  once  adrntted  his  liability 
by  an  adjustment,  to  make  out  a  strong  case,  yet  until  actual  pay- 
ment of  the  money,  he  may  avail  himself  of  any  defence  which  the 
law  or  facts  will  furnish,  ik) 

If  the  underwriter  contests  his  liability,  he  either  relies  upon 
the  absence  of  some  of  the  above-mentioned  requisites  to  a  contract 
of  insurance ;  by  alleging,  for  instance,  that  the  insured  is  an  alien 
enemy,  or  that  there  is  no  legal  subject  matter  of  insurance,  ex.  gr.^ 
that  the  policy  is  a  wager  policy,  or  a  contract  of  reassurance ;  or 
he  insists  that  the  risk  never  began,  as,  for  instance,  that  the  ship 


(j)  Voller  V.  Griffiths,  S.  N.  P.  983.  Rodgers  v.  Naylor,  Park,  194.  Christian  v. 
Coombe,  2  Esp.  489.    Shepherd  v.  Chewter,  1  Camp.  274. 

[k)  Herbert  v.  Champion,  1  Camp.  124.  De  Garron  v.  Galbraith,  Peake,  Add.  Ca. 
3*7.     Note  by  Mr.  Campbell  to  Shepherd  v  Chewter  cited  ante. 

entitled  to  recover  the  partial  loss  arising  from  the  repairs,  and  general  averag-e 
consequent  thereon,  in  addition  to  the  total  loss.  Saltus  v.  Comm.  Ins.  Co.,  10 
John.  487. 

The  deduction  of  one-third  new  for  old  is,  it  seems,  to  be  made,  though  the  vessel 
be  new,  and  on  her  first  voyage.  Dunham  v.  Commercial  Ins.  Co.,  11  John.  315. 
Nichols  V.  Maine  F.  &  M.  Ins.  Co.,  11  Mass.  253.  Peele  v.  Merchants'  Ins.  Co.,  3 
Mason,  73.  And  the  rule  of  one-third  new  for  old  has  been  held  to  be  applicable  to 
insurances  on  steamboats  navigating  the  Western  rivers.  Wallace  v.  Ohio  Ins.  Co.,  4 
Ohio,  234.  In  adjusting  a  partial  loss  on  a  ship  which  has  been  repaired,  the  pro- 
ceeds of  the  old  materials  not  used  in  the  repairs,  are  first  to  be  deducted  from  the 
gross  expenses  of  the  repairs,  and  then  the  deduction  of  one-third  new  for  old  is  to 
be  made  from  the  balance.  Eager  v.  Atlas  Ins.  Co.,  14  Pick.  141.  B3-rnes  v.  National 
Ins.  Co ,  1  Cow.  265 


484  MERCANTILE  CONTRACTS. 

Proceedings  after  a  Loss. 

cleared  out  and  sailed  on  a  voyage  different  from  that  insured;  or 
that  he  has  been  discharged  by  a  breach  of  warranty,  ex.  gr.^  by  a 
deviation ;  or  he  contends  that  the  policy  is  vitiated  by  fraud,  mis- 
representation, or  concealment  on  the  part  of  the  insured.  All 
these  grounds  of  defence  have  been  already  treated  of,  except  the 
last,  on  which  we  will  now  say  a  few  words. 

It  is  essential  that  in  all  contracts  of  insurance  the  strictest  good 
faith  should  be  observed ;  for  fraud,  concealment,  or  misrepresen- 
tation of  any  material  circumstance,  avoids  the  whole  contract :  thus, 
if  the  underwriter  assures  a  ship  as  on  her  voyage,  which  he  pri- 
vately knows  to  be  arrived,  the  policy  is  void,  and  the  assured  may 
bring  an  action  against  him  to  recover  back  the  premium.  {V)  So, 
if  the  assured  or  his  agent  conceal  or  misrepresent  any  material  fact, 
relating  to  the  property  insured,  the  policy  is  void,  and  the  insurer 
not  liable,  {m)  When  this  takes  place  the  policy  is  vacated  ah  initio, 
and  the  underwriters  may  use  it  as  a  defence,  though  the  loss  have 
arisen  from  a  cause  wholly  unconnected  with  the  circumstance  con- 
cealed or  misrepresented,  {n)  A  misrepresentation  of  a  material  fact 
vitiates  the  policy,  whether  the  party  assert  a  thing  he  knows  to  be 
false,  or  does  not  know  to  be  true,  (o)  The  misrepresentation  will 
be  of  a  material  fact,  if  it  consist  of  an  assertion  that  the  ship  was 
safe  on  a  particular  day,  will  sail  at  a  particular  time,  {p)  or  will  sail 
in  company,  and  carry  a  certain  force,  {q)  A  misrepresentation 
made  to  the  first  underwriter  in  a  material  point,  is  considered  as  a 
misrepresentation  to  every  one  of  the  underwriters,  for  they  are  all 
supposed  to  follow  the  first,  (r)     But  a  misrepresentation  made  to 

{l)  Carter  v.  Boehm,  3  Burr.  1909.  And  an  action  on  the  case  lies  against  an  in- 
surer for  misrepresentation.     Pontifex  v.  Bignold,  3  M.  &,  Gr.  63. 

(m)  Carter  v.  Boehm,  1  Blackst.  594;  3  Burr.  1905.  Middlewood  v.  Blakes,  7 
T.  R.  162.  Willes  v.  Glover,  1  N.  R.  14.  Roberts  v.  Fonnereau,  Park,  176.  Da  Costa 
V.  Scandret,  2  P.  Wms.  170.  Hodgson  v.  Richardson,  1  Bl.  4G3.  Fitzherbert  v.  Mather 
1  T.  R.  12. 

(n)  Per  Lee,  C.  J.,  Leaman  v.  Fonnereau,  Str.  1183. 

(o)  Macdoual  v.  Fraser,  Doug.  260.  Charaud  v.  Angerstein,  Peake,  43.  Duffel  v 
Wilson,  1  Camp.  401. 

(p)  Supra,  last  note.     Roberts  v.  Fonnereau,  Park,  285. 

{q)  Edwards  v.  Footner,  1  Camp.  530. 

(r)  Pawson  v.  Watson,  Cowp.  785.  Barber  v.  Fletcher,  Dougl.  S06.  Marsden  » 
Reid,  3  East,  573. 


MARITIME  INSURANCE.  435 


Proceedings  after  a  Loss. 


any  underwriter  other  than  the  first,  is  not  to  be  considered  as 
made  to  subsequent  underwriters ;  (s)  and  the  rule  concerning  the 
effect  of  a  misrepresentation  to  the  first  is  founded,  it  is  said,  more 
upon  precedent  than  reason,  {t)  and  must  be  received  with  great 
quahfication.  {u) 

If  a  representation  be  substantially  true,  that  is  sufficient,  and  in 
this  respect  it  differs  from  a  warranty,  which  must  be  literalhj  com- 
plied with.  Thus,  where  it  was  represented  xhat  the  ship  would 
carry  twelve  guns  and  twenty  men,  and  she  really  carried  nine 
guns  and  six  swivels,  and  sixteen  men  and  eleven  boys,  a  force 
equal  in  amount  to  that  represented,  the  polic}'-  was  not  avoided,  (v) 
Moreover,  if  the  party  who  effects  the  ^^olicy  do  not  make  his  asser- 
tion positively,  but  only  as  a  matter  of  expectation  and  belief,  it 
will  be  sufficient  if  he  really  believe  it.  (zf)* 


(s)  Bell  V.  Carstairs,  2  Camp.  543.     Brine  v.  Featlierstone,  4  Taunt.  869. 

(t)  Per  Heath,  J.,  in  Brine  v.  Featherstone. 

(?<)  Per  Lord  Ellenborough,  in  Forrester  v.  Pigoii,  1  M  &  S.  13. 

(«^)  Pawson  V.  Watson,  Cowp.  "IBS.  Bize  v.  Fletcher,  Doiigl.  275.  Konnen  v.  Reid, 
16  East,  1Y6.     Von  Tungein  v.  Dubois,  2  Camp.  151. 

('(»)  Barber  v.  Fletcher,  Dougl.  292.  Bize  v.  Fletcher,  Dougl.  275.  Hubbard  v. 
Glover.  3  Camp.  313.  Bowden  v.  Vaughan,  10  East,  415.  Brine  v.  Featlierstone,  4 
Taunt.  869.     Driscol  v.  Passraore,  1  B.  &  P.  200.     Weston  v.  Ernes,  1  Taunt.  115. 


*  The  general  principles  in  relation  to  fraud,  misrepresentation,  or  concealment  of 
material  facts,  in  obtaining  an  insurance,  laid  down  in  tiie  text,  have  been  recognized 
and  acted  on  in  the  United  States.  Hodgson  v.  Marine  Ins.  Co.  of  Alexandria,  5 
Cranch,  100 ;  2  C.  R.  195.  Livingston  v.  Maryland  Ins.  Co.,  6  Cranch,  274 ;  2  C.  R.  370. 
S.  C  7  Cranch,  506 ;  2  C.  R.  589.  Maryland  Ins.  Co.  y.  Ruden,  6  Cranch,  338  ;  2  C.  R. 
392.  Buck  V.  Chesapeake  Ins.  Co.,  1  Pet.  151.  M'Lanahan  v.  Universal  Ins.  Co.,  1  Pet. 
170.  Hazard  v.  New  England  Ins.  Co.,  8  Pet.  557.  Locke  v.  Nortli  American  Ins.  Co., 
13  Mass.  60.  Green  v.  Merchants'  Ins.  Co.,  10  Pick.  402.  Firemen's  Ins.  Co.  v.  Waldcn. 
12  John.  513.    Irving  v.  Sea  Ins.  Co.,  22  Wend.  380. 

Where  an  insurance  was  effected  after  a  loss  had  happened,  though  unknown  to 
the  insured,  the  master  having  omitted  to  communicate  information  to  tlie  owner, 
and  having  expressed  his  intention  not  to  write  to  the  owner,  and  taken  measures  to 
prevent  the  fact  of  thu  loss  being  known,  for  the  avowed  purpose  of  enabling  the 
owner  to  effect  insurance,  in  consequence  of  which  inforinatior.  of  the  loss  had  not 
reached  the  parties  at  the  time'  the  policy  was  underwritten,  it  was  held  that  the 
owner  having  acted  in  good  faith,  was  not  precluded  from  a  recovery  on  account  of 
the  fraudulent  misconduct  of  the  mastei*.  General  Interest  Ins.  Co.  v.  Ruggles,  12 
Wiieat  408 ;  S.  C.  4  Mas.Mi,  74.     This  case  has  been  commented  on  and  disapproved 


486  MERCANTILE  CONTRACTS. 

Proceedings  after  a  Loss. 

As  to  concealment^  it  is  as  fatal  to  the  policy  as  misrepresenta- 
tion ;  for  insurance  is  a  contract  founded  on  speculation,  and  a 
knowledge  of  all  tlie  facts  is  necessary  to  enable  the  underwriter  to 
calculate  and  form  a  just  estimate  of  the  risk ;  nor  is  it  an  excuse 
that  the  concealment  was  attributable  to  the  fraud  or  neglect  of  an 
agent,  {x)  or  that  the  account  concealed  was  false,  {y)  or  in  no  way 
referred  to  the  subsequent  cause  of  loss,  (2)  or  was  not  concealed  with 
a  fraudulent  design ;  (a)  nor  does  it  matter  whether  it  was  known 
as  a  report  or  as  a  matter  of  positive  intelligence,  {b)  But  the  con- 
cealment which  vitiates  a  policy  must  be  of  a  fact  material  to  a  just 
estimate  of  the  risk  ;  (c)  and,  therefore,  the  main  question  respecting 
concealment  almost  always  is,  whether  the  fact  concealed  be  a  mate- 
rial one.  Of  this  description  have  been  held  to  be, — intelligence 
that  the  vessel  about  to  be  insured,  or  a  ship  like  her,  has  been 


{x)  Fitzherbert  v.  Mather,  1  T.  R.  12. 

{y)  See  3  Taunt.  87 ;  14  East,  494. 

(2)  2  Str.  1183. 

{a)  3  Burr.  1905;  1  T.  R.  12. 

\h)  Durrell  v.  Bederley,  1  Holt,  238.     Gibbs,  C.  J. 

(c)  Durrell  v.  Bederley,  uhi  supra. 


by  Mr.  J.  Duer  in  his  treatise  on  Insiirance ;  he  considers  Judge  Story  as  having 
affirmed  to  the  general  principle  that  when  the  assured  acts  -with  entire  good  faith, 
his  contract  is  not  liable  to  be  affected  by  the  fraud  or  negligence  of  an  agent,  whose 
duty  is  limited  to  the  mere  communication  of  intelligence;  but  insists  that  the 
Supreme  Court  of  the  United  States  placed  their  decision  on  different  grounds  ;  and 
argues  with  much  ability  and  ingenuity  against  the  principle  above  stated.  2  J. 
Duer  on  Ins.  415-427.  "It  is  admitted  by  all,"  says  the  same  learned  author,  "that 
the  actual  or  virtual  concealment  of  material  facts  by  an  agent  who  is  employed  to 
procure  or  effect  the  insurance,  is  just  as  noxious  as  that  of  his  principal."  2  J.  Duer, 
415.  As  to  facts  which  need  not  be  communicated,  which  the  insurer  is  supposed  to 
know,  see  Buck  v.  Chesapeake  Ins.  Co.,  1  Pet.  151 ;  8  Pet.  557.  Delonguemere  v 
N.  Y.  Fire  Ins.  Co.,  10  John.  120.  Alsop  v.  Commercial  Ins.  Co.,  1  Sumn.  451.  Green 
V.  Merchants'  Ins.  Co.,  10  Pick.  402 ;  2  J.  Duer,  474.  As  to  the  disclosure  of  the 
nature  of  the  interest  of  the  insured,  in  relation  to  which  there  is  some  conflict  in  the 
authorities,  see  2  J.  Duer,  448-459,  who  says  that,  "Judging  from  the  authorities  alone, 
it  seems  the  most  probable  conclusion,  that,  by  the  actual  law,  with  the  exception  of 
the  few  cases  in  which  the  interest  must  be  specified  in  the  policy,  the  special  nature 
of  the  interest  of  the  assured  need  not  be  disclosed,  unless  in  reply  to  the  inquirie* 
of  the  underwriter.    "Where  the  underwriter  omits  to  inquire,  he  assumes  the  risk. 


MARITDIE  INSURANCE.  487 


Proceedings  after  a  Loss. 


lost,  or  wliich.  induced  the  owner  to  fear  that  she  may  be  so ;  id) 
information  respecting  the  time  or  manner  of  her  sailing  which  is 
material  to  the  probability  of  her  safety,  such,  for  instance,  as  would 
show  her  to  be  a  missing  ship,  or  out  of  time,  or  that  she  had 
encountered  bad  weather,  or  that  another  ship,  which  sailed  after 
her,  had  arrived  first ;  (e)  intelligence  that  she  had  been  met  with 
in  a  leaky  state,  (/)  or  had  from  some  other  cause  sustained  damage 
before  the  commencement  of  the  risk;  {g)  or  that  she  is  in  danger 
of  an  attack,  as  if  a  man  were  to  insure  a  ship,  knowing  that 
enemies  were  lying  in  wait  for  her.  (A)  A  merchant  resident  at 
Sidney  shipped  goods  by  the  ship  C.  for  England,  and,  by  another 
ship  that  sailed  after  the  ship  C,  wrote  to  an  agent  in  England, 
desiring  him,  if  he  received  that  letter  before  the  C.  arrived,  to 
wait  for  thirty  days,  in  order  to  give  every  chance  of  her  arrival, 
and  then  effect  an  insurance  on  the  goods ;  the  letter  was  received, 
and  the  agent,  having  waited  more  than  thirty  days,  employed  a 
broker  to  effect  an  insurance,  and  handed  the  letter  to  him;  the 
broker  told  the  underwriter  when  the  C.  sailed,  and  when  the 
letter  ordering  the  insurance  was  written,  but  he  did  not  state 
when  it  was  received,  nor  the  order  to  wait  thirty  days  after  the 
receipt  of  it  before  effecting  an  insurance.  The  C.  never  arrived. 
In  an  action  on  the  policy,  no  fraud  was  imputed  to  the  plaintiff, 
but  several  underwriters  were  called,  who  stated  that  in  their 
opinion  the  matters  not  communicated  were  material;  and  the 
jury,  being  of  opinion  that  a  material  part  of  the  letter  had  been 
concealed,  found  a  verdict  for  the  defendant.  It  was  held  that  the 
evidence  of  the  underwriters  was  properly  received ;  {i)  and  that, 

{d)  Da  Costa  v.  Scandret,  2  P.  Wms.  170.  See  1  Show.  324.  Fitzherbert  v. 
Mather,  1  T.  R.  12.     Gladstone  v.  King,  1  M.  &  S.  35. 

(e)  Macintosh  v.  Marshal,  11  M.  <fe  W.  116.  Kirby  v.  Smith,  1  B.  &  A.  672. 
M'Andrew  v.  Bell,  1  Esp.  373.  Webster  v.  Foster,  1  Esp.  407.  Willis  v.  Glover,  1  K 
R.  14.  Bridges  v.  Hunter  1  M.  &  S.  15.  Sawtell  v.  Loudon,  5  Taunt.  359.  Elton  v. 
Larkins,  8  Bingh.  198.     Elkin  v.  Janson,  13  M.  &  W.  655. 

(/)  Lynch  v.  Hamilton,  3  Taunt.  37.  Lynch  v.  Dunsford,  14  East,  494.  See  West- 
bury  V.  Aberdein,  2  M.  &  W.  267,  where  another  ship  arrived  before  her,  which  had 
parted  from  her  in  a  storm. 

{g)  Gladstone  v.  King,  1  M.  &  S.  35. 

{h)  Carter  v.  Boehm,  3  Burr.  1905;  Bl.  503.  Beckwaite  v.  Walgrovc,  cited  3 
Taunt.  41.     Durrell  v.  Bederley,  1  Holt,  283. 

(i)  It  has  been  considered  that  this  evidence  was  impr;  perly  admitted,  for  that 


488  3IERCANTILE  CONTRACTS. 

Proceedings  after  a  Loss. 

even  had  it  not  been  so,  the  jury  would  have  been  bound  to  find 
that  the  uucommunicated  part  of  the  letter  was  material,  and  the 
policy  consequently  void,  {j) 

But  the  rule  respecting  concealment  is  confined  to  matters 
v/hicli  lie  within  the  private  knowledge  of  the  insured.  He  need 
not  mention  what  the  underwriter  knows,  or  ought  to  know, — 
scientia  utrimque  par  pares  facit  contrahentes.  He  need  not  men- 
tion general  topics  of  speculation, — such  as  the  difficulty  of  -the 
voyage,  the  nature  of  the  season,  the  probability  of  lightning,  hur- 
ricanes, and  earthquakes,  of  danger  from  the  ruptures  of  states, 
from  war,  and  the  various  operations  of  war.  Men  argue  differ 
ently  from  natural  phenomena  and  political  appearances, — they 
have  different  capacities,  different  degrees  of  knowledge,  Jvud  dif- 
ferent modes  of  thinking;  but  the  means  of  information  are  open 
alike  to  all,  each  professes  to  act  from  his  own  skill  and  sagacity, 
and  therefore  neither  need  communicate  to  the  other  the  result  of 
his  individual  judgment.  QS)  The  insured  need  not  communicate 
the  usage  of  trade,  for  the  underwriter  is  supposed  to  know  it ;  (J) 
nor  a  fact  which  the  underwriter  may  learn  by  the  exercise  of 
proper  diligence,  for  instance,  as  it  would  seem,  facts  contained  in 
the  printed  English  list  at  Lloyd's ;  (m)  but  the  announcement  of  a 
material  fact  in  the  foreign  list  at  Lloyd's  will  not  dispense  with 
a  communication  from  the  insured,  {n)  And  though  a  London 
underwriter  may  prima  facie  be  taken  to  know  matters  contained 
in  the  shipping  list  at  Lloyd's,  yet  if  the  insured  make  a  misrepre- 
sentation which  may  induce  him  to  neglect  looking  at  the  list,  the 
policy  is  avoided,  at  all  events  unless  the  insured  be  able  to  show 
that  he  really  did  acquire  a  knowledge  of  the  truth  before  sub- 

the  question  of  materiality  was  for  the  jury.  Campbell  v.  Eickards,  2  Nev.  A  Mann. 
546  ;  5  B.  &  Ad.  840. 

(j)  Eickards  v.  Murdock,  10  B.  &  C.  52T.  See  Campbell  v.  Rickards,  2  ]S"ev.  & 
Mann.  546 ;  5  B.  &  Ad.  840. 

{k)  Carter  v.  Boehm,  3  Burr.  1905. 

(l)  Noble  V.  Kennoway,  Dougl.  510.  Vallance  v.  Dewar,  1  Camp.  503.  Ougier  v. 
Jennings,  ibid.  505.  Grant  v.  Paxton,  1  Taunt.  463,  Moxon  v.  Atkins,  3  Camp.  200. 
Stewart  v.  Bell,  5  B.  &  A.  238.     Blanche  v.  Fletcher,  Dougl.  238. 

(m)  Friere  v.  Woodhouse,  1  Holt,  5Y2.  Qucere,  whether  this  case  be  not  shaken  bv 
Ellon  V.  Larkms. 

{n)  riton  V.  Larkins,  8  Bingh.  198. 


MARITIME  INSURANCE.  480 


Proceedings  after  a  Loss. 


scribing  the  policy,  (o)  Tlie  insured  is  not  bound  to  communicate 
matter  which  forms  an  ingredient  in  a  warranty,  such,  for  instance, 
as  that  of  seaworthiness ;  thus,  where  the  assured  received  a  letter 
mentioning  that  the  ship  had  been  surveyed  at  Trinidad,  on  ac- 
count of  lier  had  character ;  but  the  survey  which  accompanied  the 
letter,  gave  the  ship  a  good  character ;  the  concealment  of  this  did 
not  vacate  the  policy ;  for  the  insured  impliedly  warranted  the  ship 
to  be  seaworthy,  and  it  did  not  appear  either  that  she  was,  or  that 
he  had  reason  to  think  that  she  was  otherwise,  {p)  If,  after  the 
broker  has  been  instructed  to  effect  a  policy,  his  principal  receive 
further  intelligence,  but  the  policy  is  effected  before  the  principal 
can  communicate  it  to  the  broker,  the  policy  is  valid,  if  the  prin- 
cipal and  broker  appear  to  have  acted  with  due  diligence,  {q)  And, 
in  every  case,  the  question,  whether  the  non-communication  of  a 
fact  vacate  the  policy,  depends,  as  has  been  before  said,  upon  the 
further  question,  whether  that  fact  was  a  material  one.  (r)  Thus,  in 
some  cases,  the  time  of  the  ship's  sailing  has  been  held  immate- 
rial ;  (s)  nor  need  the  insured  state  to  the  underwriter  general  cir- 
cumstances connected  with  the  history  and  capabilities  of  the  ship, 
ex.  gr.,  her  age,  where  she  was  built,  what  was  her  construction, 
whether  clinker  built,  or  not,  whether  copper-bottomed,  when, 
how,  and  where  repaired,  &c. :  circumstances  of  this  nature  would 
no  doubt  have  weight  in  guiding  the  judgment  of  the  underwriter ; 
but  it  is  not  essential  to  the  fairness  of  the  contract,  that  the  insured 
should,  in  the  first  instance,  disclose  them ;  it  is  sufficient  if  he 
answer  truly  when  it  is  demanded  of  him.  (t)- 

Return  of  Premium.^ — If  the  underwriter  should  succeed  in  es- 

(o)  Mackintosh  v.  Marshall,  11  M.  &  W.  116. 

(/>)  Haywood  v.  Rodgers,  4  East,  490.     Shoolbred  v.  Nutt,  Park,  346. 

(5')  Wake  v.  Atty,  4  Taunt.  493. 

(r)  See  Littledale  v.  Dixon,  1  N.  R.  151.  Beckwith  v.  Sydebotham,  1  Camp.  116. 
Weir  V.  Aberdeen,  2  B.  <fe  A.  320.  Taylor  v.  Wilson,  15  East,  324;  2  Dowl.  367. 
Boyd  V.  Dubois,  3  Camp.  133.     Bell  v.  Bell,  2  Camp.  4Y9. 

(s)  Fort  V.  Lee,  3  Taunt.  381.  Foley  v.  Maline,  5  Taunt.  430;  1  Marsh.  117. 
Sed  vide  Bridges  v.  Hunter,  1  M.  &  S.  15.     Kirby  v.  Smith,  1  B.  &  A.  672. 

(t)  See  Haywood  v.  Rodgers,  4  East,  590.  Freeland  v.  Glover,  7  East,  457.  See 
Long  V.  Duff,  2  B.  <fe  P.  209. 

*  The  decisions  in  the  Ui  ted  States  on  this  subject  appear  to  have  been  in  ac- 


490  MERCAKTILE  CONTRACTS. 

Proceedings  after  a  Loss. 

tablisliing  a  defence  against  his  liability  upon  the  policy,  a  question 
immediately  arises  whether  the  insured  be  entitled  to  a  return  of 
;premium^  and,  if  so,  whether  to  a  return  of  all  or  part.  On  this 
subject  the  parties  sometimes  enter  into  an  agreement,  and,  if  they 
do,  the  terms  of  that  must,  of  course,  be  observed,  (w)  and  will 
regulate  the  amount  of  the  sum  to  be  returned  and  the  circum- 
stances under  which  it  is  returnable,  {v)  If  there  be  no  express 
stipulation,  the  question  of  return  or  no  return  is  regulated  by  two 
main  principles, — First.  Where  the  risk  has  not  been  run,  the  pre- 
mium shall  be  returned,  for  the  underwriter  receives  it  for  running 


(m)  Audley  v.  Duff,  2  B.  &  P.  IIL 

{v)  See  Kellner  v.  Le  Mesurier,  4  East.  396.  Leevia  v.  Cormac,  4  Taunt.  483. 
Dalgleish  v.  Brooke,  15  East,  295.  Aguilar  v.  Eodgers,  7  T.  R.  421.  Simmonds  v. 
Bo3'del],  Dougl.  255.  Horncastle  v.  Ha^yorth,  2  Marsh.  Ins.  674.  Langhorn  v.  Alnutt, 
4  Taunt.  611,  which  last  two  cases  seem  at  variance.  Long  v.  Allen,  Park,  589,  where 
the  decision  turned  on  the  usage  of  trade. 


cordance  with  the  principles  laid  down  in  the  text.  As  to  the  return  of  premium 
where  no  risk  has  been  run,  see  Ecbers  v.  United  Ins.  Co.,  16  John.  128.  "Wadding- 
ton  V.  United  Ins.  Co.,  17  John.  23.  Taylor  v.  Lowell,  3  Mass.  343.  As  to  where  the 
vessel  was  unseaworthy.  Commonwealth  Ins.  Co.  v.  Whitney,  1  Mete.  21.  For  short 
interest,  Finney  v.  Warren  Ins.  Co.,  1  Mete.  16,  19.  Murray  v.  Columbian  Ins.  Co., 
11  John.  302.  When  the  risk  is  entire,  and  has  once  commenced,  Hendricks  v. 
Comm.  Ins.  Co.,  8  John.  1.  Homer  v.  Dorr,  10  Mass.  28.  In  case  of  fraud,  Hoyt  v. 
Gillman,  8  Mass.  336.  Waters  v.  Allen,  5  Hill,  421.  In  this  case  it  was  said  by 
Bronson,  Judge,  in  delivering  the  opinion  of  the  Court,  to  be  a  safe  rule,  "that 
where  the  insured  sues  for  a  loss,  and  fails  on  the  ground  that  the  contract  is  void 
by  reason  of  his  own  fraud  in  procuring  it,  or  where  he  sues  for  a  return  of  premium, 
and  is  obliged  to  show  his  own  fraud  in  making  title  to  the  money,  then  he  shall 
not  have  a  return ;  but  when  the  contract  is  valid,  and  the  insured  can  make  title  to 
a  return  of  premium,  without  showing  his  own  fraud,  then  he  may  recover,  although, 
but  for  his  own  fault,  the  peril  insured  against  might  have  been  run."  5  Hill,  426. 
And  it  was  held,  that  where  the  policy  divides  the  voyage  into  distinct  risks,  affix- 
ing a  separate  premium  to  each,  and  immediately  after  the  first  risk  has  commenced, 
the  vessel  is  destroyed  by  tlie  fraudulent  act  of  the  insured,  whereby  the  other  risks 
are  not  incurred,  the  premium  paid  for  the  latter  may  be  recovered  back. 

And  the  same  learned  judge  expressed  the  opinion,  that  though  one  procure  an 
insurance  on  a  vessel  with  intent  to  destroy  it,  in  order  to  charge  the  underwriter, 
the  policy  will,  nevertheless,  attach ;  and  if  a  loss  afterwards  happen  without  the 
fault  of  the  assured,  he  may  recover  against  the  underwriter.  "The  mere  intent  to 
do  wrong,  rarely,  if  ever,  constitutes  a  crime  or  a  fault  of  which  the  law  will  take 
cognizance."     5  Hill,  424. 


MARITIME  INSURANCE.  491 


Proceedings  after  a  Loss. 


the  risk,  and,  if  ke  do  not  run  ttie  risk,  he  ought  not  to  retain  it.  {w) 
Thus,  if  the  policy  were  on  goods,  and  no  goods  are  put  on  board 
the  ship,  the  premium  must  be  returned ;  (x)  and  on  this  ground 
rests  the  return  of  premium  for  short  interest,  which  occurs  when 
part  only  of  the  goods  embraced  by  the  policy  is  put  on  board,  in 
which  case,  a  portion  of  the  premium  corresponding  to  the  defici- 
ency must  be  returned,  (y)  So,  where  profits  are  the  subject  of  in- 
surance, there  may  be  a  return  of  premium  for  short  profits,  (z) 
But,  if  it  be  a  valued  policy,  and  all  the  goods  intended  were  put 
on  board,  the  insured  will  not  be  entitled  to  a  return  on  the  ground 
that  they  were  not  of  the  value  specified,  (a) 

A  question  lately  occurred  in  the  Court  of  Exchequer  with  re- 
gard to  the  return  for  short  interest,  which  does  not  appear  to  have 
ever  before  arisen  in  our  courts.  Insurances  had  been  effected  on 
the  12th  of  April,  to  the  amount  of  14,150/.,  and  on  the  13th,  to 
the  amount  of  22,300/.  It  turned  out,  that  the  whole  value  was 
30,333/.  10s.,  so  that  there  was  6116/.  10s.  short  interest.  The  courl 
held,  that  there  must  be  a  return  by  the  underwriters  on  the  13th, 
the  amount  of  over-insurance  to  be  ascertained  by  taking  all  the 
policies  into  account,  but  no  return  to  be  made  by  the  underwriters 
on  the  12th.  {!>) 

Secondly. — When  the  risk  embraced  by  the  policy  is  entire,  and 
has  once  commenced,  there  can  be  no  return  of  the  premium,  or  of 
any  part  of  it ;  (c)  thus,  even  if  the  insurance  be  for  twelve  months 
at  a  certain  rate  per  month,  and  the  risk  ceases  at  the  end  of  two 
months,  there  can  be  no  apportionment  or  return  of  premium ;  (c/) 


(w)  Routh  V.  Thompson,  11  East,  428.  Oom  v.  Bruce,  12  East,  225.  Hen  tig  v. 
Stanniforth,  5  M.  &  S.  122 ;  4  Camp.  2'70.  Siffkin  v.  Alnutt,  1  M.  &  S.  39.  Feize  v. 
Parkinson,  4  Taunt.  640.  Penson  v.  Lee,  2  B.  &  P.  330.  Vide  Hagedorn  v.  Oliver- 
eon,  2  M.  &  S.  491.  MacCuUock  v.  R.  E.  A.  Co.,  3  Camp.  406.  Lowry  v.  Bordieu, 
Dougl.  46*7. 

(a;)  Martin  v.  Sitwell,  1  Show.  156. 

(y)  Eyre  v.  Glover,  16  East,  218     Horneyer  v.  Lushington,  15  East,  46  ;  3  Camp.  90. 

\z)  S.  C. 

(a)  4  Bro.  P.  C.  450,  464. 

\b)  Fisk  V.  Masterman,  8  M.  &,  W.  165. 

(c)  Tyrie  v.  Fletcher,  Cowp.  666.  Bermon  v.  Woodbridge,  Dougl  ^61.  Langhorn 
V.  Cologan,  4  Taunt.  330. 

(d)  Loraine  v.  Thomlinson,  Dougl.  564. 


492  MERCANTILE  COXTRACTS. 

Pi'oceedings  after  a  Loss. 

for  the  whole  risk  attached,  the  underwriter  would  have  been 
obliged  to  settle  for  a  total  loss,  had  such  a  one  taken  place  within 
the  two  months,  and  the  specification  of  a  certain  sum  per  month 
is  only  a  mode  of  computing  the  gross  amount  of  premium. 
Again,  if  a  ship  insured  from  A.  to  B.  sail  in  an  unseaworthy  con- 
dition, the  underwriter's  risk  never  commences ;  (e)  and  the  pre- 
mium, as  we  have  seen,  must  be  returned.  But  if  a  vessel  be  in- 
sured at  and  from  A.  to  B.,  and  sail  in  an  unseaworthy  condition,  no 
portion  of  the  premium  is  returnable ;  for  the  risk  attached,  while 
she  remained  at  A.,  before  she  sailed,  and  if  she  had  been  lost 
while  there,  a  total  loss  would  have  been  payable.  (/)  So  again, 
if  the  ship  deviate  the  underwriter  is  discharged ;  yet,  inasmuch  as 
the  risk  once  attached,  and  as  he  might  have  been  subjected  to  a 
total  loss,  had  she  perished  before  she  had  reached  the  point  of  de- 
viation, no  portion  of  the  premium  is  returnable,  {g) 

We  have  seen  that  there  can  be  no  return  of  premium  where 
the  risk  is  entire,  and  has  once  commenced.  But  if  the  insurance 
be,  in  effect,  on  two  or  more  voyages,  and  one  or  more  have  not 
commenced,  there  shall  be  an  apportionment  and  return  of  pre- 
mium, in  respect  of  those  voyages  that  have  not  commenced ;  for, 
in  such  a  case,  the  risk  is  not  entire,  nor  is  the  underwriter  for  a 
single  moment  liable  to  make  good  any  loss  incurred  during  the 
latter  voyages.  (A)  The  usual  mode  of  showing  that  the  risk  is  to 
be  considered  as  thus  divided,  is  by  proving  a  usage  of  trade  to 
that  effect,  of  which  usage  the  underwriter  must,  of  course,  be  pre- 
sumed cognizant,  (i)  Thus,  where  the  insurance  was  from  London 
to  Halifax,  warranted  to  depart  with  convoy  from  Portsmouth ;  the 
ship  not  having  departed  with  convoy  from  Portsmouth,  and  the 
jury  having  found  a  usage  to  return  part  of  the  premium  in  such 
a  case ;  the  court  thought  that  the  contract  was  for  an  insurance 
from  London  to  Halifax ;  which  contract,  in  case  of  the  ship's  not 
departing  from  Portsmouth  with  convoy  was  to  be  reduced  to  an 
insurance  from  London  to  Portsmouth ;  that,  as  she  had  not  de- 


(e)  Penson  v.  Lee,  2  B.  &  P.  330 

(/)  Annen  v.  Woodman,  3  Taunt.  299.     Meyer  v.  Gregson,  Park,  588. 

{g)  Tait  v.  Levi,  14  East,  481.     Moses  v.  Pratt,  4  Camp.  297. 

(A)  Stevenson  v.  Snow,  3  Burr.  1237. 

(j)  Long  V.  Allen,  Marsli.  370.     Stevenson  v  Snow,  ^cbi  supra. 


MARITIME  INSUllANCE.  493 

Proceedings  after  a  Loss. 


parted  from  Portsmoutli  with  convoy,  the  contract  had  been  so  re- 
duced, and,  consequently,  that  there  must  be  a  part-return  of  the 
premium  for  the  risk  never  incurred,  viz.,  that  from  Portsmouth  to 
Halifax,  {j) 

It  remains  to  observe,  that,  even  where  the  risk  never  com- 
menced, yet,  if  the  assured  or  his  agent  have  been  guilty  of  fraud, 
for  instance,  if  he  knew  that  the  ship  was  lost  when  he  insured 
her,  there  can  be  no  return  of  premium,  (k)  The  same  rule  holds, 
if  the  insurance  be  illegal,  and  the  voyage  have  been  performed 
(unless  the  parties  could  not  have  known  of  the  illegality,  {l)  or 
believed  that  the  risk  would  be  legal,  and  took  the  usual  effective 
steps  to  make  it  so),  (m)  for  in  pari  delicto  potior  est  conditio  p)ossiden- 
tis.  {n)  But  this  maxim  does  not  apply  where  the  return  of  pre- 
mium is  claimed  before  the  voyage  has  commenced :  for  then,  the 
contract  being  still  executory,  there  is  a  locus  pcenitentice^  and  either 
party  has  a  right  to  rescind  it,  since,  by  doing  so,  he  prevents  the 
commission  of  that  which  the  law  forbids.  (0)  However,  the  party 
seeking  to  rescind  must  formally  renounce  the  contract,  and  give 
notice  to  the  underwriter  that  he  has  done  so,  before  he  can  bring 
an  action  to  recover  back  the  premium,  (p) 

When  the  insured  is  compelled  to  sue  the  underwriter,  the  form 
of  action  he  adopts  is  generally  assumpsit.  If,  indeed,  the  insurer 
be  the  Royal  Exchange  or  London  Assurance  Company,  the  defen- 
dant being  a  corporation,  and  the  policy  a  deed,  the  action  must  be 
one  of  debt  or  covenant,  .to  which  a  general  plea  is  given  by  stat. 
11  Geo.  1,  c.  30,  s.  43. 

When  several  actions  are  brought  on  a  policy  against  several 
underwriters,  the  court  will  make  a  rule  for  staying  the  proceed- 

(_;')  Stevenson  v.  Snow,  uhi  supra. 

(^•)  Wilson  V.  Duckett,  3  Burr.  1361.  Tyler  v.  Home,  Park,  329.  Chapman  v 
Fraser,  ibid. 

(l)  Oom  V.  Bruce,  12  East,  225. 

{m)  Hentig  v.  Stanniforth,  5  M.  &  S.  122. 

(n)  "Wilson  v.  R.  E.  A.  Comp.,  2  Camp.  623.  Cowie  v.  Barber,  4  M.  &  S.  16, 
Toulmin  v.  Andei'son,  1  Taunt.  227.  Lowry  v.  Bordieu,  Dougl.  451.  Andre%  v 
Fletcher,  3  T.  R.  266. 

'  (0)  See  per  Bullar,  J.,  Lowry  v.  Bordieu ;  and  see  3  Taunt.  283.     Hed  vide  Palyart 
V.  Leckie,  6  M.  &  S.  290,  and  the  remarks  of  Abbott,  J.,  there. 

(p)  Palyart  v.  Leckie,  6  M.  &  S.  290. 


494  MERCANTILE  COKTRACTS. 

Proceedings  after  a  Loss. 

ings  in  all  the  actions  except  one,  on  the  defendants'  undertaking 
to  be  bound  bj  the  verdict  in  that  action,  and  consenting  to  other 
reasonable  terms,  (q)  But  though  all  the  defendants  are  bound  to 
abide  by  the  verdict  in  that  single  action,  the  plaintiff  is  not  so ;  (r) 
however,  if  he  proceed  in  a  second  action  without  leave  of  the 
court,  he  will  not  be  allowed  the  benefit  of  the  terms  imposed  on 
the  defendants  by  the  consolidation  rule.  And  if  he  have  effected 
several  insurances  declaring  the  same  value  in  each,  he  is  bound 
by  that  sum,  and  cannot  receive  beyond  that  extent ;  (s)  though, 
where  he  declares  different  values,  viz.  6000?.  on  one  policy,  and 
8000/.  on  another,  he  will  be  permitted  to  recover  6000/.  subscribed 
upon  the  former  policy,  though  he  had  already  recovered  GOOOl. 
upon  the  latter.  (;!) 

(q)  For  the  history  of,  and  practice  on  this  subject,  see  Tidd,  9th  ed.  614.  See 
Hollingsworth  v.  Brodrick,  4  Ad.  &  E.  646.  The  court  may  grant  a  new  trial  in  the 
first  action,  Cohen  v.  Bulkeley,  5  Taunt.  165,  but  they  are  unwilling  to  do  so.  Fos- 
ter V.  Steele,  3  Bingh.  N.  C.  892.     Doyle  v.  Anderson,  1  Ad.  &  E.  635. 

(r)  Dojle  V.  Douglass,  4  B.  <fe  Ad.  545.  Long  v.  Douglass,  ibid.  Doyle  v.  Alver, 
ibid.  896.  As  to  the  case  of  diffei'ent  policies  on  the  same  ship,  see  M'Gregor  v.  Hora- 
fall,  and  M'Gregor  v.  Smith,  3  M.  &  W.  320. 

(s)  Irving  v.  Richardson,  1  M.  &  Rob.  153, 

(i)  Bousfield  v.  Barnes,  4  Camp.  228. 


CHAPTER  V. 


INSURANCE      "UPON      LIVES. 

Insukance  upon  a  life,  is  a  contract  bj  wTiich  the  insurer  in  con- 
sideration of  a  certain  premium,  either  in  a  gross  sum  or  bj  an- 
nual payments,  undertakes  to  pay  to  the  person  for  whose  benefit 
the  insurance  is  made,  a  certain  sum  of  money  or  annuity,  on  the 
death  of  the  person  whose  life  is  insured.  If  the  insurance  be  for 
the  whole  life,  he  undertakes  to  make  the  payment  ivhenever  the 
death  happens  ;  if  otherwise,  he  undertakes  to  make  it,  in  case  the 
death  should  happen  ivithin  a  certain  period^  for  which  period  the 
insurance  is  said  to  be  made.  The  utility  of  this  contract  is  ob- 
vious. A  creditor  is  enabled  thereby  to  secure  his  debt ;  an  annui- 
tant, the  continuance  of  his  income  after  the  grantor's  decease; 
a  father,  a  provision  for  his  family,  available  in  case  of  his  own 
death.  In  case  of  marriage  it  supplies  a  substitute  for  the  funds 
which  it  would  otherwise  be  necessary  to  invest  as  a  provision  for 
the  wife  and  children  in  case  of  survivorship,  and  enables  the  hus- 
band to  invest  his  capital  profitably  in  the  mean  while.  However, 
as  an  unlimited  power  of  effecting  insurances  of  this  description 
would  give  rise  to  a  species  of  gambling,  it  is  enacted  by  stat.  14, 
Geo.  8,  c.  48,  "  That  no  insurance  shall  be  made  by  any  person  or 
persons,  bodies  politic  or  corporate,  on  the  life  or  lives  of  any  person 
or  persons,  or  on  any  other  event  or  events  whatsoever,  (a)  wherein 
the  person  or  persons  for  whose  use,  benefit,  or  on  whose  account 
such  policies  shall  be  made,  shall  have  no  interest,  or  by  way  of 
gaming  or  wagering  :  and  that  every  insurance  made  contrary  to 


(a)  Perhaps  it  might  not  be  very  easy  to  say  to  what  description  of  wagers,  par- 
ticularly if  written,  this  statute  is  inapplicable.  See  Paterson  v.  Powell,  9  Bingh. 
320.  Roebuck  v.  Hammerton,  Cowp.  737.  Bed  vide  Good  v.  Elliott,  3  T.  Pu  693,  and 
Morgan  v.  Pebrer,  3  Bingh.  N.  C.  457. 


490  MERCANTILE  COXTRACTS. 

Insurance  upon  Lives. 

the  true  intent  and  meaning  hereof,  shall  be  null  and  void  to  all 
intents  and  purposes  whatsoever."  (i) 

"  That  it  shall  not  be  lawful  to  make  any  policy  or  policies  on 
the  life  or  lives  of  any  person  or  persons,  or  other  event  or  events, 
without  inserting  in  such  policy  or  policies  the  person  or  persons' 
name  or  names  interested  therein,  or  for  whose  use,  benefit,  or  on 
whose  account  such  policy  was  so  made  or  underwrote,  (c) 

"  That  in  all  cases  where  the  insured  hath  interest  in  such  life 
or  lives,  event  or  events,  no  greater  sum  shall  be  recovered  or  re- 
ceived from  the  insurer  or  insurers,  than  the  amount  or  value  of 
the  interest  of  the  insured  in  such  life  or  lives,  or  other  event  or 
events."  (ri) 

Marine  insurances  are  exempted  from  the  operation  of  this 
act.  (e) 

This  act  does  not  prohibit  individuals  from  effecting  insurances 
upon  their  own  lives,  provided  that  be  done  bonafide^  but  it  seems 
that  a  man  would  not  be  allowed  to  evade  the  statute  by  procuring 
another,  in  whose  life  he  had  no  legal  interest,  to  insure  it  with  his 
money  and  for  his  benefit,  though  ostensibly  for  the  advantage  of 
the  party  insuring.  (/)'•" 

A  creditor  has  an  insurable  interest  in  the  life  of  his  debtor,  {g) 
provided  the  debt  be  not  an  illegal  one ;  (A)  and  a  trustee  may  in- 
sure in  respect  of  the  interest  of  which  he  is  trustee.  (/)  But,  as 
insurance  is  a  contract  of  indemnity,  the  insured   can  found  no 


ib)  Sect.  1.  (c)  Sect.  2.  {d)  Sect.  3.  (e)  Sect.  4. 

(/)  Wainwright  v.  Bland,  1  M.  &  "VV.  32 ;  1  M.  &  Rob.  481. 
(jg)  Anderson  v.  Edie,  Pai-k,  640.    See  also  as  to  interest,  Henson  v.  Blackwell,  4 
Hare,  434. 

(A)  Dwj-er  v.  Edie,  Park,  639. 

{i)  Tidswell  v.  Angerstein,  Peake,  151. 

*  An  insurance  on  a  life  is  a  legal  and  valid  contract  by  our  laws.  But  the  as- 
sured must  have  an  interest  in  the  life  insured,  otherwise  it  would  be  a  mere  wager 
policy,  and  contrar}^  to  the  general  policy  of  our  laws  and  void.  Lord  v.  Dall,  12 
Mass.  115. 

A  single  woman  dependent  on  her  brother  for  her  support  and  education,  has  a 
sufficient  interest  in  his  life  to  entitle  her  to  insure  it.  And  such  an  insurance  will 
avail  for  her  benefit,  although  he  was  engaged  in  an  unlawful  and  immoral  traffic, 
she  being  ignorant  of  any  intended  violation  of  the  law  by  him.     S.  C.  12  Mass.  115. 


INSURANCE  UPOX  LIVES.  497 

Insurance  upon  Lives. 

claim  upon  his  policy,  if  the  debt  or  other  interest,  in  respect  of 
which  he  made  it,  be  satisfied  aliunde.  {Ic) 

When  a  life  policy  has  been  assigned,  it  is  not  necessary  that 
the  assignee  should  have  any  interest  or  have  paid  any  considera- 
tion for  the  assignment,  for  he  stands  upon  the  rights  of  the  party 
who  effected  the  insurance,  and  stat.  14  Geo.  3,  c.  48,  only  applies 
to  the  original  parties,  not  to  the  assignees.  Q) 

Lord  Tenterden  has  expressed  a  strong  opinion,  that  the  word 
"interest,"  in  the  statute  above  cited,  means  a, 2^ecuniari/  interest]  {m) 
and  in  the  same  case  it  was  held,  that  a  father  had  not  such  an  in- 
terest in  his  son's  life  as  would  entitle  him  to  insure  it.  But  Lord 
Kenyon  was  of  opinion  that  a  wife,  making  an  assurance  on  her 
husband's  life,  need  not  prove  she  was  interested  therein,  for  that  it 
must  be  presumed,  (n) 


(^•)  Godsall  V.  Boldero,  9  East,  72.  Ux parte  Andrews,  1  Madd.  5li.  But  it  may 
be  conjectured  from  the  case  of  Holland  v.  Smith,  which  was  decided  at  Kisi  Prius 
by  Lord  Ellenborough,  6  Esp.  11,  that  his  Lordship  was  of  opinion  that  if  A.  insure 
the  life  of  B.  his  debtor,  and  afterwards  the  debt  is  paid  off,  B.  may,  by  continuing 
to  pay  the  premium,  keep  the  policy  alive  for  his  own  benefit.  In  that  case,  O'Hara 
being  indebted  in  501.  to  Kendrick,  the  latter  insured  his  (O'H.'s)  life  to  that  amount. 
The  debt  was  paid  off,  and  O'llara's  executor  sued  Kendrick's  executor  for  the 
amount  of  the  policy  which  had  been  afterwards  paid  by  the  insurance  office,  and 
having  proved  that  O'Hara  had  regularly  repaid  to  Kendrick  the  amount  of  tlie  pre- 
miums paid  by  the  latter  to  the  office,  he  was  lield  entitled  to  recover,  his  Lordship 
saj'ing  that  it  must  be  taken  that  O'Hara  meant  to  keep  the  policy  alive  for  his  own 
benefit.  It  seems,  however,  clear  from  Godsall  v.  Boldero,  that  Kendrick's  executor 
could  not  have  recovered  against  the  office ;  and,  as  O'Hara's  executor  must  have 
sued  in  the  name  of  Kendrick's  executor,  it  would  be  strange  if  his  rights  should  be 
more  extensive.  It  is  to  be  observed,  that  the  question  as  to  the  i-ights  of  either 
executor  against  the  office  is  by  no  means  involved  in  the  decision  of  Holland  v. 
Smith,  since  it  was  there  only  necessary  to  determine  that  Kendrick's  executor,  who 
had  actually  received  the  loOl.  from  the  office,  had  no  right  to  retain  it  against 
O'Hara's  executor,  but  must  be  considered  to  have  received  it  as  the  latter's  agent. 
See  Henson  v.  Blackwell,  4  Hare,  434. 

(l)  Ashley  v.  Ashley,  3  Simon's  Rep.  149.  There  are,  indeed,  some  cases  in  which 
the  insurers, — as  the  condition  upon  Avhich  they  allow  an  assignee  some  advantage 
he  would  not  otherwise  have  had, — impose  on  him  the  necessity  of  proving  that  he 
is  an  assignee  for  value ;  as,  for  instance,  where  they  allow  a  policy,  which  would, 
as  against  the  insured,  be  avoided  by  his  suicide,  to  be  good  in  favor  of  an  assignee 
for  value  to  the  extent  of  his  interest.     See  Cook  v.  Black,  1  Hare,  390. 

(m)  Halford  v.  Kymer,  10  B.  &  C.  724. 

(n)  Reed  v.  R.  E.  A.  Compy.,  Peake,  Add.  Ca.  70. 
32 


498  JIERCANTILE  CONTRACTS. 

Insurance  upon  Lives. 

Before  the  policy  is  effected,  it  is  usual  for  the  person  whose 
life  is  insured  to  subscribe  a  declaration  concerning  his  age,  health, 
and  other  circumstances ;  (o)  this  declaration  is  recited  and  incor- 
porated by  reference  in  the  policy,  at  the  end  of  which  a  proviso  is 
ordinarily  inserted,  declaring  the  policy  to  be  void,  in  case  the  in- 
sured should  die  upon  the  seas,  or  go  beyond  the  limits  of  Europe, 
without  leave  obtained,  commit  suicide,*  or  die  by  the  hands  of 
justice,  {p)  or  if  the  age  of  the  assured  exceed  years,  or 

he  be  afflicted  with  any  disease  which  tends  to  the  shortening  of 
life,  or,  in  case  the  declaration  should  contain  any  averment  which 
is  not  true.  These  are  the  usual  conditions,  but  they  are  sometimes 
varied  to  suit  the  objects  of  different  insurers.  In  construing  them, 
it  has  been  held  that  the  condition  which  avoids  the  policy  in  case 
of  any  untrue  averment  contained  in  the  declaration  is  to  be  taken 
literally,  and  that  where  it  is  inserted,  the  insurance  becomes  void, 


(o)  Tlie  following  is  an  example  of  the  ordinary  subjects  of  this  declaration : — 

1.  Name  of  life  to  be  assured. 

2.  Present  residence  and  occupation. 

3.  Place  and  date  of  birth. 

4.  If  he  has  had  the  small  or  cow-pox. 

5.  If  at  any  time  afflicted  with  gout,  rupture,  insanity,  liver  complaint,  fits,  or 
convulsions. 

6.  If  he  has  had  symptoms  of  consumption,  spitting  of  blood,  asthma,  or  any 
disease  of  lungs  or  cliest. 

7.  If  now,  and  ordinarily  enjoying  good  health. 

8.  If  aware  of  any  disorder  or  circumstance  tending  to  shorten  life,  or  to  make 
an  assurance  more  than  usually  hazardous. 

9.  If  in  the  army  or  navy. 

10.  Nanie  and  residence  of  ordinary  medical  attendant  to  be  referred  to.  (See 
Huckman  v.  Fernie,  3  M.  &  W.  505.) 

11.  Name  and  residence  of  friend  for  same  purpose. 

12.  If  the  policy  be  for  another  person's  benefit,  that  other  person's  name,  re- 
sidence, and  occupation. 

(jd)  The  provisions  respecting  suicide,  or  death  by  the  hands  of  justice,  are  sel- 
dom or  never  inserted,  except  where  a  man  insures  his  own  life. 

*  A  provision  in  a  life  policy,  that  it  is  to  be  deemed  void  in  case  the  assured  shall 
"die  hy  his  own  hand,"  imports  a  death  by  suicide:  i.  e.,  an  act  of  criminal  self-destruc- 
tion. Accordingly,  in  an  action  on  such  policy,  the  underwriters  will  be  liable 
though  it  appear  that  the  assured  drowned  himself,  provided  the  act  was  done  in  a 
fit  of  insanity.     Breasted  v.  Farmers'  Loan  <fe  Trust  Co.,  4  Hill,  73. 


INSURANCE  UPON  LIVES.  499 


Insurance  upon  Lives. 


if  any  statement  be  in  fact  untrue,  although  the  party  makin"-  it  is 
not  apprised  of  its  untruth ;  {q)  and  so  it  will  be  void,  if  the  person 
whose  life  is  insured,  have  had  any  of  the  complaints  which  the 
declaration  states  he  has  not  had,  notwithstanding  it  may  have  been 
an  attack  of  so  mitigated  a  character  as  could  not  have  a  tendency 
to  shorten  life,  (r)  A  condition  that  the  person  is  in  good  health  is 
understood  to  mean  that  he  is  in  reasonably  good  health,  not  that 
he  is  free  from  the  seeds  of  disorder.  Such  a  condition  has  been 
held  to  be  complied  with,  though  the  party  whose  life  was  insured, 
was  troubled  with  spasms,  cramps,  and  violent  fits  of  the  gout.  (5) 
Nor  is  it  to  be  concluded,  that  a  disease  is  one  tending  to  shorten 
life  within  the  meaning  of  the  policy,  from  the  single  fact  that  the 
party  afterwards  dies  of  it,  if  it  be  not  a  disorder  necessarily  hav- 
ing that  tendency,  {t)  As  to  the  provisions  inserted  in  policies  by 
the  insured  on  their  own  lives,  (w)  respecting  death  by  duelling  or 
the  sentence  of  the  law,  those  are  superfluous,  for  the  policy  would 
be  unavailable  to  the  representatives  of  the  insured  in  case  of  such 
a  death,  even  if  they  were  not  inserted  ;  and  if  a  man  insuring  his 
own  life  were  to  introduce  a  contrary  provision,  it  would  be  void, 
as  being  against  public  policy,  {v) 

The  condition  respecting  death  by  suicide,  or,  as  it  is  sometimes 
expressed,  "  by  his  own  hands,"  would  likewise  be  superfluous,  if 
its  meaning  were  confined  to  acts  of  felonious  self-destruction  ;  but 
in  the  recent  case  of  Borradaile  v.  Hunter^  (w)  which  arose  on  a 
policy  containing  a  proviso  in  the  latter  form,  the  jury  having 
found  that  the  assured  "  voluntarily  threw  himself  from  the  bridge 
into  the  water,  with  the  intention  of  destroying  life,  but  at  the  time 
of  committing  the  act  he  was  not  capable  of  judging  between  right 

(q)  Duckett  v.  Williams,  2  C.  &  M.  348 ;  4  Tjrwh.  240. 

(r)  Geach  v.  Ingall,  14  M.  &  W.  95. 

(s)  Willis  V.  Pole,  Marsh  669.     Ross  v.  Bradshaw,  1  Bl.  312. 

{t)  Watson  V.  Mainwaring,  4  Taunt.  763. 

(m)  a  warranty  that  the  life  insured  had  not  been  afflicted  with,  nor  is  subject  to 
fits,  is  not  broken  by  his  having  accidentally'  had  an  epileptic  fit  in  consequence  of 
an  accident.     Chattock  v.  Shaw,  1  M.  &,  Rob.  498. 

(i')  Amicable  Assurance  Society  v.  Bolland,  revei'sing  judgment  of  M.  R.,  4  Bligh, 
194,  Selw.  N.  P.  1043.  See  too  the  observations  of  Ld.  Abinger,  C.  B.,  in  W'aiu- 
Wright  V.  Bland,  1  M.  &  Rob.  486. 

(w)  5  M.  &  Gr.  639. 


500  MERCANTILE  CONTRACTS. 

Insurance  upon  Lives. 

and  wrong,"  three  judges  of  the  Court  of  Common  Pleas  held  the 
policy  to  have  been  avoided :  Tindal,  C.  J.,  however,  expressed  his 
opinion  that,  regarding  the  context,  the  condition  was  limited  to 
cases  of  felonious  suicide.  He  considered  it  quite  clear  that  such 
would  have  been  its  operation,  if  the  words  used  had  been  "  shall 
die  by  suicide ;"  and,  in  this  construction,  Erskine,  J.,  seems  to 
have  concurred.  In  the  more  recent  case  of  Schwabe  v.  Clift^  {x) 
which  arose  upon  a  policy  containing  these  words,  Cresswell,  J.,  at 
nisi  jprius,  told  the  jury  that,  in  his  opinion,  "  it  must  appear  that 
the  deceased  was  a  responsible  moral  agent  at  the  time  of  his  death, 
in  order  to  make  the  act  committed  by  him  amount  to  suicide ;" 
and,  if  they  thought  he  could  not  "  at  the  time  distinguish  and  un- 
derstand the  nature  and  quality  of  the  act  he  was  doing,"  they  should 
find  a  verdict  for  the  plaintiff,  which  they  did.  Upon  a  bill  of  ex- 
ceptions to  this  ruling,  (?/)  four  of  the  judges  in  Cam.  Scacc.  held, 
that  these  words  included  all  cases  of  voluntary  self-destruction ; 
and  that,  if  the  deceased  voluntarily  killed  himself,  it  is  immaterial 
whether  he  was  at  the  time  sane  or  not.  From  this  decision,  how- 
ever. Pollock,  C.  B.,  and  Wightman,  J.,  dissented ;  the  question, 
therefore,  cannot  be  deemed  to  admit  of  no  doubt. 

The  payment  of  the  stipulated  premium  in  the  stipulated  man- 
ner is  an  invariable  condition  ;  if  it  be  broken,  a  subsequent  receipt 
of  the  premium  by  the  insurance  company's  agent  will  not  set  up 
the  policy ;  (2)  the  agent  not  being  authorized  to  bind  the  company 
by  a  fresh  agreement  to  insure,  though  possibly  a  payment  to  an 
agent  having  such  authority,  might  be  evidence  of  such  an  agree- 
ment. 

If  there  be  no  warranty  or  condition  on  the  part  of  the  insured, 
the  insurer  is  subject  to  all  risks,  unless  he  (a)  can  show  a  fraudu- 
lent concealment  or  misrepresentation,  (h)  or  a  non-communication 
of  material  facts  known  to  the  assured,  (c)  either  of  which  will  avoid 

{z)  2  Cr.  &  K.  134.  (y)  Clift  v.  Schwabe,  2  Car.  &  K.  Addendum, 

(z)  Acey  V.  Fernie,  1  M.  &  "W.  151. 

(a)  See  Elkin  v.  Janson,  13  M.  &  "W.  655.     Geach  v.  Ingall,  14  M.  &  W.  95. 

(6)  Stackpole  v.  Simon,  Park,  648. 

(c)  Williams  v.  Duckett,  6  Car.  &  P.  4.  Per  Ld.  Lyndhurst,  C.  B.  Morrison  v. 
Muspratt,  4  Bing.  60.  Huguenin  v.  Rayley  6  Taunt.  186.  Geach  v.  Ingall,  14  M.  4 
W.  95. 


IJsSURANCE  UPON  LIVES.  501 

Insurance  upon  Lives. 

the  policy.'^  It  is  the  duty  of  the  insured  to  disclose  all  materia,! 
facts  within  his  knowledge  ;  and,  if  the  fact  suppressed  be  material, 
it  signifies  not  whether  the  party  did  or  did  not  believe  it  to  be  so, 
its  materiality  being  a  question  for  the  jury;  (d)  and  a  verbal  mis- 
representation vitiates  the  policy,  although  it  be  expressly  stipu- 
lated by  its  terms  that  it  shall  be  void  on  untrue  answers  being 
given  to  certain  written  inquiries,  (e)  It  has  been  held,  that  a  bill 
in  Equity  will  lie  to  have  a  fraudulent  policy  delivered  up,  but 
that  the  Equity  is  better  if  the  bill  be  filed  during  the  continuance 
of  the  life  assured.  (/)  But  semble,  that  no  such  bill  would  lie  on 
the  ground  of  there  being  no  insurable  interest,  (g)  "Where  one 
person  insures  the  life  of  another,  the  party  whose  life  is  insured, 
if  applied  to  for  information,  is,  in  giving  it,  impliedly  the  agent  of 
the  party  insuring  ;  who  is,  therefore,  bound  by  his  statements,  and 
must  suffer  if  they  be  false,  though  he  himself  was  not  acquainted 
with  the  life  insured,  (h)  But  it  seems  that  he  is  only  the  agent  of 
the  insured  for  the  particular  purpose  of  answering  questions,  and, 
therefore,  that  his  concealment  of  a  mortal  disease  known  to  him- 
self, but  the  existence  of  which  was  not  involved  in  the  inquiries 
of  the  company,  would  not  avoid  the  policy,  if  the  existence  of  such 
disease  were  unknown  to  the  party  insured,  (j)     It  seems  too  that, 

{d)  Lindeman  v.  Des^orough,  8  B.  &  C.  586.     Geach  v.  Ingal,  iibl  sup. 

(e)  "W"ainwright  v.  Bland,  1  M.  &  W.  32.  As  to  the  question,  who  is  your  usitai 
medical  attendant  ?  and  the  answer  proper  to  be  given  to  it,  see  Huckman  v.  Fernie, 
3  M.  <fe  W.  505. 

(/)  Fenn  v.  Craig,  3  Y.  &  Coll.  216. 

{())  Desborough  v.  Curlewis,  3  Y.  <&  Coll.  175. 

(Ji)  Everett  v.  Desborough,  5  Bingh.  503.  See  Aveson  v.  Lord  Kinnaird,  6  East, 
188.  Swete  v.  Fairlie,  6  Carr.  &  P.  1.  Williaias  v.  Duckett,  cited  ibid.  3.  Von  Lin- 
denau  v.  Desborough,  3  Carr.  and  P.  353.  Majnard  v.  PJiodes  5  D.  &  R.  266  ;  1  C. 
&  P.  360. 

{i)  Huckman  v.  Fernie,  3  M.  &,  "W.  505.  Rawlins  v.  Desborough,  2  M.  &  Rob 
328. 


*  The  general  principle  was  considered  and  affirmed  in  Vose  v.  Eagle  Life  and 
Health  Insurance  Company,  6  Cush.  Rep.  42,  that  if,  in  the  representation  on  which 
a  life  insurance  is  effected,  a  material  fact  is  untruly  stated  or  concealed,  the  policy 
will  be  void,  though  no  specific  questions  are  asked  respecting  such  fact,  and  tliough 
such  statement  or  concealment  is  the  result  of  accident  or  negligence,  and  not  design  ■ 
provided  a  general  question  is  put  Avhich  would  elicit  the  fact. 


502  MERCANTILE  CONTRACTS. 

Insurance  upon  Lives. 

though  the  person  whose  life  is  insured  have  been  afflicted  with  a 
disease  tending  to  shorten  life,  still  if  that  disease  was  of  such  a 
nature  that  he  himself  could  not  be  conscious  of  what  happened  to 
him  while  suffering  under  it  (as  in  some  cases  of  mental  derange- 
ment), his  non-communication  thereof  would  not  vitiate  the  policy.  (J) 


U )  Swete  V.  Fairlie,  ubi  supra. 


CHAPTEE  VI. 


INSURANCE      AGAINST      FIRE.* 


By  this  contract,  the  insurer,  in  consideration  of  a  certain  pre- 
mium, paid,  either  in  gross,  or  at  stated  intervals,  undertakes  to 
indemnify"  the  assured  against  damage  to  his  property  by  fire,  du- 


*  It  is  to  be  regretted  that  the  author  has  not  given  more  consideration  to  the 
contract  of  insurance  against  fire,  which  has  become  one  of  great  importance,  not 
only  to  mercantile  men,  but  to  the  community  generally.  To  supplj-  this  defect,  we 
have  collected,  under  their  appropriate  lieads,  the  most  important  American  decisions 
relating  to  this  subject. 

1.  As  to  the  interest  of  the  insured. — Any  property  liable  to  be  injured  by  fire, 
whether  attached  to  land,  as  houses,  buildings,  (fee,  or  personal,  as  merchandise,  fur- 
niture, <fec.,  may  be  the  subject  matter  of  this  contract.  The  insured  must  have  an 
interest  in  the  property  at  the  time  of  insuring,  and  at  the  time  the  loss  happens.  la 
England,  where  at  one  time  wager  policies  in  marine  insurances  were  allowed,  the 
courts  refused  to  admit  the  same  principle  as  to  fire  policies.  Ellis  on  Ins.  21.  Sad- 
dlers' Co.  V.  Badcock,  2  Atk.  554-.  Gilbert  v.  K  American  Fire  Ins.  Co.,  23  "Wend.  43. 
But  as  different  persons  may  have  different  and  distinct  interests  in  the  same  pro- 
perty, the  interest  of  each  may  be  insured.  Thus,  a  mortgagor  and  mortgagee  may 
both  insure  the  same  building,  or  a  general  owner  and  a  factor  or  commission  mer- 
chant, having  a  special  property  or  interest  for  charges  or  commissions,  the  same 
goods.  Traders'  Ins.  Co.  v.  Robert,  9  Wend.  404.  Columbian  Ins.  Co.  v.  Lawrence, 
2  Pet.  25,  47,  S.  C,  10  Pet.  507.  Carpenter  v.  Providence  "Washington  Ins.  Co.,  16 
Pet.  495,  501,  505.  Any  actual  interest,  legal  or  equitable,  is  insurable.  An  interest 
held  under  an  executoiy  contract,  gives  to  the  person  claiming  under  it,  while  the 
contract  subsists,  a  substantial  interest  in  the  property,  which  may  be  insured.  2 
Pet.  25,  46. 

2.  As  to  the  parties. — Any  person  competent  to  make  other  contracts  may  make 
this.  Insurances  are  usually  made  by  incorporated  companies,  but  there  is  nothing 
to  prevent  individuals  from  doing  the  same.  As  in  the  contract  of  marine  insurance, 
so  in  this,  it  may  be  effected  by  an  agent.  The  insurance  companies,  of  course,  act 
by  their  officers  or  agents.  Care  should  be  taken  that  the  mode  prescribed  by  their 
charters  be  pursued ;  otherwise  the  act  may  not  be  obligatory  upon  the  company. 
Head  v.  Providence  Ins.  Co.,  2  Cranch.  127,  1  C.  R.  371.  Furnishing  an  agent  with 
policies  already  executed  by  the  officei's  of  a  company,  and  ready  to  be  delivered  to 
any  one  who  might  wish  to  contract,  after  his  name,  the  subject  insured,  extent  of 


504  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

ring  a  limited  period  of  time,  (a)  It  is  necessary  that  the  insured 
should  have  an  interest  in  the  property  protected,  (b)  and  in  case 
of  loss,  he  will  only  be  able  to  recover  to  the  extent  of  that  inter 

(a)  A  great  variety  of  forms  are  adopted  by  the  different  insurance  offices  in  fram- 
ing their  Jire  policies.  Some  are  indeed  so  worded  that  it  is  very  difficult  to  deter- 
mine who  are  the  parties  to  be  sued  by  the  insured  in  case  of  loss,  or  even  whether 
any  action  whatever  be  maintainable  upon  the  policy.  See  Andrews  v.  Ellison,  6 
B.  M.  199. — Alchorne  v.  Saville,  ibid.  199,  i?i  nota.  Gurney  v.  Rowlins,  2  M.  <fe  "W. 
87. 

(i)  Stat.  14  Geo.  3,  c.  48,  cited  in  last  chapter. 


the  risk,  and  date  of  the  transaction  had  been  inserted  in  the  contract,  have  been 
held  to  confer  full  authority  upon  the  agent,  so  far  as  third  persons  ai'e  concerned  ; 
and  the  company  cannot,  in  such  case,  discharge  themselves  by  setting  up  j^rivate 
instructions,  unknown  to  the  p^rty  who  enters  into  a  contract.  Lightbody  v.  North 
American  Ins.  Co.,  23  Wend.  18,  23. 

3.  As  to  the  contract.  The  ■policy,  how  cotistrued. — As  stated  by  the  author  to  be 
the  practice  in  England,  so  in  this  country,  the  different  insurance  companies  have 
adopted  forms  of  fire  policies  different  in  some  respects,  though  it  is  believed  that 
the  most  important  clauses  and  conditions  are  alike  in  most  of  the  forms  in  common 
use.  There  seems  to  be  no  reason  why  the  contract  of  fire  insurance  should  not  re- 
ceive the  same  liberal  construction  which  it  is  said  by  the  author  should  be  given  to 
that  of  marine  insurance.  And  although  the  Superior  Court  of  New  York,  (Savage, 
'C.  J.)  in  Fowler  v.  JStna  Fire  Ins.  Co.,  6  Cow.  677,  a  case  in  which  the  effect  of  a  descrip- 
tion of  tlie  property  in  a  fire  policy  was  involved,  said,  "This  is  not  a  case  in  which 
equities  should  be  considered.  It  is  a  sort  of  gambling — a  speculating  upon  chances 
— and  the  parties  must  be  held  strictly  and  literally  to  their  contract ;"  the  same 
court,  in  The  Jefferson  Ins.  Co.  v.  Cotheal,  7  "Wend.  82,  speaking  of  a  fii-e  policy,  say, 
"The  contract  of  the  pai'ties  must  have  its  fair  and  legitimate  construction  ;"  and  in 
the  case  of  McLaughlin  v.  "Washington  Co.  Mut.  Ins.  Co.,  23  "Wend.  527,  that  the 
clause  in  a  fire  policy  requiring  an  account  of  loss  to  be  furnished,  "  has  alwaj's  been 
construed  with  great  liberalit}'." 

In  relation  to  the  construction  of  this  contract,  and  particularly  of  the  usual 
clauses  in  fire  policies,  upon  a  proper  observance  of  which  so  many  important  inter- 
ests depend,  it  may  not  be  out  of  place  to  insert  some  of  the  remarks  of  Mr.  Justice 
Story,  in  a  case  above  cited,  16  Pet.  510,  as  to  the  clauses  in  fire  policies  respecting 
notice  of  prior  and  subsequent  policies,  which  may  well  apply  to  other  clauses. 
"The  public,  too,"  he  says,  "have  an  interest  in  maintaining  the  validity  of  these 
clauses,  and  giving  them  full  effect  and  operation.  They  have  a  tendency  to  keep 
premiums  down  to  the  lowest  rates,  and  to  uphold  institutions  of  this  sort,  so  essen- 
tial, in  the  present  state  of  our  country,  for  the  protection  of  the  vast  interests  em- 
barked Ml  manufactures,  and  on  consignments  of  goods  in  ware^iouses.  If  these 
clauses  are  to  be  construed  with  a  close  and  scrutinizing  jealousy,  when  they  may  be 
complied  with  in  all  cases  by  ordinary  good  faith,  and  ordinary  diligence  on  the 


INSURANCE  AGAINST  FIRE.  505 

Insurance  against  Fire. 

est ;  and  there  is  this  peculiarity  incidental  to  the  contract  of  in- 
surance against  fire,  viz.,  that  it  is  not  assignable,  (c)  except  with 
the  consent  of  the  insurer. 

(c)  Lynch  v.  Dalzell,  4  Bro.  P.  C.  431.     Saddlers'  Company  i;.  Badcock,  2  Atk.  554. 


Dart  of  the  insured,  the  effect  will  be  to  discourage  the  establishment  of  fire  insurance 
companies,  or  to  restrict  their  operations  to  cases  where  the  parties  and  tlie  premises 
are  within  the  personal  observation  and  knowledge  of  the  underwriters.  Such  a 
course  would  necessarily  have  a  tendency  to  enhance  premiums,  and  to  make  it  diffi- 
ctdt  to  obtain  insurances  when  the  parties  live',  or  the  property  is  situate,  at  a  dis- 
tance from  the  place  where  the  insurance  is  sought.  But  be  these  considerations  as 
they  may,  we  see  no  reason  why,  as  these  clauses  are  a  known  part  of  the  stipula- 
tions of  the  polic}',  they  ought  not  to  receive  a  fair  and  reasonable  interpretation, 
according  to  their  terms  and  obvious  import." 

4.  Representation  and  concealment. — The  contract  of  insurance  is  one  in  which  the 
underwriters  generally  act  on  the  representation  of  the  assured ;  and  fair  dealing  re- 
quires that  he  should  state  every  thing  which  might  influence  and  probably  would 
influence  the  mind  of  the  underwriter,  in  forming  or  declining  the  contract.  A  mis 
representation  which  is  material  to  the  risk,  avoids  the  policy.  Marshall,  C.  J., 
Columbian  Ins.  Co,  v.  Lawrence,  2  Pet.  49.  It  is  said  by  Chancellor  "Walworth,  that, 
after  an  examination  of  various  learned  treatises,  which  he  enumerates,  on  the  subject 
of  marine,  fire,  and  life  insurances,  he  finds  them  to  concur  in  saying,  that  "misrepre- 
sentation, in  reference  to  insurance  contracts,  is  a  false  affirmation  as  to  some  fact, 
material  to  the  risk ;  which  affirmation  is  made  by  the  assured,  or  his  agent,  either 
from  a  mistake  as  to  the  fact  represented,  or  with  a  design  to  deceive  the  insurer." 
Alston  V.  Mechanics'  Mutual  Ins.  Co.  of  Troy,  4  Hill,  334.  In  the  same  opinion,  he 
says,  that  Marshall,  a  writer  of  very  considei'able  authority  on  the  law  of  insurance, 
speaks  of  two  diff"erent  kinds  of  representation,  one  of  which  he  calls  an  affirmative, 
and  the  other  a  promissory  representation  ;  1  Marshall,  450 ;  and  that  it  is  said  by 
Ellis,  that  "  a  representation  in  insurance  is  in  the  nature  of  a  collateral  contract." 
Ellis  on  Ins.  29.  But  the  learned  Chancellor  denies  that  there  is  any  distinction,  or 
that  there  is  such  a  term  known  to  the  law  of  insurance  as  a  promissory  representation, 
rendering  the  contract  void,  for  the  non-performance  of  a  stipulation  in  the  nature 
of  a  collateral  executory  agreement,  which  the  parties  did  not  think  proper  to  make 
a  part  of  the  written  contract.  He  says,  "  that  a  statement  as  to  a  future  fact  or 
event,  which  is  in  its  very  nature  contingent,  and  which  the  insurer  knows  the  party 
could  not  have  intended  to  state  as  a  known  fact,  but  as  an  intention  or  expectation 
merel}',  if  honestly  made,  and  not  with  an  intent  to  deceive,  is  not  a  collateral  con- 
tract or  a  promissory  representation,  which  the  assured  is  bound  to  see  performed  to 
render  his  policy  valid.  But  if  the  underwriter  considers  the  statement  material  to 
the  risk,  and  is  unwilling  to  insure  at  the  contemplated  premium  without  binding 
the  assured  to  the  performance  of  it,  as  a  condition  precedent  to  his  liability,  he 
should  make  it  a  part  of  the  contract  stated  in  the  polic}'."  4  Hill,  340.  And  in 
accordance  with  this  opinion,  in  that  case,  where  the  insured,  on  applying  for  insur- 


506  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

A  misrepresentation  or  concealment  of  material  facts,  is  as  fatal 
to  this  as  to  any  other  contract  of  insurance.  To  use  the  words  of 
Mr.  J.  Bayley,  {d)  "  In  all  insurances,  whether  on  ships,  houses,  or 

{<!)  In  Lindenau  v.  Desborough,  8  B.  &  C.  586. 


ance  upon  a  building  against  fire,  promised  the  underwriters,  verbally,  that  if  they 
accepted  the  risk  he  would  discontinue  the  use  of  a  fireplace  in  the  basement,  and 
use  a  stove  instead  thereof,  but  after  obtaining  the  policy,  omitted  to  perform  his 
promise,  in  consequence  of  which  the  building  was  burned — it  was  held,  unani- 
mously, by  the  Court  of  Errors  of  New  York,  reversing  the  opinion  of  the  Supreme 
Court,  1  Hill,  510,  that  the  failure  to  comply  with  such  promise  was  no  defence  to 
an  action  on  the  policy.  See  also  Bryant  v.  Ocean  Ins.  Co.,  22  Pick.  200 ;  Whitney 
V.  Haven,  13  Mass.  172;  Allegre  v.  Maryland  Ins.  Co.,  2  Gill  &  John,  136. 

It  should  be  observed,  that  Mr.  J.  Duer,  in  his  treatise  on  Insurance,  recently  pub- 
lished, adopts  the  distinction  made  by  Mr.  Marshall,  of  affirmative  and  promissory/  re- 
presentations, and  controverts  the  opinion  of  Chancellor  Walworth,  above  referred 
to.  The  distinction,  he  says,  is  clearly  deducible  from  the  cases,  and  "  is  sustained 
by  an  irresistible  weight  of  authority."  2  J.  Duer,  657,  721,  note  2;  749,  note  6. 
He  cites,  among  other  cases,  Steel  v.  Lacy,  3  Taunt.  285  ;  Feise  v.  Parkinson,  4  Taiint. 
639;  Edwards  v.  Footner,  1  Camp.  530;  Driscol  v.  Passraore,  1  Bos.  &  Pull.  200; 
Murray  v.  Alsop,  3  John  Cas.  47  ;  Bowden  v.  Vaughan,  10  East,  415. 

"  Generally  speaking,  insurances  against  fire  are  made  in  the  confidence  that  the 
assured  will  use  all  the  precautions  to  avoid  the  calamity  insured  against,  which 
would  be  suggested  by  his  interest.  The  extent  of  this  interest  must  alwaj-s  influ- 
ence the  underwriter  in  taking  or  rejecting  the  risk,  and  in  estimating  the  premium. 
So  far  as  it  may  influence  him  in  these  respects,  it  ought  to  be  communicated  to  him. 
Underwriters  do  not  rely  so  much  upon  tlie  principles  as  on  the  interest  of  the  as- 
sured: and  it  would  seem,  therefore,  to  be  always  material  that  they  should  know 
how  far  this  interest  is  engaged  in  guarding  the  property  from  loss."  Marshall,  C. 
J.,  Columbian  Ins.  Co.  v.  Lawrence,  2  Pet.  49.  And  in  this  case,  where  an  offer  for 
insurance  described  the  property  as  belonging  to  the  insured,  and  stated  it  afterwards 
to  be  their  stone  mill,  and  the  proof  showed  that  the^'  held  only  one-half  of  one-third, 
under  a  lease  for  three  lives,  renewable  for  ever,  and  one-half  of  the  other  two-thirds 
as  mortgagees ;  and  that  the  other  moiety  was  held  under  a  contract,  the  terms  of 
which  had  not  been  complied  with,  and  which,  if  complied  with,  would  give  them  a 
title  to  two-thirds  of  that  moiety  only  as  mortgagees  ;  it  was  held  that  there  was  a 
misrepresentation ;  that  a  precarious  title,  depending  for  its  continuance  on  events 
which  might  or  might  not  happen,  was  not  such  a  title  as  that  described  in  the  offer 
for  insurance,  construing  the  words  of  that  offer  as  they  are  fairly  to  be  understood ; 
and  that  the  question  of  the  materiality  of  the  misrepresentation  should  have  been 
submitted  to  the  jury.  This  case  came  before  the  Supreme  Court,  10  Pet.  507,  and 
the  principles  above  stated  were  reaffirmed.  But  the  decisions  in  Massachusetts  and 
New  York  appear  to  be  somewhat  in  conflict  with  this  case.  While  it  is  admitted, 
&s  said  by  Nelson,  J.,  in  Tyler  v.  -^tna  Fire  Ins  Co,   12  Wend.  513,  that  the  naturt 


IXSURANCE  AGAINST  FIRE.  507 

Insurance  against  Fire. 

lives,  tlie  underwriter  should  be  informed  of  every  material  circum- 
stance within  the  knowledge  of  the  insured,  and  the  proper  ques- 
tion is,  whether  any  particular  circumstance  was  in  fact  material, 
not  whether  the  party  believed  it  to  be  so."  (e) 

(e)  Accord.  Bufe  v.  Turner,  2  Marsh.  46  ;  6  Taunt.  338. 


and  extent  of  the  interest  of  tlie  insured  may,  in  some  instances,  be  material  fticts  in 
making  up  an  estimate  of  the  risk  and  rate  of  premium,  and  upon  general  principles 
a  disclosure  would  seem  to  be  required  ;  yet,  it  is  added,  "generally  they  cannot  be 
60  material  as  to  justify  a  conclusion  that  they  would  have  varied  the  premium." 
And  after  examining  the  circumstances  of  the  cases  in  those  states  in  wliich  a  con- 
cealment or  misrepresentation  in  relation  to  the  interest  of  the  assured  have  been 
held  not  to  be  material,  it  would  seem  scarcely  possible  to  imagine  a  case  in  which 
it  would  be  so  considered.  Thus,  in  the  case  of  Fletcher  v.  Commonwealth  Ins.  Co., 
18  Pick.  419,  where  an  insurance  was  obtained  on  a  building,  without  disclosing  the 
fact  tliat  it  stood  on  the  land  of  another  person,  under  an  agreement  tei'minable  at 
the  pleasure  of  such  person,  upon  six  months'  notice,  it  was  held  that  there  was  not 
a  concealment  of  a  material  fact.  In  Strong  v.  The  Manufacturers'  Ins.  Co.,  10  Pick. 
40,  the  assured,  in  his  application  for  an  insurance  on  a  house,  stated  it  to  be  his  own 
property,  but  no  inquiry  was  made  by  the  insurei's  as  to  the  state  of  his  title.  The 
house,  in  fact,  had  been  mortgaged,  and  the  equity  of  redemption  had  been  seized  in 
execution.  It  was  held  that  these  circumstances  were  not  material  to  the  risk,  and 
that  the  statement  in  the  application  was  not  a  misrepresentation.  And  in  the  ^tna 
Fire  Ins.  Co.  v.  Tyler,  16  Wend.  385,  S.  C.  12  Wend.  501,  it  was  held  that  a  party  in 
possession  of  a  dwelling-house,  under  a  valid  subsisting  contract  of  purchase,  although 
he  has  not  paid  the  whole  consideration  money,  has  an  insurable  interest ;  and  if  he 
applies  for  insurance,  representing  the  house  as  fiis,  and  it  is  described  in  the  policy 
as  his  dwellinff-house,  he  is  not  guilty  of  a  misrepresentation  or  breach  of  warranty,  so 
as  to  avoid  the  policy.  See  also  Curry  v.  The  Commonwealth  Ins.  Co.,  10  Pick.  535. 
lu  1  Phillips  on  Ins.  285,  it  is  said,  "The  cases,  on  the  whole,  favor  the  doctrine 
that  the  insured  needs  not  to  state  that  his  interest  in  the  building  insured  against 
fire  is  a  qualified  or  conditional  one,  unless  inquiries  are  made  on  the  subject.  If 
such  inquiries  are  put,  or  if  he  voluntarily  makes  any  such  representation,  his  state- 
ments must  be  true,  or  the  policy  will  be  void." 

5.  Description  of  the  insured — The  same  effect,  it  seems,  will  be  given  to  the 
phrase  "whom  it  may  concern,"  -when  inserted  in  a  fire  policy,  that  it  has  in  a  ma- 
rine. Thus,  where  a  policy  insured  two  individuals  by  name,  and  then  the  words 
"or  whom  it  may  concern"  were  added,  and  a  clause  was  inserted  in  the  policy  that 
the  loss,  if  any  occurred,  should  be  paid  to  the  individuals  na.'ied,  it  was  held  that 
an  action  might  be  maintained  in  their  names,  and  that  they  were  entitled  to  recover 
the  whole  sum  insured,  although  it  appeared  they  were  owners  of  but  one-half  of 
the  building  insured,  and  that  the  other  lialf  belonged  to  a  third  person,  not  joined 
as  plaintiff.     Jefferson  Ins.  Co.  v.  Cotheal,  7  Wend.  72. 

6.  Description  of  the  Property. — In  some  insurance  companies,  and  particularlj 


508  '  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

It  is  necessary  to  be  extremely  accurate  in  describing  the  nature 
of  the  property  intended  to  be  insured,  in  order  that  it  may  not  fall 
without  the  scope  of  the  policy.     For  where  a  policy  was  effected 

those  on  the  imitual  principle,  inttrrogatories  are  propounded  to  the  applicants  for 
insurance  in  relation  to  the  condition,  situation,  value,  and  risk  of  the  property  to 
be  insured,  to  which  -written  answers  are  embodied  in  the  application  ;  and  these  are 
referred  to  in  tlie  body  of  the  poliej-,  and  a  proviso  is  inserted,  that  if  the  represen- 
tations thus  made  do  not  contain  a  full  and  true  exposition  of  all  the  facts  and  cir- 
cumstances, in  regard  to  the  condition,  situation,  value,  and  risk  of  the  property  in- 
sured, so  far  as  the  same  are  known  to  the  applicants,  and  are  material  to  the  risk, 
the  policy  shall  be  void. 

It  has  been  held,  that  the  application  for  insurance,  and  representations  made  wnd 
referred  to  as  above  stated,  are  legally  embodied  and  adopted  as  part  of  the  con- 
tract, to  the  same  effect  as  if  they  were  recited  and  set  forth  at  large  in  the  policy. 
But  being  termed  representations  in  the  policy,  they  are  rather  to  be  regaraed  as 
having  the  legal  effect  of  representations  than  of  warranties,  though  partaking  in 
some  measure  of  the  character  of  both.  "They  are  like  representations,  in  requir- 
ing that  the  facts  stated  shall  be  substantially  true  and  correct,  and  so  far  as  they 
are  executorj',  that  they  shall  be  substantially  complied  with ;  but  not  like  warran- 
ties, in  reqiiiring  an  exact  and  literal  compliance.  It  is  enough,  therefore,  if  these 
statements,  relied  on  as  the  basis  of  the  contract,  are  made  in  good  faith  and  with- 
out intent  to  deceive ;  that  they  are  substantially  true  and  correct,  as  to  existing  cir- 
cumstances, and  substantially  complied  with,  so  far  as  they  are  executory  and  regard 
the  future."  Houghton  v.  Manufacturers'  Mutual  Fire  Ins.  Co.,  8  Mete.  114.  And 
thus,  in  this  case,  where  among  other  answers  in  relation  to  the  risk  of  fire,  it  was 
stated  that  "no  watch  is  kept  in  or  about  the  buildings,  but  the  mill  is  examined 
thirty  minutes  after  work,"  it  was  held  that  this  representation  of  the  usual  practice 
amounted  to  a  condition  or  stipulation  that  it  should  be  continued ;  although  it  was 
said,  "an  occasional  omission,  owing  to  accident,  or  to  the  negligence  of  subordinate 
persons,  servants,  or  workmen,  not  sanctioned  nor  permitted  by  the  assured,  or  by 
their  superintendent,  manager,  or  agent,  might  not  be  a  breach  or  non-compliance." 
8  Mete.  124. 

But  in  the  case  of  Burritt  v.  Saratoga  Co.  Mut.  Fire  Ins.  Co.,  5  Hill,  188,  while  it 
is  said  by  the  Court  (Bronson,  J.)  that  "an  express  warranty  is  always  part  of  the 
contract,  and  a  reference  in  the  policy  to  a  survey,  or  other  paper,  will  not  make 
such  paper  a  part  of  the  contract,  so  as  to  change  what  would  otherwise  be  a  mere 
representation  into  a  warranty" — citing  Jefferson  Ins.  Co.  v.  Cotheal,  Y  Wend.  72 ; 
Snyder  v.  Farmers'  Ins.  Co.,  13  "Wend.  92,  S.  C.  16  "Wend.  481.  Delonguemere  v. 
Tradesmen's  Ins.  Co.,  2  Hall,  589.  1  Marsh  on  Ins.  346,  350,  451.  1  Phil.  Ins.  346,  347 
— it  is  insisted  that  "these  cases  adnrit,  what  no  one  could  well  denj",  tliat  the  policy 
may  so  speak  of  another  writing  as  to  make  it  a  part  of  the  contract,  although  not 
actually  embodied  in  the  policy."  Citing  Routedge  v.  Burrell,  1  H.  Black,  254. 
Worsley  v.  "Wood,  6T.  R.  710.  Roberts  v.  Chenango  Ins.  Co.,  3  Hill,  501.  And  in 
that  case,  the  policy  not  only  referring  to  the  written  application  "for  a  more  parti- 
cular description"  of  the  property  insured,  but  "  as  forming  a  part  of  this  policy,"  it 


MAEITIME  INSURANCK  509 


Insurance  against  Fire. 


on  "stock  in  trade,  household  furniture,  Unen^  wearing  apparel, 
and  jDlate,"  the  person  insured  not  being  a  linen  draper,  this  was 
held  not  to  protect  linen  subsequently  purchased  on  speculation, 

was  held  to  be  thus  made  part  and  parcel  of  the  contract,  and  that  the  two  instru- 
ments must  be  read  in  the  same  manner  as  though  they  had  been  actually  moulded 
into  one.  And  one  of  the  conditions  annexed  to  the  policy  being,  that  "if  any  per- 
son insui'ing  any  property  in  this  company,  shall  make  any  misrepresentation  or  con- 
cealment in  the  application,  d'c,  such  insurance  shall  be  void  and  of  no  effect,"  it  was 
eaid,  "  Here  the  parties  have,  by  their  contract,  placed  a  misrepresentation  or  con- 
cealment, in  relation  to  particular  facts,  iipon  the  same  footing  as  a  waiTanty.  They 
have  agreed  that  misrepresentation  or  concealment  shaJ  avoid  the  policy,  and  we 
have  nothing  to  do  with  the  inquiry,  whether  the  fact  misrepresented  or  concealed 
was  material  to  the  risk."  "Any  concealment  in  the  application  avoids  the  policy." 
5  Hill,  193.  Accordingly,  the  application  requiring  the  applicant  for  an  insurance  on 
a  building  to  state  its  "relative  situation  as  to  other  buildings — distance  from  each,  if 
less  than  ten  rods,"  and  the  insured  having  described  five  buildings  which  stood 
within  the  specified  distance,  omitted  to  mention  several  others  standing  within  the 
same  distance,  it  was  held  that  the  omission,  however  innocent,  was  fatal  to  the 
policj',  and  this  whether  material  to  the  risk  or  not. 

It  frequently  occurs  that  in  policies  a  description  is  given  of  the  house  or  build- 
ing insured,  and  questions  have  arisen  in  several  cases  as  to  the  eff'ect  of  such  de- 
scription. In  Catlin  v.  Springfield  Fire  Ins.  Co.,  1  Sumn.  434,  the  house  was  described 
as  "  at  present  occupied  as  a  dwelling-house,  but  to  be  occupied  hereafter  as  a  tavern, 
and  privileged  as  such."  These  words  were  held  not  to  be  a  warranty  that  the 
house  should  be  so  occupied,  but  a  mere  representation  of  the  intention  to  occupy  it 
as  a  tavern,  and  to  secure  for  it  the  privileges  of  the  policy  as  such. 

But  in  the  case  of  Fowler  v.  The  ^tna  Fire  Ins.  Co.,  6  Cow.  673,  it  was  held  that 
the  description  of  the  property  insured  in  a  policy  against  loss  by  fire,  is  a  warranty 
that  the  property  is  as  described;  and  if  untrue  in  substance,  tlie  policy  is  void, 
though  the  misdescription  arise  from  mistake,  and  there  be  no  fraud.  Thus,  where 
a  policy  of  this  kind  described  the  subject  insured  as  the  stock  in  trade  of  the  in- 
sured, contained  in  a  two-story  frame  house  Jilled  iti  with  brick,  and  the  house  was 
not  so  filled  in,  the  policy  was  held  to  be  void. 

And  in  the  case  of  "Wood  v.  Hartford  Fire  Ins.  Co.,  13  Conn.  533,  it  appears  to 
have  been  the  opinion  of  the  Court,  that  any  statement  or  description,  or  any  un- 
dertaking on  the  part  of  the  insured,  on  the  face  of  the  policy,  which  relates  to  tlie 
risk,  is  a  warranty.  And  whether  this  is  declared  to  be  a  warranty,  or  is  ascertained 
to  be  such  by  construction,  is  immaterial ;  in  either  ease  it  is  an  express  warranty 
and  a  condition  precedent,  And  thus,  in  that  case,  where  property  was  described  in 
the  policy  as  "a  paper-mill,  which  tlie  insured  owned  at  W.,  together  with  the  ma- 
chinery, wheels,  gearing,  <tc. ;"  it  was  held  that  this  description  related  to  the  risk, 
and  was  consequently  a  warranty :  this  was  considered  evident,  from  the  fact  that 
the  paper-mills  were  enumerated  in  the  memorandum  of  special  rates.  It  was  also 
held,  that  if  the  property  was  not  a  paper-mill  at  the  time  of  the  loss,  the  warranty 
was  not  kept,  and  the  plaintiffs  could  not  recover,  although  the  change  may  hava 


510  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

the  word  linen  in  the  policy  being  taken  to  mean  honsehold  linen, 
or  linen  used  by  way  of  apparel.  (/)  The  insurance  of  an  inn 
keeper's  ^Hnterest  in  the  inn  and  offices'''  does  not  cover  the  loss  of 

(/)  Watchorne  v.  Langford,  3  Camp.  422. 

diminished  the  hazard,  and  been  effected  without  their  knowledge  or  against  their 
•will.  But,  in  this  case,  when  the  use  of  the  paper-i.il]  was  discontinued,  and  a  pair 
of  millstones  added  for  grinding  grain,  the  only  change  made  being  the  removal  of 
the  rag-cutter  and  duster,  and  the  sviletitution  of  the  grindstones,  to  be  moved  by 
the  same  gearing  and  by  the  power  of  the  same  water-wheel — all  the  rest  remaining 
as  it  was,  capable  at  any  time  of  being  emploj-ed  in  making  paper — it  was  further 
held,  that  the  property  was  still,  to  all  intents  and  purposes,  a  paper-mill,  ready  for 
use,  and  that  the  warranty  was  duly  kept. 

7.  Particular  clauses.  As  to  prior  or  subsequent  insurances  on  the  same  property. — 
Where  the  clause  as  to  prior  insurances,  provided  that  "in  case  the  insured  shall 
have  alread}'  any  other  insurance  on  the  property  hereby  insured,  not  notified  to  this 
corporation,  and  mentioned  or  indorsed  upon  this  policy,  then  tliis  insurance  shall  be 
void  and  of  no  effect;"  it  lias  been  held  that,  at  law,  mere  parol  notice  of  another 
insurance  on  the  same  property,  is  not  sufficient;  and  that  it  was  necessary  in  case 
of  any  such  prior  policy,  that  the  same  should  not  only  be  notified  to  the  company, 
but  should  be  mentioned  in  or  indorsed  upon  the  policy.  "It  can  never  be  properly 
said  that  the  stipulation  in  the  policy  is  complied  with,  when  there  has  been  no  such 
mention  or  indorsement  as  it  positivelj'  requires;  and  without  which  it  declares  that 
the  polic}'  shall  henceforth  be  void  and  of  no  effect."  Carpenter  v.  Providence  Wash- 
ington Ins.  Co.,  16  Pet.  495.  Tlie  plaintiff  in  this  case  afterwards  filed  a  bill  in 
equity,  but  the  question  whether  a  notice,  not  mentioned  in  or  indorsed  upon  the 
policy,  would  there  be  sufiicient,  was  not  decided.     4  How.  S.  C.  185. 

Where  the  clause  as  to  subsequent  insurances  provided  that  "in  case  the  insured 
or  the  assigns  of  the  insured  shall  hereafter  make  any  other  insurance  on  the  same 
property,  and  shall  not  with  all  reasonable  diligence  give  notice  thereof  to  this  com- 
pany, and  have  the  same  indorsed  on  this  instrument,  or  otherwise  acknowledged  and 
approved  by  them  in  writing,  this  policj'  should  cease  and  be  of  no  further  effect;" 
and  another  insurance  was  effected,  and  at  the  same  time  a  written  notice  was  for- 
warded to  the  secretary  of  the  company,  and,  on  the  next  day,  the  insured  received 
a  letter  from  the  secretary  in  these  words,  "  I  have  received  your  notice  of  additional 
insurance ;"  it  was  held  in  an  action  upon  the  policy,  that  the  letter  imported  both 
an  acknowledgment  and  an  approval  in  meriting,  within  the  meaning  of  the  condition 
as  to  further  insurance,  and  that  the  plaintiff  was  therefore  entitled  to  recover. 
Potter  V.  The  Ontario  and  Livingston  Mut.  Ins.  Co.,  5  Hill,  147.  In  this  case  it  was 
further  held,  that^  "making  further  insurance  d;d  not  work  a  forfeiture  of  the  policy, 
unless  the  plaintiff  neglected  to  give  notice  with  all  reasonable  diligence,  and  there 
is  no  pretence  of  any  such  neglect.  On  receiving  notice,  it  was  for  the  defendants 
to  say  whether  the  contract  should  terminate  or  not;  and  until  they  made  the  elec- 
tion, the  policy  continued  in  force.  The  policy  was  in  full  force  at  the  time  the  lost 
bajipened  and  the  cause  of  action  accrued."     5  Hill,  151. 


INSURANCE  AGAINST  FIRE.  5U 


Insurance  against  Fire. 


profits  sustained  between  the  time  of  the  destruction  of  the  inn  by 
fire  and  its  restoration.  Such  profits  are,  indeed,  insurable,  but 
they  must  be  insured  qita  profits,  (g)     If  a  building  be  described  as 

(g)  In  re  Wright,  1  Ad.  &  E.  261. 

If  nothing  is  said  in  the  policy  as  to  the  manner  of  notification,  it  may  be  by 
parol.  Thus,  where  it  was  provided  in  the  policy  that  in  case  the  assured  had  al 
ready  made  any  other  insurance  on  the  same  property,  not  notified  to  the  corporation, 
the  policy  should  be  void ;  and  the  conditions  annexed  further  provided  that  all  ap 
plications  for  insurance  should  be  in  writing,  d'c,  but  were  silent  as  to  notices;  it  was 
held,  that  there  was  nothing  requiring  notice  of  a  prior  insurance  to  be  inserted  in 
the  application,  and  that  a  parol  notice  was  therefore  sufficient.  McEwen  v.  Mont 
gomery  Co.  Mut.  Ins.  Co.,  5  Hill,  101.  And  it  was  further  held  in  this  case,  that  such 
notice  was  binding  on  the  company,  tho:igh  given  to  one  of  their  travelling  agents, 
and  though  it  never  reached  the  company ;  it  appearing  that  the  business  of  the 
agent  was  to  solicit  insurances,  make  surveys,  and  receive  applications,  and  that  he 
was  notified  while  actually  engaged  in  preparing  an  application  for  the  policy  in 
question. 

It  appears  to  have  been  considered  by  the  Supreme  Court  of  Massachusetts,  that 
where  a  policy  had  been  effected  in  one  office,  containing  the  usual  clause  against 
double  insurances,  and  afterwards  a  policy  is  effected  in  another  office,  containing 
the  same  clause,  and  no  notice  is  given  to  either  company,  that  the  second  policy, 
being  wholly  nugatory  and  of  no  effect,  cannot  be  set  up  to  defeat  the  first.  Jack- 
son V.  Mass.  Mutual  Fire  Ins.  Co.,  23  Pick.  418.  And  see  also  Stacey  v.  Franklin  Fire 
Ins.  Co.,  2  Watts  &  Serj.  544.  But  in  a  case  before  cited  from  16  Peters,  495,  the 
Supreme  Court  of  the  United  States  seems  to  entertain  a  contrary  opinion.  In  that 
case,  to  avoid  the  consequences  of  a  failure  to  give  notice  of  a  prior  insurance  on 
the  same  property,  it  was  insisted  that  such  prior  insurance  had  been  procured  by  a 
misrepresentation  of  material  facts,  was  therefore  null  and  void,  and  that  no  n'otice 
of  such  prior  insurance  need  be  given ;  but  the  Court,  expressing  a  doubt  whether 
a  party  to  a  policy  can  be  allowed  to  set  up  his  own  misrepresentations  to  avoid  the 
obligations  deducible  from  his  own  contract,  decided,  that  because  a  policy  is  pro- 
cured by  misrepresentations  of  material  facts,  it  is  not  therefore  to  be  treated,  in  the 
sense  of  the  law,  as  utterly  void  af)  initio.  It  is  merely  voidable,  and  maj^  be  avoided 
by  the  underwriters  upon  due  juof  of  the  facts;  but  until  so  avoided,  it  naust  be 
treated,  for  all  practical  purposes,  as  a  subsisting  policy.  And  that  notice  of  avoid- 
able policy  must  be  given  to  the  underwriters  ;  for  such  a  case  falls  within  the  words 
and  the  meaning  of  the  stipulations  in  the  i^olicy.  It  is  a  prior  policy,  and  it  has  a 
legal  existence  until  avoided.  16  Pet.  509.  And  the  Court  proceed  to  say,  "  Indeed, 
we  are  not  prepared  to  say  that  the  Court  might  not  have  gone  further,  and  have 
held  that  a  policy — existing  in  the  hands  of  the  insured,  and  not  utterly  void  u[)on 
its  very  face,  without  any  reference  whatever  to  any  inti'insic  facts — sliould  Iiave 
been  notified  to  the  underwriters;  even  although  by  proofs,  affotdfd  by  sucli  ex- 
trinsic facts,  it  might  be  held  in  its  very  origin  and  concoction  a  nullity."  16  Pet 
510. 


512  MERCANTILE  CONTRACIS. 


Insurance  against  Fire. 


of  one  class,  instead  of  another,  when  a  larger  premium  would 
have  been  required  for  that  other,  the  policy  becomes  completely 
void,  {h) 

(/t)  Newcaslle  Fire  Ins.  Company  v.  M'Morran,  3  Dow.  255.  See  Doe  d.  Pitt  v. 
Laming,  4  Camp.  73.  Dobson  v.  Sotheby,  M.  &  M.  90.  Eisks  are  commonlydivided 
by  the  insurance  offices  into  three  classes:  1st.  Common  Lis-urances ;  2dly.  Hazard- 
ous ;  3dly.  Doubly  Hazardous.  There  are,  besides,  a  few  cases  of  what  is  called  Ex- 
traordinary Risl",  ex.  gr.,  those  of  sugar  refineries :  these  are  generally  excluded  from 
tho  table  of  premiums,  and  made  subjects  of  special  agreement.  Cash,  and  securities 
for  cash,  are,  I  believe,  seldom  insurable  on  any  terms. 


This  question  has  recently  come  up  before  the  Supreme  Court  of  Massachusetts 
again,  and  the  Court,  on  re-examination,  has  adhered  tc  the  doctrine  before  pro- 
pounded. Clark  V.  New  England  Mutual  Fire  Insurance  Company,  6  Cush.  Rep.  342. 
The  case  in  16  Peters,  509,  is  examined,  and  shown  to  be  inconsistent  with  the  deci- 
sion of  Judge  Story  in  the  same  case  on  the  Circuit,  in  1  Story  Rep.  57. 

It  has  been  already  observed,  that  persons  holding  different  interests  in  the  same 
property  may  severally  insure,  and  it  appears  to  be  settled,  that  no  notice  of  a  prior 
or  subsequent  insurance  on  the  same  property  made  by  a  third  person  on  account  of 
a  distinct  interest  need  be  given.  Tyler  v.  Mtna.  Fire  Ins.  Co.,  12  Wend.  507,  515  ;  S. 
C.  16  Wend.  385.  Jackson  v.  Massachusetts  Mut.  Fire  Ins.  Co.,  23  Pick.  418.  And 
where  the  clause  provided  that  notice  should  be  given  by  persons  insuring  property, 
"  of  any  other  insurance  made  on  their  behalf  on  the  same,"  it  was  held  to  mean  one 
that  should  be  effected  at  the  instance  and  upon  the  authority  of  the  assured ;  and 
that  an  insurance  on  his  account  by  another  without  his  knowledge,  authority,  or 
subsequent  recognition,  would  not  be  embraced  under  such  a  clause.  Franklin  Ins. 
Co.  V.  Drake,  2  B.  Monroe,  47. 

But  where  a  party  has  an  interest,  whether  legal  or  equitable,  in  another  policy 
on  the  same  subject  matter  insured,  it  seems  that  notice  should  be  given.  There  ap- 
pears, however,  to  be  some  conflict  of  opinion  on  the  question,  whether  a  mortgagor, 
who  having  an  insurance  on  the  property  mortgaged  assigns  it  to  the  mortgagee,  is 
still  so  far  interested  in  the  policy  assigned  as  to  require  him,  in  obtaining  another 
insurance  on  the  same  property,  to  give  notice  of  the  one  assigned  to  his  mortgagee. 
It  appears  to  have  been  considered  by  the  Supreme  Court  of  the  United  States,  16 
Peters,  500,  502,  that  where  the  policy  is  assigned  as  a  collateral  security,  the  mort- 
gagor still  retains  such  an  interest  in  it  that  he  must  give  notice  of  its  existence. 
But  see  Traders'  Ins.  Co.  v.  Roberts,  9  Wend.  404,  474;  S.  C.  17  Wend.  631,  640;  23 
Pick.  418. 

There  is  another  clause  usually  added  in  relation  to  the  effect  of  prior  or  subse- 
quent insuratices.  This  clause  is  generally  to  this  effect,  that  "in  case  of  any  other 
insurance  upon  the  property  hereby  insured,  the  insured  shall  not,  in  case  of  loss  or 
damage,  be  entitled  to  demand  or  recover  on  this  policy  any  greater  portion  of  the 
loss  or  damage  sustained,  than  the  amount  hereby  insured  shall  bear  to  the  whole 
amount  insured  upon  said  property." 

The  effect  and  object  of  this  clause,  and  also  the  law  as  to  a  double  insurance. 


INSUKANCE  AGAINST  FIRE.  513 

Insurance  against  Fire. 

But,  thougli  the  most  appropriate  phrase  be  not  employed,  yet, 
if  the  description  of  the  property  be  substantially  correct,  and  a 
more  accurate  statement  would  not  have  varied  the  premium,  the 
error  is  not  material,  {i) 

(i)  R.  &  M.  92.    See  Doe  d.  Pitt  v.  Laming,  4  Camp.  73. 


were  considered  and  stated  by  Cowen,  J.,  in  a  recent  case.  "A  man  may  insure  the 
same  subject  against  fire  in  several  offices,  to  any  amount,  due  notice  being  given  to 
each,  and  the  fact  noted  on  the  respective  policies.  The  effect  is,  that  each  office 
then  stands  in  the  relation  of  co-surety  with  the  other,  according  to  the  several 
amounts  for  which  they  undertook,  just  as  if  they  had  all  underwritten  the  same 
policy.  The  several  policies  are  considered  as  one.  Stopping  here,  therefore,  the 
insured  may  sue  and  recover  on  one  or  more  of  them  to  the  extent  of  his  entire  loss, 
if  the  sums  subscribed  will  cover  it;  and  those  who  pay  the  loss  may  compel  con- 
tribution for  the  payment  from  the  others,  in  the  proportion  that  each  of  the  sums 
subscribed  by  them  bears  to  the  whole  amount  of  subscriptions.  To  avoid  this  cir- 
cuity, the  clause  in  question  was  introduced.  By  this,  the  double  office  of  recovery 
and  contribution  is  performed  in  a  single  action ;  the  defendant  being  allowed  to  re- 
coupe  the  same  amount  which  he  must  formerly  have  recovered  over  against  those 
who  stood  by  his  side." — "The  clause  in  question  Avas  probably  intended  to  substi- 
tute proportional  abatement  for  contribution,  in  all  those  cases  in  which  the  latter 
would  otherwise  have  been  required  by  the  common  law  ;  and  is  perhaps  sufficient 
to  answer  that  end."     Howard  Ins.  Co.  v.  Scribner,  5  Hill,  29-8,  301. 

But,  say  the  Court  in  the  same  case,  5  Hill,  302,  none  of  the  numerous  books  cited 
show  that  the  right  to  contribution  has  ever  been  supposed  to  arise  without  the 
subject  matter  insured  being  exactly  the  same  in  each  policy.  It  is  not  enough  that 
the  insured  be  the  same  person.  He  may  take  policies  on  different  things,  or  different 
risks  pertaining  to  the  s.ame  thing,  or  in  different  interests  in  respect  to  the  same 
thing.  In  each  case  the  demand  for  a  loss  against  one  insurer  is  in  no  way  affected 
by  the  subscription  of  another.  Citinrf  Godin  v.  Lond.  Assu.  Co.,  1  Burr.  489,  495; 
1  "W.  Bl.  103,  105,  S.  C. ;  Park  on  Ins.  375.  And  it  was  accordingly  held,  in  an  action 
on  a  policy  containing  the  clause  above  stated,  and  insuring  $1000  on  fixtures  and 
$3000  on  sfocl;  though  it  appeared  that  the  plaintiff  had  procured  another  policy 
insuring  $5000  on  the  stock  and  fixtures,  as  one  parcel,  that  it  was  not  a  double  in- 
Bm'ance,  and  that  the  underwriter  was  liable  to  the  same  extent  as  if  the  latter  policy 
had  never  existed. 

In  the  case  of  Harris  v.  Ohio  Ins.  Co.,  5  Ohio,  461,  the  clause  was  in  this  form: 
"Persons  insuring  property  at  this  office  must  give  notice  of  any  other  insui-ance 
made  on  their  behalf  on  the  same,  and  cause  such  other  insurances  to  be  indorsed  on 
the  policy ;  in  which  case,  each  office  shall  be  liable  to  the  payment  of  a  rateable  pro 
poi'tiou  of  any  loss  or  damage  which  may  be  sustained.  And  unless  such  notice  is 
given,  the  insured  will  not  be  entitled  to  recover,  in  case  of  loss."  It  was  held  that 
this  clause  extended  to  a  case  of  subsequent  as  well  as  previous  insurance.  This  de- 
cision was  followed  in  Stacy  v.  Franklin  Fire  Ins.  Co.,  2  Watts  &  Serj.  506,  544.  The 
33 


514  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

And  where  goods  were  described  as  in  the  dwelling-house  of  the 
insured,  and  it  turned  out  that  the  insured  had  but  one  room  as  a 
lodger,  in  which  the  goods  were,  it  was  held  that  they  were  correctly 


case  of  Harris  v.  Ohio  Ins.  Co.,  was  decided  against  the  plaintiff  for  a  failure  to  give 
notice  of  a  subsequent  insurance,  but  in  the  conclusion  of  the  opinion  of  the  Court,  it 
is  said,  "An  objection  is  stated,  that  the  plea  does  not  sufficiently  show  the  second 
insurance  was  a  double  insurance,  the  one  being  upon  the  goods,  and  the  other  on 
the  store  and  goods.  The  rule  is  correct,  that  to  constitute  a  double  insurance,  the 
same  risks  must  be  covered  by  the  same  policj^,  for  the  benefit  of  the  same  person. 
An  insurance  against  one  -peril  does  not  diminish  the  ownei-'s  interest  as  to  other 
pei'ils.  If  property  be  insured  to  its  value  against  capture,  the  owner  has  the  same 
amount  of  honorable  interest  against  the  perils  of  the  sea.  (Phil,  on  Ins.  326;  11 
Johns.  238;  5  Serg.  &  Rawle,  513.)  But  where  the  second  policy  insures  the  same 
risks,  for  the  benefit  of  the  same  person,  it  falls  within  Mansfield's  definition, 
(1  Burr.  489,)  and  is,  to  any  extent,  a  double  insurance.  The  plea  in  the  present  case, 
shows  the  goods  are  protected  by  the  second  policy  from  perils  by  fire ;  it  is,  there- 
fore, a  double  insurance  of  the  same  risks."  This  case  was  referred  to  in  the  case  of 
the  Howard  Ins.  Co.  v.  Scribner,  5  Hill,  303,  and  it  is  said  of  it,  that  it  "  did  not  raise 
the  question  of  contribution  or  abatement  The  first  policy  was  declared  void,  be- 
cause notice  of  the  second  was  not  given.  It  comes  out  in  the  course  of  the  opinion 
that  one  was  on  ffoods  and  the  other  on  store  and  goods,  but  the  latter  might  have 
been  for  separate  sums  on  each." 

8.  Clause  as  to  increase  of  risk,  in  use  of  huilding. — To  policies  of  fire  insurance, 
conditions  are  generalh^  annexed  and  referred  to  in  the  policy ;  but  whether  so  re- 
ferred to  by  express  words  or  not,  if  annexed  to  and  delivered  with  the  policy,  they 
are  to  be  deemed  prima  facie  a  part  of  it.  Roberts  v.  Chenango  Co.  Mut.  Ins.  Co., 
3  Hill,  501.  These  conditions  usually  denominate  certain  goods  not  hazardous,  and 
certain  trades  and  goods,  <fec.,  hazardous,  and  in  some  forms,  certain  others  extra- 
hazardous, and  a  clause  is  generally  inserted  in  the  policy,  providing  against  using 
the  building  insured  for  carrying  on  any  trade,  <fec.,  or  storing  any  goods,  Ac,  deno- 
minated in  the  conditions  to  be  hazardous  or  extra-hazardous,  unless  provided  for  or 
agreed  to  by  the  company.  In  some  conditions  annexed  to  policies,  there  is  also  a 
memorandum,  to  the  effect  that  certain  buildings  used  for  certain  trades,  &c.,  will  be 
insured  at  special  rates  of  premium. 

Where  the  clause  in  the  policy  provided,  that  in  case  the  building  "  siiould  be 
appropriated,  applied,  or  used  to  or  for  the  purpose  of  carrying  on  or  exercising 
therein  any  trade,  business,  or  vocation  denominated  hazardous,  extra-hazardous,  or 
specified  in  the  memorandum  of  special  rates,  Ac.,"  the  policy  should  be  of  no  effect, 
BO  long  as  the  building  should  be  so  appropriated,  applied  or  used ;  and  the  memo- 
randum specified  "houses  building  or  repairing;"  it  was  held,  that  these  words, 
taken  in  connection  with  the  policy,  must  be  understood  in  reference  to  the  carrying 
on  the  track  of  house-building  or  house-repairing  in  or  about  the  building  insured, 
and  that  they  did  not  apply  to  repairs  upon  the  building  itself;  and  that  the  fact 
that  the  building  was  undergoing  repairs  at  the  time  of  its  destruction  by  fire,  did 
ttot  prevent  a  recovery.    To  give  the  clause  that  effect,  say  the  Court,  would  "cut  off 


INSURANCE  AGAINST  FIRE.  515 

Insurance  against  Fire. 

described  within  a  condition,  that  "the  liouscs,  bnihlings,  and  otlier 
places  where  goods  are  deposited  and  kept,  shall  be  truly  and  ac- 
curately described  ;"  such  a  condition  relating  to  the  construction 


all  right  of  making  repairs,  however  proper  and  necessary ;  a  construction  that  should 
not  be  admitted,  except  upon  the  most  clear  and  explicit  terms."  Grant  v.  Howard 
Ins.  Co.  of  New  York,  5  Hill,  10. 

It  may,  however,  be  remarked,  that  the  words  used  in  the  conditions  annexed  m 
some  of  the  forms  of  policies,  would  scarcely  bear  the  construction  given  in  tiiis 
case;  and  it  would,  perhaps,  be  the  safer  plan  to  have  the  privilege  of  repairing  in 
dorsed  on  the  policy'. 

The  enumeration  of  certain  trades  or  kinds  of  business,  as  prohibited  on  the 
ground  of  being  hazardous,  is  an  admission  that  all  other  kinds  are  lawful  under  tlie 
contract.  Therefore,  the  trade  or  business  of  a  grocer  not  being  mentioned  in  the 
conditions,  was  held  not  to  be  prohibited.  And  not  being  prohibited,  the  ordinary 
incidents  of  that  business,  the  right  to  keep  a  grocery  store  and  conduct  it  in  the 
usual  manner,  by  keeping  on  hand  for  retail  articles  usually  kept  in  such  stores,  were 
allowable,  although  some  of  the  articles  were  those  denominated  hazardous;  the 
keeping  them  for  such  purpose  not  being  a  using  or  appropriating  the  building  for 
the  purpose  of  storing  those  articles  within  the  meaning  of  the  policy.  And  thus, 
where  oil  and  spirituous  liquors  were  denominated  hazardous  in  the  conditions,  the 
keeping  them  by  a  grocer  in  quantities  in  the  cellar,  from  which  the  stock  in  the 
store  was  from  time  to  time  replenished  for  the  purpose  of  selling  out  by  retail,  was 
held  not  to  be  a  storing,  prohibited  by  the  policy.  N.  Y.  Equitable  Ins.  Co.  v.  Lang- 
don,  6  Wend.  623. 

And  in  this  case,  it  was  said  by  the  Judge,  Sutherland,  in  delivering  the  opinion 
of  the  Court,  that  the  word  storing,  as  used  in  the  policy,  means  "a  keeping  for  safe 
custody-,  to  be  delivered  out  in  the  same  condition,  substantially,  as  when  received ; 
and  applies  only  where  the  storing  or  safe  keepmg  is  the  sole  or  principal  object  of 
the  deposit,  and  not  where  it  is  merely  incidental,  and  the  keeping  is  only  for  the 
purpose  of  eonsumption."     6  Wend.  628. 

In  the  case  of  Duncan  v.  Sun  Fire  Ins.  Co.,  6  Wend.  488,  where  the  question  was 
whether,  under  the  peculiar  form  of  the  conditions,  gunpowder  was  among  the  articles 
denominated  extra-hazardous,  and  privileged  in  the  policy,  and  it  was  so  decided  to 
be,  the  point  was  also  raised,  whether  the  buildings  being  in  the  possession  of 
tenants,  the  use  of  them  for  storing  an  article  prohibited,  without  the  knowledge  or 
agenc}-  of  the  insured,  prevented  his  recovery  on  thfe  policy.  And  in  relation  to 
this  point,  it  was  said,  by  tlie  Court,  Savage,  C.  J.,  "  Whether  the  powder  was  there 
with  tlie  knowledge  or  agency  of  the  plaintiff,  seems  to  me  not  very  material.  The 
absence  of  agency  or  knowledge,  on  the  part  of  the  plaintiff,  excuses  him  from  any 
imputation  of  fraud,  or  an  intention  to  violate  his  contract.  The  policies  say  nothing 
about  the  knowledge  or  agency  of  the  plaintiff  in  storing  articles  therein  prohibited, 
but  the  contract  is  in  substance,  that  if  the  building  shall  be  used  for  storing  articles 
not  privileged  to  be  there,  then,  so  long  as  they  shall  be  so  used,  the  policies  shall 
cease  and  be  of  no  force  or  effect.  The  plaintiff  could  not  be  supposed  to  know  what 
urticles  were  deposited  in  all  these  buildings,  they  being  let  to  different  persin;s, 


51G  MERCANTILE  CONTRACTS. 


Insurance  aaiainst  Fire. 


of  the  house,  not  to  the  interest  of  the  parties  in  it.  (j)  And  where 
the  policy  was  effected  on  premises  "  lohere  no  fire  is  kept  and  nc 
hazardous  goods  deposited^''  these  words  were  held  to  mean  hahitu- 

(j)  Friedlander  v.  L.  A.  Compy.,  1  M.  &  Rob.  171. 


but  -whether  he  knew  that  there  was  powder  in  the  stores  or  not,  if  the  buildings 
were  used  in  a  manner  prohibited  by  the  policy,  the  liability  of  the  defendants 
ceased."     6  Wend.  493. 

9.  As  to  increase  of  risk,  by  addition  to,  alteration  of  building,  etc. — Whether  the 
risk  is  materially  increased  by  an  addition  to,  or  alteration  of  a  building,  or  othei 
circumstance,  where  the  clause  in  the  policy  or  the  conditions  annexed,  as  is  some- 
times the  case,  provide  generally  against  a  material  increase  of  the  risk,  is  a  question 
to  be  submitted  to  the  jury  as  a  matter  of  fact.  Grant  v.  Howard  Ins.  Co.  of  New 
York,  5  Hill,  10.  Stebbings  v.  Globe  Ins.  Co.,  2  Hall,  632.  Stetson  v.  Massachusetts 
Mut.  Fire  Ins.  Co.,  4  Mass.  330.  Jefferson  Ins.  Co.  v.  Cotheal,  7  Wend.  72.  In  this 
last  case,  where  an  insurance  was  effected  upon  a  steam  saw-mill,  and  subsequent  to 
the  policy  being  underwritten,  the  boiler,  which  was  placed  on  the  outside  of  the 
mill,  was  inclosed  by  a  frame  building  and  covered  over  with  a  roof,  it  was  held, 
that  evidence  of  the  opinions  of  underwriters  who  had  not  seen  the  premises,  and  had 
no  particular  science  in  the  construction  of  such  buildings,  was  not  admissible  to 
show  that  the  risk  was  materially  increased  by  such  additional  building ;  whether 
the  risk  was  thereby  increased  not  being  a  matter  of  skill  or  science,  but  simply  a 
question  of  fact,  which  the  jurors  were  as  competent  to  decide  as  the  witnesses. 

10.  Clause  as  to  preliminary  proofs,  notice,  account  of  loss,  <i:c. — This  clause,  it  is 
said,  has  always  been  construed  Avitli  great  liberality,  as  the  party  must  necessarily 
often  make  out  the  account  under  embarrassment  arising  from  loss  of  books,  bills  of 
parcels,  <fec.  The  clause  requires  only  reasonable  information  to  be  given,  so  that 
the  company  may  be  enabled  to  form  some  estimate  of  their  rights  and  duties,  before 
they  are  obliged  to  pay.  McLaughlin  v.  Washington  Co.  Mut.  Ins.  Co.,  23  Wend. 
525,  527.  Lawrence  v.  Ocean  Ins.  Co.,  11  John.  240,  260.  In  the  usual  form  of  this 
clause  there  is  nothing  which  makes  it  necessary  for  the  insured  to  state  the  nature 
of  his  interest  in  the  affidavit,  which  forms  a  part  of  the  preliminary  proofs.  Gilbert 
V.  N.  American  Fire  Ins.  Co.,  23  Wend.  43. 

In  a  recent  case,  where  the  objection  was  taken  that  the  certificate  required  by 
this  clause,  was  not  given  by  the  magistrate  or  notary  public  7}iost  contiguous  to  the 
place  of  fire,  and  it  appeared  that  the  certificate  was  given  by  a  magistrate  who  re- 
sided three  or  four  blocks  north  of  the  place  of  the  fire,  and  kept  his  office  two  or 
three  blocks  south,  usually  passing  it  several  times  daily;  that  another  magistrate 
lived  directly  across  the  street  from  the  fire,  but  whether  nearer  than  the  office  of 
the  former  was  not  stated,  and  that  a  notary  public  resided  within  a  block  and  a 
half  of  the  place ;  Nelson,  Chief  Justice,  after  remarking  that  the  office  or  place  of 
business  of  the  magistrate  should  be  regarded  in  ascertaining  the  magistrate  most 
contiguous,  within  the  meaning  of  the  conditions,  further  says,  "It  seems  the 
residence  of  a  notary  happens  to  be  a  few  feet  nearer  the  fire  than  the  office  of  the 
judge,  and  we  are  asked  to  go  into  a  nice  calculation  of  distances,  and  settle  the 


INSURANCE  AGAINST  FIRE.  517 

Insurance  against  Fire. 

ally  kept  and  hahitualhj  deposited,  so  that  the  policy  Avas  not  vitiated 
by  bringing  a  tar  barrel  and  lighting  a  fire,  in  order  to  effect  re- 
pairs, in  consequence  of  which  the  loss  occurred,  {k)    A  subsequent 

{k)  Dodson  v.  Sothebj-,  M.  &  M.  90. 


point  upon  the  laws  of  mensuration.  De  minimis,  etc.,  is  a  sufficient  answer  to  this 
objection.  The  spirit  of  the  condition  requires  no  such  matliematical  precision  from 
the  assured.  Its  object  is  completely  secured  by  the  proximity  of  the  certifj'ing 
magistrate."  Turley  v.  North  American  Fire  Ins.  Co.,  25  Wend.  347,  378.  The  con- 
cluding part  of  the  opinion  of  the  Court  in  this  case  in  relation  to  that  part  of  the 
certificate  of  the  magisti-ate,  as  to  his  acquaintance  vMh  the  character  and  circumstances 
of  the  insured,  and  the  duties  of  the  officers  of  insurance  companies  in  reference  to  the 
prelhninary proofs,  is  worthy  of  attention  and  should  be  inserted.  "As  to  the  form 
of  the  certificate.  It  is  said  that  the  magistrate  does  not  certifj-  that  he  is  acquainted 
with  the  character  and  circumstances  of  the  assured,  &c.  Tlie  certificate  is  not  as 
particular  in  this  respect  as  is  required  by  the  terms  of  the  condition  ;  and  yet  it  is 
as  full  as  may  be  practicable  in  many  cases.  The  magistrate  *  most  contiguous'  may 
not  always  be  personally  acquainted  with  the  character  of  the  claimant,  and  must 
rely  upon  inquiry,  and  proof  produced,  as  in  this  case,  for  the  requisite  knowledge. 
I  prefer,  however,  placing  the  answer  to  the  objection  here,  mainl}-,  upon  the  refusal 
of  the  agent  to  .show  the  preliminary  proofs  to  the  party  when  asking  to  see  them 
with  a  view  to  their  correction.  It  appears  that  he  was  repeatedly  called  upon  for 
that  purpose,  and  as  often  refused  sight  of  them.  It  is  true  he  had  before  trans- 
mitted written  objections  to  tliese  proofs ;  but  they  were  quite  indefinite  in  respect 
to  the  certificate,  and  did  not  advise  as  to  the  particulars  in  which  it  fell  shoi't.  No 
copy  had  been  kept  by  the  assured,  and  it  was  important,  therefore,  to  examine  the 
original  with  a  view  to  a  correction.  Indeed,  the  agent  when  thus  directly  called 
upon,  in  fair  dealing,  should  not  only  have  produced  the  papers,  but  pointed  out  the 
particulars  in  respect  to  which  he  considered  them  deficient.  So  liberal  is  the 
practice  of  the  offices  in  England,  saj's  Mr.  Ellis,  (Ellis  on  Ins.  62,)  that  upon  appli- 
cation after  the  fire,  they  usuall}^  furnish  the  assured  with  the  necessary  information 
for  proving  the  loss.  It  certainl}'  becomes  all  at  least  to  tlirow  no  embarrassments 
m  the  way;  and  surelj"  there  should  be  no  contrivance  to  mislead  the  claimant  when 
he  is  honestly  endeavoring  to  comply  with  the  conditions."     25  AVend.  378. 

But  in  some  other  cases,  this  clause  has  been  construed  more  strictly,  and  a  com- 
pliance with  its  terms  is  required  as  a  condition  precedent.  Tlius,  in  Ledbetter  v. 
./Etna  Ins.  Co.,  13  Maine,  265,  where  it  appeared,  that  the  plaintiff  had  applied, 
successively,  to  the  two  nearest  magistrates,  who  declined  giving  the  certificate,  but 
for  what  cause  or  reason  was  not  shown,  and  he  then  applied  to  a  third,  who  was 
the  next  nearest,  and  obtained  the  certificate  relied  on,  which  was  in  due  form ;  it 
was  held,  that  the  certificate  of  the  nearest  magistrate  was  a  condition  precedent, 
which  the  plaintiff  was  bound  to  procure,  and  without  which  he  could  not  recover 
Worsley  v.  "Wood,  6  T.  R.  710,  was  cited,  and  relied  on  as  an  analogous  case. 

The  law  is  well  settled,  that  if  there  be  a  formal  defect  in  the  preliminary  proo^ 
which  could  have  been  supplied  had  an  objection  been  made  by  the  underwriters  t* 


518  MERCANTILE  CONTRACTS. 


Insurance  asrainst  Fire. 


change  in  the  nature  of  the  business,  carried  on  upon  the  premises, 
in  the  absence  of  fraud  and  any  express  condition  to  the  contrary, 
during  the  period  covered  by  the  policy,  will  not  avoid  it.  (I) 


{I)  Pim  V.  Reed,  6  M.  &  Gr.  1. 


payment  on  that  ground,  for  instance,  if  they  do  not  call  for  a  document,  or  mak* 
objection  on  the  ground  of  its  absence  or  imperfection,  tut  put  their  refusal  upon 
other  grounds,  the  production  of  such  further  preliminary  proof  will  be  considered 
as  waived.  McMasters  v.  Westchester  Mut.  Ins.  Co.,  25  Wend.  319,  382.  ^tna  Fire 
Ins.  Co.  V.  Tyler,  16  Wend.  401.  It  is,  however,  said  by  Chancellor  Walworth,  in 
the  last  ease,  that  the  Supreme  Court  of  the  United  States  thought  differently  on  this 
question  when  the  case  of  The  Columbian  Ins.  Co.  v.  Lawrence,  3  Pet.  25,  was  first 
before  that  Court.  And  in  that  case  the  Court  do  say,  "We  mow  of  no  principle  or 
usage  which  requires  underwriters  to  specify  their  objections,  or  which  justifies  the 
inference  that  any  objection  is  waived.  AVe  know  of  no  principle  by  which  this 
preliminary  proof  should  be  separated  from  the  other  proofs  which  were  required  to 
sustain  the  claim,  or  its  insufficiency  be  remarked  to  the  assured."  But  it  is  observed 
by  Chancellor  Walworth,  that  the  subsequent  liistory  of  that  case  shows  the  good 
sense  of  the  rule  above  stated.  Immediately  after  the  reversal  of  the  judgment, 
partly  on  account  of  a  defect  in  the  certificate,  a  new  one  was  procured,  and  after- 
wards, when  the  case  again  came  before  the  Court,  the  delay,  which  was  for  more 
than  five  years,  was  held  under  the  circumstances  not  to  be  unreasonable,  the  non- 
production  sooner  of  the  proper  certificate  having  been  occasioned  not  by  any  laches 
properly  imputable  to  the  insured,  but  by  the  omission  of  the  company  to  give  notice 
of  tlie  defect,  and  cf  the  mistaken  confidence  placed  by  the  party  in  the  company 
itself.  "If  the  companj-,"  say  the  Court,  "had  contemplated  the  objection,  it  would 
have  been  but  ordinary  fair  dealing  to  have  apprised  the  plaintiff  of  it;  for  it  is  now 
obvious  that  the  defect  might  have  been  immediately  supplied."  10  Pet.  507,  514 
See  also  Cornell  i'.  Leroy,  9  Wend.  163.  Daws  v.  North  River  Ins.  Co.,  T  Cow.  462. 
Heath  et  als.  v.  Franklin  Insurance  Company,  1  Cush.  Rep.  258. 

The  particular  account  of  the  loss  or  damage  required  to  be  given  by  the  insured, 
as  a  part  of  the  preliminary  proofs,  has  been  held  to  mean  a  particular  account  of 
the  articles  lost  or  damaged,  and  not  to  refer  to  the  manner  and  cause  of  the  loss. 
Catlin  V.  Springfield  Ins.  Co.,  1  Sumn.  434. 

11.  Asuignment  of  policy  or  interest. — It  is  said  by  the  author,  page  50.5,  that 
"there  is  this  peculiarity  incidental  to  the  contract  of  insurance  against  fire,  viz., 
that  it  is  not  assignable,  except  with  the  consent  of  the  insurer."  It  is  said  \>y 
Chancellor  Kent,  3  Kent's  Com.  375,  that  "fire  policies  usually  contain  a  prohibition 
against  the  assignment  of  them,  without  the  previous  consent  of  the  company.  But 
without  this  clause,  they  are  assignable  in  equity,  like  any  other  chose  in  action ; 
though,  to  render  the  assignment  of  any  value  to  the  assignee,  an  interest  in  the 
subject  matter  of  the  insurance  must  be  assigned  also,  for  the  assignment  only  covers 
such  interest  as  the  assured  had  at  the  time  of  the  assignment."  In  the  recent  case 
of  Wilson  V.  Hiil,  3  Mete.  68,  it  is  said  by  tlie  Court,  Shaw,  C.  J.,  "An  insurance  of 
buildings  against  loss  by  fire,  although  in  popular  language  it  ma}-  be  called  an  in- 


IXSURAXCE  AGAINST  FIRE.  510 

Insurance  against  Fire. 

Every  warranty  or  condition  inserted  in  the  policy,  or  incor- 
porated into  it  by  reference  from  tlie  printed  proposals  (whicli  are 
considered  parcel  of  the  contract),  must  be  strictly  and  literally 

Burance  of  the  estate,  is  in  effect  a  contract  of  indemnity,  'with  an  owner,  or  other 
person  having  an  interest  in  the  preservation  of  the  buildings,  as  mortgagee,  tenant, 
or  otherwise,  to  indemnify  him  against  any  loss  which  he  may  sustain,  in  ease  they 
are  destroyed  or  damaged  by  fire.  If,  therefore,  the  assured  has  whollj'  parted  with 
his  interest,  before  they  are  burnt,  and  they  are  afterwards  burnt,  the  underwriter 
incurs  no  obligation  to  pay  anybody'.  The  contract  was  to  indemnify  the  assured; 
if  he  has  sustained  no  damage,  the  contract  is  not  broker^  If,  indeed,  on  a  transfer 
of  tlie  estate,  the  vendor  assigns  his  policy  to  the  purchaser,  and  tliis  is  made  knowa 
to  the  insurer,  and  is  assented  to  bj^  him,  it  constitutes  a  new  and  original  promise 
to  the  assignee,  to  indemnify'  him  in  like  manner,  whilst  he  retains  an  interest  in  the 
estate;  and  the  exemption  of  the  insurer  from  further  liability  to  the  vendor,  and 
the  premium  already  paid  for  insurance  for  a  term  not  yet  expired,  are  a  good  con- 
eideration  for  such  promise,  and  constitute  a  new  and  valid  contract  between  the 
insurer  and  the  assignee.  But  such  undertaking  will  be  binding,  not  because  the 
policy  is  in  any  way  incident  to  the  estate,  or  runs  with  the  land,  but  in  consequence 
of  the  new  contract."  Citing  Lynch  v.  Dalzell,  3  Bro.  P.  C.  1st  ed.  497.  The  Saddlers' 
Co.  V.  Badcock,  2  Atk.  554.  Marshall  on  Ins.,  3d  ed.  800-807.  Carroll  v.  Boston 
Marine  Ins.  Co.,  8  Mass.  515.     JStna  Fire  Ins.  Co.  v.  Tyler,  16  Wend.  397. 

"These  considerations,  however,  do  not  apply  to  a  case  where  the  assured,  after 
ii  loss,  assigns  his  right  to  recover  that  loss  :  it  would  stand  on  the  same  footing  as 
the  assignment  of  a  debt,  or  right  to  recover  money  actually  due,  which,  like  the 
assignment  of  any  other  chose  in  action,  would  give  the  assignee  an  equitable  in- 
terest, and  a  right  to  recover  in  the  name  of  the  assignor,  subject  to  set-off  and  all 
other  equities."  3  Mete.  69.  And  even  where  the  policy  contains  a  clause  avoiding 
it,  in  case  of  assignment  without  consent,  it  has  been  held  that  such  clause  has  no 
application  to  an  assignment  made  after  the  loss  has  occurred.  Brichta  v.  X.  Y. 
Lafayette  Ins.  Co.,  2  Hall,  372.     2  J.  Duer  on  Ins.  65. 

The  opinion  expressed  in  the  case  of  Davis  v.  Hill,  3  Mete.  68,  as  to  the  effect  of  a 
transfer  of  the  property  insured  before  a  loss  has  occurred,  was  confirmed  by  the 
opinion  of  the  Supreme  Court  of  the  United  States,  in  the  case  of  Carpenter  v.  Provi- 
dence Washington  Ins.  Co.,  16  Peters,  495,  502.  But  the  doctrine  laid  down  in  the 
former  opinion,  in  relation  to  the  assignment  of  a  policy  of  insurance,  and  its  result 
on  the  rights  of  the  parties,  does  not  appear  to  have  been  followed  in  the  latter  case, 
or  in  the  remarks  made  by  Mr.  Justice  Story  in  delivering  the  opinion  of  the  Court 
After  adverting  to  the  distinction  between  an  insurance  of  the  interest  of  a  mortgagor 
and  mortgagee,  Mr.  Justice  Story,  in  the  case  last  cited,  16  Pet.  501,  proceeds  to  say, 
"  If,  then,  a  mortgagor  procures  a  policy  on  the  property  against  fire,  and  he  after- 
wards assigns  the  policy  to  the  mortgagee,  with  the  consent  of  the  underwriters, 
(if  that  is  required  by  the  contract  to  give  it  validity,)  as  collateral  security,  that 
assignment  operates  solely  as  an  equitable  transfer  of  the  polic}-,  so  as  to  enable  the 
mortgagee  to  recover  the  amount  due  in  case  of  loss;  but  it  does  not  displace  the  in- 
terest of  the  mortgagor  in  the  premises  insured.     On  the  contrary,  the  insurance  ii 


520  MERCANTILE  COXTRACIS. 


Insurance  against  Fire. 


observed.  Thus,  where  it  was  stipulated  in  the  proposals,  that  loss 
money  should  not  be  payable  till  the  insured  should  have  produced 
a  certificate  of  character  from  the  minister  of  the  parish,  it  was  held 


still  his  insurance,  and  on  his  property,  and  for  his  account.  And  so  essential  is  this, 
that  if  the  mortgagor  should  transfer  the  property  to  a  third  person,  without  the 
consent  of  the  underwriters,  so  as  to  divest  all  his  interest  therein,  and  then  a  loss 
should  occur,  no  recovery  can  be  had  therefor  against  the  underwriters,  because  the 
assured  has  ceased  to  have  any  interest  therein,  and  the  purchaser  has  no  right  or 
interest  in  the  policy." 

The  apparent  conflict  between  these  remarks  and  those  before  cited,  from  3 
Metcalf,  68,  may  perhaps  be  reconciled,  if  it  can  be  considered  that  a  different  result 
would  follow  the  transfer  of  the  policy,  in  the  case  of  a  mortgagor  and  mortgagee, 
from  that  in  the  case  of  a  vendor  or  vendee.  See  also  Traders'  Ins.  Co.  v.  Robert,  9 
Wend.  404,  474;  S.  C.  17  Wend.  631. 

In  several  cases  in  New  York,  the  question  has  arisen  as  to  the  right  of  the 
assignee  of  a  fire  policy  to  sue  in  his  own  name.  Tliis  has  been  permitted  in  some 
cases,  and  indeed  required,  but  only  on  the  ground  that  it  was  so  provided  by  an  ex- 
press provision  in  the  charter  of  the  company.  Independent  of  any  such  provision, 
it  appears  to  have  been  considered  and  held,  that  the  assignee  of  a  fire  policy  stood, 
in  this  respect,  on  the  same  footing  as  the  assignee  of  any  other  personal  contract. 
Granger  v.  Howard  Ins.  Co.,  5  Wend.  200.  Ferris  v.  N.  American  Fire  Ins.  Co.,  1  Hill, 
71.  Jessel  V.  Williamsburgh  Ins.  Co.,  3  Hill,  88.  Smith  v.  Saratoga  Co.  Mut.  Fire  Ins. 
Co.,  1  Hill,  497.  Now,  if,  on  the  assignment  of  the  policy  with  the  consent  of  the 
underwriters,  it  becomes  a  new  contract  upon  a  new  consideration,  as  is  said  in  Davis 
V.  Hill,  3  Mete.  69,  it  would  seem  that  the  action  not  only  might,  but  ought  to  be 
brought  in  the  name  of  the  assignee. 

Indeed,  if  tto  principles  can  be  considered  settled,  as  stated  in  some  of  the 
authorities  before  cited — 1.  That  there  cannot  be  a  valid  and  effectual  assignment 
of  a  fire  policy,  before  loss,  unless  it  be  accompanied  by  a  transfer  of  an  interest  in 
the  property  insured ;  and,  2.  That  in  no  case  can  such  assignment  be  made  without 
notice  to,  and  the  consent  of  the  underwriters,  whether  such  consent  be  required  by 
the  policy  or  not — it  would  seem  to  follow  that  difterent  considerations  would  apply, 
in  the  case  of  such  assignment,  from  those  applicable  to  the  assignment  of  an 
ordinary  personal  contract.  A  fire  policy  is  admitted  to  be  a  personal  contract  of 
indemnity :  when  assigned,  is  it  an  assignment  of  the  riglit  to  recover  the  loss  or 
damac-e  which  may  be  ^istained  by  uie  assiynor,  on  the  breach  of  such  contract  of 
indemnity  ?  or  is  it  a  transfer  to  the  assignee  of  tlie  same  right  of  indemmty  as  to  the 
interest  in  the  property  insured,  acquired  b}'  liim  at  tlie  time  of  the  assignment,  as  was 
before  held  by  the  assignor?  If  it  be  the  latter,  it  may  well  be  said  to  be  a  new 
contract,  necessarily  requiring  the  assent  of  the  insurers,  on  the  breach  of  which  the 
assignee  would  be  entitled  to  sue  in  his  own  name ;  and  that  no  disposition  of  the 
interest  in  the  property,  whether  legal  or  equitable,  retained  by  the  assignor  at  the 
time  of  the  assignment,  could  affect  the  rights  of  the  assignee. 

In  relation  to  the  clause  usually  inserted  in  fire  policies,  restrictive  of  an  assign- 
meutj  it  was  held,  in  the  case  of  Smith  v.  Saratoga  Co.  Mut.  Fire  Ins.  Co.,  1  Hill,  497, 


INSURANCE  AGAINST  FIRE.  521 

Insurance  against  Fire. 

that  he  could  not  recover,  even  though  the  minister  should  have 
wrongfully  refused  to  grant  such  certificate ;  for  that  if  a  man  un- 
dertakes for  the  act  of  a  stranger,  he  must  see  it  done,  (m)     A  con- 

(m)  "Worsley  v.  "Wood,  6  T.  R.  710.  See  also  Salvia  v.  James,  6  East,  571.  Rout- 
ledge  V.  Burrell,  1  H.  Bl.  254.  Oldman  v.  Bewicke,  2  H,  Bl.  577,  n.  Tarleton  v. 
Staniforth,  5  T.  R.  695  ;  1  B.  &  P.  471.     Levy  v.  Baillie,  V  Bingh.  349. 


that  where  the  clause  "was  in  this  form — "The  interest  of  the  assured  in  this  policy 
is  not  assignable,  without  the  consent  of  said  company  in  writing ;  and  in  case  of  any 
transfer  or  termination  of  the  interest  of  the  assured,  either  by  sale  or  otherwise, 
without  such  consent,  tliis  policy  shall,  thenceforth  be  void  and  of  no  effect" — an  as- 
signment of  the  policy,  without  consent,  was  equally  fatal  as  an  assignment  or  sale 
of  the  subject  insured — that  tlie  clause  does  not  merely  nullify  the  assignment,  but 
operates  on  the  policy.  The  insurance,  in  this  case,  was  made  by  a  mutual  insurance 
company ;  and  after  they  had  notice  of  the  assignment,  assessments  were  made  and 
collected  on  the  premium  note,  and  when  the  case  again  came  before  the  Court,  3 
Hill,  508,  it  was  contended  that,  by  these  acts,  the  company  waived  the  forfeiture, 
and  affirmed  the  continuance  of  the  policy ;  but  it  was  said  by  Bronson,  J.,  that  this 
doctrine  only  applied  where  the  act  rendered  the  contract  voidable,  and  that  the 
parties  having  "  in  the  strongest  terms  declared  that  the  policy  shall  immediatel}", 
and  without  any  act  on  the  part  of  the  company,  become  absolutely  void,  it  is 
difficult  to  see  how  any  thing  short  of  a  new  creation  could  impart  vitality  to  this 
dead  body." 

12.  Re-insurance. — There  is  no  difference,  in  principle,  between  the  insurance 
against  loss  by  fire  or  the  perils  of  the  sea.  Re-insurance  is  a  valid  contract  at  the 
common  law,  and  there  is  no  principle  of  public  policy  which  forbids  an  insurer  to 
seek  an  indemnity  by  means  of  a  re-insurance,  either  in  whole  or  in  part,  on  the 
same  risk.  The  risk  which  he  has  assumed  in  relation  to  the  subject,  is  an  insurable 
interest.  Re-insurance  is  not  a  wager,  but  a  contract  of  indemnity.  W.  Y.  Bowery 
Fire  Ins.  Co.  v.  New  York  Fire  Ins.  Co.,  17  Wend.  359,  362. 

In  this  case  it  was  held,  that  under  the  general  powers  conferred  by  a  charter  to 
make  contracts  of  insurance,  and  all  kinds  of  insurance,  an  insurance  company  is 
authorized  to  make  re-insurance,  which  operates  not  upon  the  risk,  but  upon  the 
property  covered  by  the  original  policy. 

And  it  was  also  held,  that  an  underwriter  obtaining  a  policy  of  re-insurance  is 
bound  to  communicate  such  infoi-mation  as  he  possesses  in  reference  to  the  character 
of  the  party  assured ;  and  if  he  omit  to  do  so,  whether  from  misapprehension  of  the 
probable  effect  of  such  communication,  when  made,  or  from  design,  and  the  infor- 
mation be  material  to  the  risk,  or  to  the  amount  of  the  premium  to  be  charged,  the 
policy  of  re-insurance  will  be  void. 

13.  As  to  the  loss. — In  their  ordinary  form,  fire  policies  are  what  are  termed  open 
policies,  and  not  valued,  though  it  is  said  they  are  not  invariabl}^  so.  2  Phil,  on  Ins. 
40.  In  the  case  of  Borden  v.  Ilingham  Mut.  Ins.  Co.,  18  Pick.  523,  where,  under  the 
terms  of  the  charter  of  the  company,  it  was  important  to  fix  tlie  value  of  the  pro 
pert}',  and  it  was  agreed  on  fairly  and  inserted  in  the  policy,  there  being  no  sugges- 


522  MERCANTILE  CONTRACTS. 

Insurance  arrainst  Fire. 


dition  that  notice  shall  be  given  of  any  change  in  the  business 
carried  on  upon  the  premises,  does  not  render  it  necessary  to  give 
notice  of  a  temporary  and  gratuitous  permission  given  to  a  friend 


tion  of  fraud,  concealment,  or  gambling,  tlie  plaintiff  was  allowed  to  recover,  accord- 
ing to  such  agreed  value,  although  it  appeared  by  the  proof  in  the  case  to  exceed  the 
real  value  of  his  interest. 

It  is  usually  provided  in  the  policy,  that  the  insurers  are  to  make  good  the  loss 
or  damage,  to  be  estimated  according  to  the  true  and  actual  value  of  the  property  at 
the  time  the  loss  happens.  This  is  settled  on  the  principle  of  particular  average,  and 
the  estimated  loss  is  paid  without  abandonment  of  what  has  been  paid.  3  Kent's 
Com.  375.  But  it  is  also  provided,  that  the  amount  to  be  paid  is  not  to  exceed  the 
sum  insured.  And  it  has  been  held  that  where  there  has  been  a  partial  loss  or  injury 
to  the  property  insured,  which  is  paid  by  the  insurers,  and  afterwards  the  property  ia 
entirely  destroyed,  and  its  actual  value  at  the  time  of  its  destruction  was  equal  to, 
or  exceeded  the  sum  insured,  still  the  amount  paid  on  the  partial  loss  or  injury  is  to 
be  deducted,  and  the  insured  can  only  recover  the  residue.  And  where,  in  the  same 
policy,  one  sum  was  insured  on  one  building,  and  another  on  another,  and  both 
losses  were  upon  the  same  building,  the  insurer  was  held  liable  for  only  the  differ- 
ence between  the  sum  paid  and  the  sum  insured  on  that  building  alone.  Curry  v. 
Commonwealth  Ins.  Co.,  10  Pick.  535.  The  provision  in  this  case  was,  that  the  in- 
surer "should  not  be  liable  for  more  than  the  sum  insured,  in  any  case  whatever," 
which  is  somew^jat  stronger  than  that  contained  in  other  forms  of  policies.  And  it 
should  be  observed,  that  the  difference  of  the  rule  in  this  respect  between  fire  and 
marine  policies,  seems  to  be  founded  on  tlie  insertion  in  the  former  of  the  restriction 
above  noticed. 

"Tiie  policy,  in  terms,  refers  to  the  true  and  actual  value  of  the  property  at  the 
time  of  the  loss,  and  makes  that  value  the  standard  by  which  to  estimate  the  loss  or 
damage  which  the  insurer  is  bound  to  satisfy,  and  the  insured  is  entitled  to  claim. 
This  agreement  cannot  be  otherwise  understood,  than  as  binding  the  parties  to  the 
intrinsic  value  of  the  property  at  the  time  of  its  destruction,  as  the  rule  by  which  the 
indemnity  is  to  be  measured,  without  reference  or  regard  to  any  special  or  adventi- 
tious circimistances  which  may  enhance  or  diminish  the  relative  value  or  importance 
of  it  to  the  insured.  It  is  the  true  and  actual  value  of  the  tenement  itself  at  the 
time,  independently  of  its  location  or  the  insecurity  of  the  title,  or  terms  by  which 
it  is  held,  that  the  insurers  agree  to  make  good  to  the  present  proprietor,  in  case 
the  loss  or  damage  by  fire  happens  during  the  continuance  of  his  ownership,  and 
within  the  term  of  the  insurance.  It  is  of  no  importance  whether  the  tenement 
stands  upon  freehold  or  upon  leasehold  ground,  or  whether  the  lease  is  :bout  expir- 
ing or  has  the  full  time  to  run  when  the  fire  occurs,  or  whether  it  is  renewable  or 
not  The  condition  of  the  policy  is  satisfied,  if  the  title  and  ownership  are  in  the 
insured  at  the  time  of  the  insurance  and  at  the  time  of  the  loss,  and  the  measure  of 
his  indemnity  as  the  amount  of  his  interest  in  the  tenement  when  destroyed  by  fire, 
notwithstanding  that  the  whole  interest  would  have  expired  the  very  next  day,  of 
Boon  after  the  loss  occurred."  Laurent  v.  Chatham  Fire  Ins.  Co.,  1  Hall,  41,  50, 
Jones,  C.  J.     But  the  learned  judge  was  not  prepared  to  say  (it  not  being  material 


IXSURANCE  AGAINST  FIRE.  523 

Insurance  against  Fire. 

to  dry  some  bark  there.  (?i)  On  the  construction  of  a  condition  as 
to  giving  sucli  notice,  see  Pirn  v.  Reed :  and  that  a  mill  sliall  ivorlc 
hy  day  only,  see  Maycdl  v.  Mitford.  (o) 

(n)  Shaw  v.  Eobberds,  6  Ad.  k,  E.  75. 

(o)  Maj'all  V.  Mitford,  6  Ad.  <fe  K  670 ;  and  see  Whitehead  v.  Price,  2  C.  M.  <fc  E. 
447. 


to  the  decision  of  that  ease)  "whether  there  may  not  be  incidents  and  special  cir- 
cumstances so  intimately  connected  with  the  premises,  or  so  pcrmanontl}^  attached 
to  them,  as  to  effect  their  intrinsic  value,  or  the  insurable  interest  of  tlie  party  who 
effects  the  insurance  upon  them." 

And  in  that  case,  wliere  a  building  erected  upon  a  lot  of  land  in  the  city  of  New 
York,  by  the  plaintiff,  who  had  leased  the  same  for  a  term  which  was  to  expire  on 
the  1st  of  September,  1827,  was  insured  to  the  amount  of  $800,  the  lessee  had  the 
power  of  renewing  the  lease  on  its  expiration,  or  of  removing  the  building  from  the 
premises,  at  his  option.  The  building,  if  suffered  to  remain,  was  worth  about  $1000, 
but  if  removed,  not  more  than  $200.  It  was  destroyed  by  fire  on  the  15th  of  August, 
1827,  at  which  time  the  lessee  had  given  the  lessor  no  notice  of  anj-  intention  to  re- 
new the  lease.  It  was  held,  nevertheless,  as  the  building  at  the  time  of  its  destruc- 
tion was  worth  $1000  as  it  stood  upon  tlie  premises,  that  the  plaintiff  was  entitled 
to  recover  the  full  amount  of  his  insurance  upon  it.     See  also  3  Kent's  Cora.  375. 

Where  an  insurance  is  made  by  a  mortgagor  on  his  own  account,  he  will  be  en- 
titled to  recover  the  full  amount  of  the  loss,  not  exceeding  the  insurance,  notwith- 
standing the  mortgage  or  other  incurnbran-ce  on  the  premises,  since  the  whole  loss  ia 
his  own,  and  lie  remains  personally  liable  to  the  mortgagee  or  other  incumbrancer 
for  the  full  amount  of  the  debt  or  incumbrance.  Carpenter  v.  Providence  Washing- 
ton Ins.  Co.,  16  Pet.  495,  501.     Strong  v.  Manufacturers'  Ins.  Co.,  10  Pick.  40. 

But  where  a  mortgagee  insures  his  interest,  it  is  but  an  insurance  of  his  debt ;  if 
the  premises  are  destroj-ed  by  fire  before  payment  or  extinguishment  of  the  mort- 
gage, tiic  underwriters  are  bound  to  pay  the  amount  of  the  debt  to  the  mortgagee^ 
if  it  does  not  exceed  the  insr.rance.  "But,  then,  upon  such  payment,  tlie  under- 
writers are  entitled  to  an  assignment  of  the  debt  from  the  mortgagee,  and  may  reco- 
ver the  same  amount  from  the  mortgagor,  either  at  law  or  equity,  aceoi-ding  to  cir- 
cumstances ;  for  the  payment  of  the  insurance  by  the  underwriters  does  not  in  such 
a  case  discharge  the  mortgagor  from  the  debt,  but  only  changes  the  creditor."  IG 
Peters,  JOl. 

[Since  the  former  edition  of  tliis  work,  the  doctrine  stated  in  the  last  paragraph 
has  been  elaborately  reviewed  and  repudiated  by  the  Supreme  Court  of  Massachu- 
setts. King  V.  State  Mutual  Fire  Insurance  Company,  7  Cush.  Pep.  1.  C.  J.  Shaw, 
speaking  for  the  Court,  uses  this  language:  "We  are  inclined  to  the  opinion,  both 
upon  principle  and  authority,  that  wlien  a  mortgagee  causes  insurance  to  be  made 
for  his  own  benefit,  pa^'ing  the  premium  from  his  own  fund,  in  case  a  loss  occurs  be- 
fore his  debt  is  paid,  he  has  a  right  to  receive  the  total  loss  for  his  own  benefit;  that 
ne  is  not  bound  to  account  to  the  mortgagor  for  Jiny  part  of  the  money  so  recovered, 
as  a  part  of  the  mortgage  debt ;  it  is  not  a  payment  in  whole  or  in  part;  but  he  has 


524  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

The  insurance  being  against  fire,  a  loss  by  fire  must  of  course 
happen,  in  order  to  give  the  insured  a  claim  upon  the  policy. 
Where  the  register  of  a  sugar  house  was  kept  shut  by  mistake,  so 


still  a  right  to  recover  his  debt  of  the  mortgagor.  And  so,  on  the  other  hand,  when 
the  debt  is  thus  paid  by  the  debtor,  the  money  is  not,  in  law  or  equity,  the  money 
of  the  insurer  who  has  thus  paid  the  loss,  or  money  paid  to  his  use."  ....  "What 
is  there  inequitable  on  the  part  of  the  mortgagee,  towards  either  party,  in  holding 
both  sums  ?  They  are  both  due  ujjon  valid  contracts  with  him,  made  upon  adequate 
considerations  paid  by  himself.  There  is  nothing  inequitable  to  the  debtor,  for  he 
pays  no  more  than  he  originally  received,  in  money  loaned ;  nor  to  the  undei'writer, 
for  he  has  only  paid  upon  a  risk  voluntarily  taken,  for  which  he  was  paid  by  the 
mortgagee  a  full  and  satisfactory  equivalent."  The  Court  examined  the  cases  of 
Robert  v.  Traders'  Ins.  Co.,  17  Wend.  631  ;  Tyler  v.  ^tna  Ins.  Co.,  16  Wend.  385; 
and  Carpenter  v.  Providence  Washington  Ins.  Co.,  10  Peters,  495;  but  did  not  con- 
sider them  as  establishing  an  opposite  doctrine.  See  also  Dobson  v.  Land,  8  Hare, 
216.] 

This  principle  of  equitable  subrogation,  or  substitiition  of  the  underwriters  in  the 
place  of  the  assured,  will  apply  to  other  cases ;  so  that  where  the  assured  has  any 
claim  to  indemnity  for  his  loss  against  a  third  person,  who  is  primarily  liable  for  the 
same,  if  the  assured  discharges  such  third  person  from  his  liability  before  the  pay- 
ment of  the  loss  by  the  underwriters,  he  discharges  his  claim  against  them  for  such 
loss,  pro  tanto.  Or,  if  he  obtains  payment  from  such  third  person  afterwards,  it  is  in 
the  nature  of  salvage,  which  he  holds  as  trustee  for  the  underwriters,  who  had  paid 
his  loss,     ^tna  Fire  Ins.  Co.  v.  Tyler,  16  Wend.  385,  397. 

Under  a  fire  policy,  as  usually  made,  the  assured  recovers  the  whole  amount  of  a 
pai'tial  loss,  if  it  does  not  exceed  the  amount  insured,  though  the  amount  insured 
may  be  less  than  the  value  of  the  property  insured.  2  Phil!,  on  Ins.  29.  It  is  stated 
as  a  general  princij^le,  that  a  loss  under  a  policy  against  fire,  is  to  be  paid  without 
contribution.     Wells  v.  Boston  Ins.  Co.,  6  Pick.  186. 

A  claim  has  been  allowed  the  insured  against  the  insurers,  for  a  saci'ifice  made 
by  the  insured  for  the  preservation  of  the  property  endangered  by  a  fire ;  and  in 
this  case  the  principle  of  contribution  was  applied.  The  loss  not  being  covered  by 
the  policy,  was  held  to  be  a  subject  of  general  average,  to  which  the  insurer  and  the 
insured  should  contribute  in  ^^roportlon  to  the  amount  which  they  respectively  had 
at  risk.     AVells  v.  Boston  Ins.  Co.,  6  P'ck.  182. 

In  Trull  V.  Roxbury  Mutual  Fire  Ins.  Co.,  3  Cush.  263,  C.  J.  Shaw  states  the  dis- 
tinction between  contract  of  fire  and  marine  insurance,  in  the  mode  of  adjustment 
and  satisfaction.  "  In  fire  policies,  the  assured  recover  the  whole  loss,  if  within  the 
amount  insured,  without  regard  to  the  proportion  between  the  amount  insured  and 
the  value  of  the  property  at  risk ;  whereas  iu  marine  policies,  the  insurer  pays  only 
Buch  a  proportion  of  the  actual  loss,  as  the  sum  insured  bears  to  the  value  of  the 
property  at  risk.  For  instance,  on  fire  policies,  if  the  sum  insured  be  $2000  on  pro- 
perty worth  810,000,  and  the  assured  sustains  an  actual  loss  on  the  whole,  he  reeo 
vers  the  whole  $2000.     But  in  a  like  case  on  a  marine  policy,  he  would  recover  one 


INSURANCE  AGAINST  FIRE.  505 


Insurance  acrainst  Fire. 


that  the  sugar  was  overheated  and  spoiled,  this  was  held  not  to  be 
a  loss  hy  fire,  but  by  mismanagement,  (p)  The  policy  usually  nar- 
rows the  liability  of  the  insurer  still  further,  by  declaring  that  "  no 
loss  or  damage  by  fire,  happening  by  any  invasion,  foreign  enemy, 
or  any  military  and  usurped  power,  will  be  made  good  by  the  in- 
surers." The  words  usurped  power  are  understood  to  refer  to  the 
power  of  rebels  or  invaders,  not  of  a  common  mob ;  and,  therefore, 
when  a  mob  at  Norwich  burnt  down  the  insured's  malting-house, 
he  was  held  entitled  to  recover ;  (^)  nor  would  the  fact  that  the 
insured  had  previously  recovered  from  the  insurer,  bar  his  action 
against  the  hundred,  or  against  the  party  who  had  committed  the 
injury,  for  he  might  sue  as  a  trustee  for  the  insurer,  (r)  But  the 
introduction  of  the  words  civil  commotion  into  the  above  exception, 
will  exempt  the  insurer  from  liability  for  the  tumultuous  act  of 
rioters.  (5) 

A  loss  by  mere  negligence,  so  that  there  be  no  fraud,  is  covered 
by  a  policy,  {tf 


{p)  Austin  V.  Drew,  6  Taunt.  436;  4  Camp.  360;  Holt,  126. 

(5')  Drinkwater  v.  London  Ins.  Co.,  2  Wils.  363. 

(r)  Clark  v.  Blj'thing,  2  B.  <fe  C.  254.  Mason  v.  Sainsbury,  Marsh.  Ins.  TQe. 
Yates  V.  Whyte,  4  Bingh.  N.  C.  2*72.  Wliite  v.  Dobinson,  14  Sim.  273 ;  but  see  Hen- 
eon  V.  Blackwell,  4  Hare,  434. 

(s)  Langdale  v.  Mason,  Park,  657 ;  Marsh.  689. 

(<)  Shaw  V.  Robberds,  6  Ad.  &  E.  75.     HoUingsworth  v.  Brodrick,  7  Ad.  &  E.  40. 


fifth  only,  or  8*00,  being  the  proportion  which  the  sum  insured  bears  to  the  value 
at  risk;  the  assured  himself  bearing  the  other  four-fifths  of  the  risk.  Tlie  result  is, 
that  every  settlement  of  a  loss  by  fire  is  in  the  nature  of  the  adjustment  of  the  partial 
loss,  although  it  may  amount  to  the  whole  sum  insured.  It  is  the  payment  of  the 
whole  actual  loss  sustained,  on  the  whole  property  at  risk,  not  exceeding  the  sum  in- 
sured, without  regard  to  any  apportionment  between  the  sum  insured  and  the 
property  at  risk,  or  to  any  abandonment,  or  technical  or  constructive  total  loss,  or 
salvage.  Liscom  v.  Boston  M.  F.  Ins.  Co.,  4  Mete.  206.  Holmes  v.  Charlestown  M.  F. 
Ins.  Co.,  10  Mete.  211." 

*  This  point  was  considered  by  tlie  Supreme  Court  of  Massachusetts  in  Chandler 
V.  Worcester  M.  F.  Ins.  Co.,  3  Cush.  328.  The  Judge  below  ruled  out  evidence  by  the 
defendants  to  prove  gross  negligence  and  gross  misconduct  of  the  plaintiff^  as  the 
cause  of  the  destruction  of  the  building,  it  being  admitted  that  no  fraudulent  design 
to  burn  the  building  was  imputed.  The  S.  C.  granted  a  new  trial,  holding  that  this 
evidence  was  improperly  excluded.  C.  J.  Shaw  said,  that  independently  of  circum- 
stances, it  would  be  difficult  by  any  definitive  or  abstract  rule  of  law,  to  designate 


52G  MERCANTILE  CONTRACTS. 

Insurance  against  Fire. 

In  order  to  deter  evil  disposed  persons  from  wilfully  setting 
their  own  premises  on  fire  for  the  purpose  of  obtaining  the  insu- 
rance money,  stat.  14  Geo.  3,  c.  78,  enables  the  ofiices,  at  tlie  re- 
quest of  any  person  interested  in  a  building  burnt  down  or  dam- 
aged, or  upon  any  suspicion  of  fraud,  to  cause  the  insurance  money 
to  be  laid  out  in  repairs,  unless  the  party  insured,  within  sixty  daj^s 
after  his  claim  has  been  adjusted,  give  security  that  the  money 
shall  be  so  expended ;  or  unless  the  money  be  at  that  time  disposed 
of  to  the  satisfaction  of  all  parties.  This  section  only  applies  to 
places  within  the  bills  of  mortality,  or  specially  named  in  the  act. 
In  consequence  thereof  it  has  been  held  that  a  covenant  to  insure 
such  premises  runs  with  the  land,  since,  as  the  landlord  may  insist 
on  the  insurance  money  being  laid  out  in  repairs,  the  covenant, 
with  the  aid  of  the  statute,  amounts  to  a  covenant  to  repair,  (w) 

(m)  Vernon  v.  Smith,  5  B.  <fe  A  1. 


■what  degree  of  negligence  ■would  amoxint  to  such  gross  misconduct  as  ■v\'ould  defeat 
the  right  of  the  assured  to  recover.  Suppose  the  premises  insured  should  take  fire, 
and  the  flame  begin  to  kindle  on  a  small  spot,  which  a  cup  of  -n-ater  would  put  out, 
and  the  assured  has  the  ■water  at  hand,  but  neglects  to  put  it  on.  This  is  mere  non- 
feasance; j'et  no  one  ■would  doubt  that  it  is  culpable  negligence,  in  violation  of  the 
maxim,  Sic  ?.''"'e  tuo  itt  alienum  non  laedas.  The  doctrine  of  the  civil  la^n  that  crassa 
negligentia  ■was  of  itself  proof  of  fraud,  or  equivalent  to  fraudulent  purpose  or  design, 
was  no  doubt  founded  on  the  consideration,  that  although  such  negligence  consists  in 
doing  nothing,  and  is  therefore  a  nonfeasance,  yet  the  doing  of  nothing,  when  the 
slightest  care  or  attention  would  prevent  a  great  injur\',  manifests  a  willingness, 
differing  little  in  character  from  a  fraudulent  and  criminal  purpose,  to  commit  such 
injury." 


CHAPTER  VII. 


BOTTO^MET      Al^D      EESPONDENTIA. 

Bottomry  is  an  agreement  entered  into  bj  the  owner  of  a  ship,  or 
his  agent,  whereby,  in  consideration  of  a  sum  of  money  advanced 
for  the  use  of  the  ship,  the  borrower  undertakes  to  repay  the  same 
with  interest,  if  the  ship  terminate  her  voyage  successfully,  and 
binds  or  hypothecates  the  ship  for  the  performance  of  his  contract. 
The  instrument  by  which  this  is  effected  is  sometimes  in  the  shape 
of  a  deed  poll,  and  is  then  called  a  Bottomry  Bill ;  sometimes  in 
that  of  a  bond ;  (a)  but,  whatever  be  its  form,  the  contract  should 
be  clearly  set  out  in  it.  Bills  of  Exchange  drawn  by  the  master 
on  the  owner,  though  accompanied  with  a  verbal  engagement  that 
the  ship  shall  be  liable,  cannot  be  considered  instruments  of  hypo- 
thecation, (b) 

If  the  loan  be  not  upon  the  vessel,  but  on  the  goods  or  mer- 
chandise laden  on  board  of  her,  it  is  called  Respondentia. 

There  are  two  main  differences  between  these  contracts  and  a 
common  loan. 

1st.  The  Risk. — The  lender's  principal  must  be  at  hazard  during 
the  voyage.  The  lender  of  the  money  is,  as  we  shall  immediately 
see,  entitled  to  receive  a  recompense  far  beyond  the  legal  rate  of 
interest :  this  recompense  is  \evj  properly  called  in  the  civil  law 
pericuU  pretium,  and  no  person  can  be  entitled  to  it  who  does  not 
take  upon  himself  the  perils  of  the  voyage.  But  it  is  not  neces- 
sary that  his  doing  so  should  be  declared  expressly,  and  in  terms, 
though  this  is  often  done :  it  is  sufficient  that  the  fact  can  be  col- 
lected from  the  language  of  the  instrument  considered  in  all  its 
parts.  Hence,  where  the  words  were,  "  I  bind  myself,  my  ship, 
and  tackle,  to  pay  the  sum  borrowed,  with  twelve  per  cent,  bot* 

(a)  See  the  forms  of  both,  Appendix  to  Abbott  on  Shipping 
(6)  3  V.  <fe  B.  135;  19  Ves.  jun.  4U;  2  Rose,  103,  229. 


528  MERCANTILE  C0NTKACT3. 

Bottomry  and  Respondentia. 

tomry  premium,  in  eight  days  after  my  arrival  at  the  port  of  Lon- 
don," the  Court  were  of  opinion,  that  the  words,  "  my  arrival," 
must  be  understood  to  mean,  my  arrival  with  the  ship,  or  the  ship's 
arrival,  (c)  But  a  total  loss  of  the  ship,  within  the  meaning  of  the 
bottomry  bond,  cannot  happen,  if  it  exist  in  specie,  although  ever 
BO  much  injured,  {d) 

2dly.  The  Amount  of  Interest. — Upon  a  lottomry  or  respondentia 
contract,  it  is  competent  to  the  lender  to  receive  any  interest  what- 
ever, (e) 

The  terms  hottomry  and  respondentia  are  also  applied  to  contracts 
for  the  repayment  of  money  borrowed,  not  on  the  ship  and  goods 
only,  but  on  the  mere  hazard  of  the  voyage  itself;  as,  where  a  man 
lends  a  merchant  1000?.  to  be  employed  in  a  beneficial  trade,  on 
condition  to  be  repaid  with  extraordinary  interest  in  case  such  a 
voyage  be  safely  performed,  which  kind  of  agreement  is  called  by 
some  writers  fcenus  naitticujn,  and  by  others  usiira  maritima  :  but 
by  stat.  19  Geo.  2,  c.  37,  money  lent  on  bottomry  or  respondentia, 
on  vessels  belonging  to  his  Majesty^s  sv.hjects,  bound  to  or  from  the 
East  Indies,  must  be  lent  only  upon  the  ship  or  merchandise,  with 
benefit  of  salvage  to  the  lender  ;  (/)  a  previous  statute,  7  Geo.  1,  c. 
21,  having  made  void  all  contracts  by  his  Majesty's  subjects  on  the 
loan  of  money  by  way  of  bottomry,  on  any  ship  in  the  service  of 
foreigners^  bound  to  the  East  Indies. 

This  contract  is  generally  entered  into,  either  by  the  owner,  or 
the  master,  acting  under  an  implied  authority,  as  his  agent.  If  it 
be  made  by  the  owners  themselves,  in  this  country,  before  the  com- 
mencement of  the  voyage,  the  lender  has  not  the  same  convenient 
and  advantageous  remedy  by  suit  in  the  admiralty  against  the  ship, 
as  he  has  in  the  case  of  hypothecation  for  necessaries  by  the  master 
m  a  foreign  port ;  and,  if  the  contract  refer  to  a  British  ship,  of 

(c)  Simonds  v.  Hodgson,  3  B.  <fe  Ad.  50,  reversing  decision  in  6  Bingh.  114;  and 
see  The  Emancipation,  1  "W.  Rob.  A.  R.  124. 

(d)  Thompson  v.  R.  E.  A.  Compy.,  1  M.  &  S.  30. 

(e)  2  Bl.  Comm.  457. 

(/)  This  statute  also  prevents  the  borrower  from  recovering  more  on  an  insurance 
than  the  value  of  his  interest,  after  deducting  the  sum  borrowed  ;  and  subjects  him 
to  repayment  of  any  part  -which  he  has  not  laid  out  upon  the  ship  or  goods,  even  in 
case  of  a  loss. 


BOTTOMRY  AND  RESPONDENTIA.  529 

Bottomry  and  Respondentia. 

•whicli  it  purports  to  be  an  assignment,  compliance  with  the  provi- 
sions of  the  Eegistry  Act  seems  necessary  to  its  validity,  (g) 
Neither  does  there  seem  to  be  any  mode  by  which  a  person  who 
advances  money  at  respondentia,  on  goods  laden  and  to  be  laden 
on  board  a  ship  on  an  outward  and  homeward  voj^age,  can  entitle 
himself  to  resort  for  payment  of  his  debt  to  the  specific  goods  that 
may  be  brought  back.  (A) 

The  authority  of  the  master  to  hypothecate  the  ship  and  freight, 
in  case  of  necessity,  at  a  foreign  port,  is  indisputable ;  {i)  and  his 
hypothecation  of  the  freight  or  cargo  is  also  justifiable,  if  neces- 
sary, (j)  The  advantage  of  allowing  the  master  to  take  up  money 
on  bottomry,  consists  in  its  enabling  him  to  ]3rocure  assistance 
when  no  other  resource  is  at  hand,  and  the  adventure  would  be 
frustrated  if  assistance  were  not  afforded.  Such  being  the  reason 
for  permitting  him  to  borrow  money  on  these  terms,  it  follows,  that 
he  has  no  right  to  do  so  where  he  can  obtain  the  money  ui^on  better 
terms,  ex.  gr.,  on  the  personal  credit  of  the  OAvner ;  {k)  or  when  he 
is  at  the  owner's  place  of  residence,  and  the  means  of  communica- 
tion with  him  are  open,  for  then  he  has  the  owner  to  resort  to.  (l) 
And,  with  us,  all  England  would,  at  least  before  the  commence- 
ment of  the  voyage,  be  considered  the  owner's  residence  for  this 
purpose ;  and  so,  perhaps,  would  Ireland  since  the  Union,  (m) 
though  before  that  period  it  was  otherwise,  {n)  It  follows,  also, 
that  the  master  ought  not  to  take  up  money  on  bottomry,  even  for 
a  necessary  purpose,  if  it  can  be  procured  on  more  moderate  terms. 

^^ Necessity,^''  to  use  the  expressions  of  Lord  Stowell,    "is  the 

{g)  Abbott,  153,  8th  ed.     Johnson  v.  Shippen,  2  Ld.  Raym.  983. 

{h)  Abbott,  153,  8th  ed. ;  2  Bl.  Comm.  458.  Busk  v.  Fearon,  4  East,  319.  Glover 
V.  Black,  3  Burr.  1394. 

(i)  Moor,  918  ;  Hob.  11 ;  Abb.  156,  8th  ed. 

Ij)  The  Gratitudine,  3  Rob.  A.  R.  240.  The  Jacob,  4  Rob.  A.  R.  245.  The  Lord 
Cochrane,  2  W.  Rob.  A.  R.  320. 

(^•)  Heathorn  v.  Darling,  re  The  Eliza,  1  Moore,  P.  C.  5. 

{I)  Abbott,  154,  8th  ed. ;  Molloy,  b.  2,  c.  11,  s.  11.  Lister  v.  Baxter,  2  Stra.  695, 
See  The  Rhadamanthe,  1  Dodson,  201.  The  Barbara,  4  Rob.  A.  R.  1.  The  Jenny,  2 
W.  Rob.  A.  R.  5.  The  Lochiel,  2  W.  Rob.  A.  R.  44.  La  Ysabel,  1  Dodson,  273.  The 
Trident,  1  W.  Rob.  A.  R.  29,  -where  the  master  was  allowed  to  borrow  on  bottomry 
ftt  Plymouth,  the  owner,  -who  lived  in  Scotland,  being  dead,  insolvent. 

(m)  Abbott,  uhi  supra.     The  Rhadamanthe,  1  Dods.  201. 

(n)  Menetone  v.  Gibbons,  3  T.  R.  2G7. 
34 


530  MERCANTILE  COXTRACTS. 

Bottomr}'  and  Respondentia. 

vital  principle  of  hypothecation,  and  the  Court  of  Admiralty  will 
consider  every  circumstance,  will  go  into  the  whole  history  of  the 
voyage,  in  order  to  determine  whether  there  be  that  necessity,  with- 
out which  an  instrument  of  hj-pothecation  is  void."  (o) 

When  the  master,  finding  it  absolutely  necessary  for  the  pur- 
poses of  the  voyage  to  obtain  money,  and  being  unable  to  obtain 
it  in  any  other  manner,  executes  an  instrument  of  hypothecation, 
the  effect  of  his  contract  is  to  give  the  creditor,  not  indeed  a 
property  in  the  ship  hypothecated,  but  a  privilege  or  claim  upon  it, 
to  be  carried  into  effect  by  legal  process,  {p)  And  where  the  in- 
terest reserved  exceeded,  as  it  almost  always  did,  the  then  legal 
rate  of  five  per  cent.,  the  ov/ner  could  not  before  the  recent  acts, 
however  it  may  now  be,  have  been  made  personally  responsible, 
and  the  lender's  remedy  was  against  the  master  or  the  ship ;  {q) 
though,  it  would  seem,  that,  if  the  lender  contented  himself  Avith 
five  per  cent.,  the  master  might  have  pledged  both  the  ship  itself 
and  the  personal  credit  of  the  owner,  {r) 

No  person  is  entitled  to  make  advances  on  bottomry,  who,  at 
the  time  of  making  them,  is  a  debtor  to  the  vessel ;  (5)  but  it  is  no 
objection  to  the  validity  of  a  bottomry  bond,  that  it  is  given  to  the 
consignee  of  the  cargo ;  the  necessity  for  borrowing,  and  the  fair- 
ness of  the  transaction,  being  established,  {t)  The  money,  how- 
ever, must  have  been  originally  advanced  upon  the  credit  of  the 
ship :  if  it  be  originally  advanced  on  that  of  the  owner,  and  such 
a  bond  be  afterwards  given,  in  consequence  of  doubt  arising  as  to 
his  responsibility,  even  before  the  ship  leaves  the  place  of  advance, 
the  bond  will  be  invalid,  {it)     But  if  a  portion  only  of  the  money 

(o)  Tlie  Hersey,  3  Hagg.  A.  R.  404 ;  S.  C.  ?.  Moore  P.  C.  79.  Scares  v.  Rann,  in  rf 
The  Prince  of  Saxe-Coburg,  3  Moore  P.  C.  1. 

{p)  Abbott,  154,  Sth  ed. 

{q)  Abbott,  158,  Sth  ed. 

(r)  IbiiL     Sampson  v.  Bragington,  1  Ves.  443. 

(s)  The  Hebe,  2  "W.  Rob.  A.  R.  146. 

{t)  Tlie  Alexander  Tate,  1  Dods.  2Y8 ;  and  see  Tlie  Lord  Cochrane,  2  W.  Rob.  A 
R.  320,  in  which  a  bottomry  bond  on  the  ship,  freight,  and  cargo,  given  for  ad- 
vances made  by  persons  acting  in  the  capacity  of  the  ship's  agents,  was  upheld  against 
the  consignees  of  the  cargo. 

(m)  The  Augusta,  1  Dods.  283.  See  Weston  v.  Foster,  2  Bingh.  K  C.  693.  The 
Tartar,  2  Hagg.  1.  See  also  The  Vibilia,  1  W.  Rob.  A.  R.  1.  The  Lochiel,  2  W. 
Rob.  A.  R.  35.     Gore  v.  Gardner,  3  Moore  P.  C.  T9. 


BOTTOMRY  AXD  RESPONDENTIA.  531 

Bottomry  and  Respondentia. 

secured  have  been  thus  previously  advanced,  and  the  rest  of  the 
sum  be  subsequently  lent  on  the  security  of  the  ship,  the  bond  is 
not  void  in  toto,  but  only  to  the  extent  of  the  previous  advance,  {v) 
It  is  clear  that  the  master  cannot  hypothecate  the  ship  for  any  debt 
of  his  own ;  though,  if  she  really  were  in  a  state  of  want,  and  the 
money  bona  fide  advanced  to  relieve  her,  his  subsequent  misappli- 
cation of  it  would  not  prejudice  the  lender's  remedy,  (iv) 

Where  the  ship  has  been  hypothecated  by  the  master  in  a  for- 
eign country,  the  lender  has,  as  we  have  seen,  a  privilege  or  claim 
against  the  ship  itself,  of  which  he  may  avail  himself  as  follows : — 
Upon  the  arrival  of  the  ship  in  this  country,  if  the  loan  be  not  re- 
paid within  the  time  prescribed,  the  agent  of  the  lender  applies  to 
the  Court  of  Admiralty,  with  the  instrument  of  contract,  and  a 
proper  affidavit  of  the  facts,  and  obtains  a  warrant  to  arrest  the 
ship,  and  cite  all  persons  interested  to  appear  before  the  court  if 
they  think  proper  to  do  so.  If,  in  the  course  of  the  proceedings,  it 
becomes  necessary  to  sell  the  ship,  the  court  decrees  a  sale  to  be 
made  under  the  direction  of  its  own  commLssioners,  and  afterwards 
distributes  the  proceeds  among  the  different  claimants,  as  justice 
requires  ;  and  this  may  be  done  if  the  owners  or  persons  interested 
in  the  ship  do  not  appear  at  the  time  appointed  by  the  court,  other- 
wise their  absence  or  default  would  occasion  a  failure  of  justice,  (x) 
As  to  the  mode  of  distributing  the  proceeds  among  the  several  > 
claimants,  it  is  worthy  of  observation,  that  if  securities  of  this  sort  / 
are  given  at  different  periods  of  a  voyage,  and  the  value  of  the/ 
ship  is  insufficient  to  discharge  them  all,  the  last,  in  point  of  date,/ 
is  entitled  to  priority  of  payment ;  becouse  the  last  loan  furnishes" 
the  means  of  preserving  the  ship,  and,  without  it,  the  former 
lenders  would  have  entirely  lost  their  security,  (y)  In  order,  how 
ever,  that  this  rule  may  apply,  the  security  last  in  date  must  have 
arisen  out  of  the  destitute  situation  of  the  master,  and  his  inability 
to  obtain  the  necessary  supplies  for  his  vessel,  on  the  personal 
credit  of  himself  or  his  emploj^ers.  (2) 

(v)  Smith  V.  Gould,  re  The  Prince  George,  4  Moore  P.  C.  21. 

(w)  Abbott,  160,  161,  8th  ed. 

(a;)  Abbott,  162,  8th  ed. 

(y)  Abbott,  163,  8th.  ed.     Tlie  Rhadamanthe,  Dods.  20-1. 

(a)  Abbott,  164,  8th  ed.     The  Rhadamanthe,  ubi  supra. 


CHAPTER  VIII. 

COKTEACTS     OF     IIIEING     AND     SEE  VICE. 

The  greater  part  of  tlie  law  respecting  the  relation  of  master  and 
servant,  lias  been  treated  of  in  the  First  Book,  under  the  head  of 
Principal  and  Agent;  for  every  servant  is,  in  executing  the  duties 
required  from  him  by  his  contract  of  service,  his  master's  agent. 
The  present  chapter  will,  therefore,  only  contain  a  few  remarks  on 
the  contract  by  which  this  relation  is  created. 

Where  the  hiring  is  under  a  special  agreement,  the  terms  of  that 
agreement  must  of  course  be  observed.  If  there  be  no  special 
agreement,  but  the  hiring  is  a  general  one,  without  mention  of 
time,  it  is  considered  to  be  for  a  year  certain.  If  the  servant  con- 
tinue in  employment  beyond  that  year,  a  contract  for  a  second  year 
is  implied,  and  so  on.  (a)  Indeed,  in  case  of  menial  or  domestic 
servants  the  contract  is,  by  general  custom,  dissoluble  by  a  month's 
warning,  or  payment  of  a  month's  wages,  ih)  And  though  a  hiring 
in  general  words  is,  prima  facie^  presumed  to  be  for  a  year,  even 
though  the  master  and  servant  may  have  thought  that  they  could 
separate  within  the  year ;  (c)  and,  though  the  circumstances  of  the 
servant's  leaving  in  the  middle  of  a  year,  {d)  or  having  previously 
served  for  a  shorter  time  than  a  year,  (e)  will  not  prevent  the  usual 
interpretation  from  taking  place;  yet  this  presumption  arising  from 
the  use  of  general  words  is  capable  of  being  rebutted ;  (/)  thus,  a 

(a)  Beeston  v.  Collyer,  4  Blngh.  309.  Williams  v.  Byrne,  T  Ad.  &  E.  I'ZY,  case  of 
a  newspaper  reporter.  Huttman  v.  Bullnois,  2  G.  &  P.  510.  Rex  v.  Hensingbam, 
Cald.  206.  Rex  y.  Croscombe,  Burr.  S.  C.  256.  Turner  v.  Robinson,  6  B.  &  Ad.  789. 
Faweett  v.  Casb,  5  B.  &  Ad.  904. 

{b)  See  Beeston  v.  Collyer.  Robinson  v.  Hindman,  3  Esp.  235 ;  6  T.  R.  326.  Now 
Ian  V.  Ablett,  5  Tyrwb.  709  ;  2  C.  M.  &  R.  64. 

(c)  Rex  V.  Stockbridge,  Burr.  769. 

Id)  Rex  V.  Korfield,  5  T.  R.  506. 

(e)  Rex  V.  Long  Whatton,  5  T.  R.  447.     Rex  v.  Hales,  5  T.  R.  668. 

(/)  Rex  V.  Christ's  Parish,  3  B.  &  C.  459.    Rex  v.  St.  Matthew,  3  T.  R.  449.     Rex 


COXTRACre  OF  HIRING  AND  SERVICE.  533 

Contracts  of  Hiring  and  Service. 

general  hiring  a.t  loeeldy  ivages  is  but  a  weekly  hiring,  if  there  be  no 
other  circumstance  whence  the  intended  duration  of  the  contract 
can  be  collected,  ( 5^)  ex.  gr.,  a  hiring  at  so  much  per  tveeJc,  "for  so 
long  a  time  as  the  master  shall  want  a  servant,"  or  "for  so  long  a 
time  as  the  master  and  servant  shall  agree,"  are  weekly  hirings.  {h) 
But,  if  there  be  any  circumstance  to  show  that  a  yearly  hiring  was 
intended,  a  reservation  of  wages  payable  at  shorter  intervals  will 
not  control  it;  (i)  as,  where  the  contract  was  to  serve  "for  four  shil- 
lings and  ninepence  a  week,"  or,  "at  the  rate  of  four  shillings  a 
week,"  the  parties  having  liberty  of  parting  at  a  month's  notice 
from  either,  this  was  held  to  be  a  hiring  for  a  year,  for  the  mention 
of  a  month  showed  that  the  stipulation  for  a  weekly  payment  of 
wages  was  not  intended  to  limit  the  duration  of  the  contract,  (y) 
But  an  indefinite  hiring  by  piece-work,  or  a  hiring  to  do  a  certain 
quantity  of  work,  cannot  be  considered  a  yearly  hiring,  {k) 

It  follows,  from  what  is  above  stated,  that  if  the  master  dismiss 
his  servant  (hired  generally)  without  cause,  the  latter  will  have 
a  right  to  wages  up  to  the  expiration  of  the  year ;  (Z)  while,  on 
the  other  hand,  if  the  servant  quit  his  master  causelessly,  he 
will  be  entitled  to  no  wages,  {m)     Nor  will  he  be  so,  if  dismissed 

V.  Great  Bowden,  7  B.  &  C.  249.  Rex  v.  Stokesley,  6  T.  R.  151.  Baxter  v.  Nurse,  6 
M.  &  Gr.  935. 

((j)  Per  BuUer,  J.,  2  T.  R.  433.  Rex  v.  Pucklecliureb,  5  East,  3S2.  Rex  v.  Clare, 
Burr.  819.    Rex  v.  Dodderhill,  3  M.  &  S.  243. 

{h)  R:x  V.  Elstack,  Cald.  489.  Rex  v.  Mitcham,  12  East,  351.  See  Rex  v.  Odi- 
ham,  2  T.  R.  622.  Rex  v.  Dodderhill,  3  M.  &  S.  243.  Rex  v.  Lambeth,  3  M.  &  S.  315. 
Rex  V.  Hanbury,  2  East,  423. 

(i)  See  Rex  v.  Seaton,  Cald.  440. 

(j)  Rex  V.  Hampreston,  5  T.  R.  205.  See  Rex  v.  Great  Yarmouth,  5  M.  &  S. 
114.  Rex  V.  Birdbrooke,  4  T.  R.  245.  Rex  v.  Bradrich,  Burr.  S.  C.  C62.  Rex  v. 
Sandhurst,  1  B.  &  C.  557.  Rex  v.  Pershore,  8  B.  <fe  C.  679.  Reg.  v.  Pilkington,  5  Q. 
B.  662. 

(k)  Rex  V.  St.  Peter's,  Burr.  S.  C.  513.  Rex  v.  Woodhurst,  1  B.  &  A.  325.  Rex  v. 
"Wrington,  Burr.  S.  C.  280. 

(/)  See  Gandall  v.  Pontigny,  4  Camp.  375;  1  Stark.  198.  Arehard  v.  Ilornor,  3  C. 
<fe  P.  349.  Eardley  v.  Price,  2  N.  R.  333,  secus  ia  a  case  of  special  agreement  provid- 
ing a  certain  notice,  see  Huntley  v.  Harman,  11  Ad.  &  E.  798. 

(m)  Lamburn  v.  Cruden,  2  M.  &  Gr.  253.  Huttman  v.  Boulnois,  2  C.  &  P.  510; 
Com.  Dig.  Justices,  B.  63.  Ridgway  v.  Hungerford  Market  Compy.,  3  Ad  &  E.  171. 
Giraud  v.  Richmond,  2  C.  B.  835.  In  Lamburn  v.  Cruden,  the  Court  held,  that  it 
should  be  left  to  the  jury  to  say  whether  there  was  a  new  contract  to  pay  for  the 
portion  of  time  which  the  servant  staj'cd  over  the  year. 


534  MERCANTILE  CONTTRACTS. 

Contracts  cf  Hiring  and  Service. 

before  the  espiration  of  his  term  of  service  for  misconduct,  (n) 
The  master  will  be  justified  in  taking  this  step  by  any  exhibi- 
tion of  moral  turpitude  (o)  on  the  part  of  the  servant,  ex.  gr.^  an 
assault  on  a  maid-servant,  or  the  persuasion  of  an  apprentice  to 
elope ;  by  a  refusal  to  obey  his  lawful  orders,  (73)  or  the  servant's 
unwarrantable  absence  from  his  duty,  {q)  even  though  involuntary, 
as  if  he  subject  himself  to  imprisonment,  (r)  Though  it  is  other- 
wise where  the  absence  is  warrantable,  as,  if  it  be  for  the  purpose 
of  having  a  severe  hurt  remedied,  (5)  going  to  a  statute  to  be  hired 
for  the  ensuing  year,  [t)  or  looking  for  another  service,  {u)  And  a 
mere  temporary  absence  without  leave,  involving  no  immoral  pur- 
pose, appears  not  to  be  a  sufficient  ground  for  his  dismissal,  espe- 
cially if  the  masters  business  be  not  seriously  impeded,  {v)  Where 
a  clerk  employed  to  make  entries  in  the  minute-book  of  a  company, 
entered  a  protest  against  a  summons  for  the  appointment  of  a  suc- 
cessor to  himself,  it  was  held  that  a  jury  were  justified  in  finding 
this  to  be  a  sufiicient  cause  for  his  dismissal,  (^y)  It  was  further 
held  in  that  case,  and  the  doctrine  has  been  since  confirmed,  (x) 
that  a  master  who  has  discharged  his  servant  for  an  insufficient 
cause,  is  not  precluded  from  afterwards  justifying  that  dismissal  by 
alleging  any  sufficient  cause  that  may  have  been  in  existence.  In 
a  subsequent  case  some  doubt  seems  to  have  been  entertained, 
whether  the  misconduct  must  not  have  been  known  to  the  master 

(n)  Turner  v.  Robinson,  6  C.  <fe  P.  15;  5  B.  <fe  Ad.  789.  Atkin  v.  Acton,  4  Carr.  & 
P.  208.     Callo  V.  Brounceker,  ibid.  513.     See  M.  &  M.  489. 

(o)  Atkin  V.  Acton,  4  C.  &  P.  208.  Turner  v.  Robinson,  6  C.  <t  P.  15 ;  5  B.  &  Ad. 
"789.  Rex  v.  Brampton,  Cald.  11.  Rex  v.  Welford,  Cald.  57.  Trotman  v.  Dunn,  4 
Camp.  211. 

{p)  Spain  V.  Arnott,  2  S^wk.  256. 

{q)  Robinson  v.  Hindman,  3  Esp.  235.  Turner  v.  Mason,  14  M.  <fe  "W.  112.  In  the 
last  case  the  fact  of  a  domestic  servant  absenting  herself  for  a  night,  to  visit  a  dying 
parent,  in  defiance  of  the  master's  prohibition,  was  held  to  justify  dismissal. 

(r)  Rex  V.  Barton,  2  M.  &  S.  329. 

(s)  Rex  V.  Sharrington,  2  Bott's  Poor  Laws,  by  Const.  525.  Rex  v.  Winterdatt 
Cald.  298.     Chandler  v.  Grieves,  2  H.  Bl.  606. 

{t)  Rex  V.  Islip,  1  Str.  423.     Rex  v.  Polesworth,  2  B.  <fe  A.  483. 

(w)  Rex  V.  Potter  Heigh.am,  Burr.  S.  C.  690. 

{v)  Fillieul  v.  Armstrong,  7  Ad.  &  E.  557 ;  sed  vide  Turner  v.  Mason,  14  M.  &  W 
112. 

(iv)  Ridgway  v.  Ilungerford  Market  Company,  3  Ad  &  E.  171. 

Ix)  Baillie  v.  Kell,  4  Bingh.  N.  C.  63S 


CONTRACTS  OF  HIRING  AND  SERVICE.  535 

Contracts  of  Hiring  and  Service. 

at  the  time  of  the  discharge,  (?/)  It  would  be  strange,  liowever,  ad- 
mitting that  the  master  cannot  relj  on  an  offence  which  he  has  not 
at  first  put  forward,  that  the  servant  should  be  allowed  to  rely  on 
his  own.  concealment  of  it.  Where  a  clerk  claimed  to  be  a  part- 
ner, and  to  transact  business  as  sucn,  his  master  was  held  justified 
in  immediately  dismissing  him  from  his  service.  (2) 

The  master  is  not  liable  to  the  servant  in  respect  of  damage 
sustained  by  the  latter  in  the  execution  of  his  orders,  but  not  aris- 
ing from  any  wilful  misbehavior  on  the  master's  part,  (a) 

By  stat.  1  &  2  Wm.  4,  c.  37,  in  contracts  of  hiring  made  with 
artificers,  workmen,  laborers,  or  other  persons  employed  in  the 
trades,  specified  in  section  19  of  that  act,  the  wages  must  be  made 
payable  in  the  current  coin  of  this  realm,  and  not  otherwise.  The  pay- 
ment of  such  wages  in  any  other  mode  is  declared  invalid.  Nor  is 
the  employer  allowed  to  set  off  goods  supplied  to  the  artificer  against 
the  wages  due  to  him.  ih)  Obedience  to  this  act  is  enforced  by  pen- 
alties. A  payment  in  bank-notes  with  the  artificer's  consent  is  le- 
galized by  a  proviso  in  section  8. 

By  stat.  55  Geo.  8,  c.  154,  a  memorandum  or  agreement  for  the 
hire  of  any  laborer,  artificer,  manufacturer,  or  menial  servant,  is 
exempt  from  stamp-duty. 

A  great  number  of  statutes  have  at  various  times  been  passed, 
pointing  out  modes  for  the  arrangement  of  disputes  occurring  be- 
tween masters  in  particular  trades  and  their  servants  or  workmen, 
the  minute  provisions  of  which  it  would  be  impossible,  consistently 
with  the  plan  of  this  Treatise,  to  enumerate :  the  reader  will  find 
them  collected  in  the  last  edition  of  Burn's  Justice,  under  the  head 
Servants.  There  is  a  general  statute  on  this  subject,  viz.,  5  Geo.  4, 
c.  96,  entitled  An  Act  to  consolidate  and  amend  the  laws  relative  to  the 
arbitration  of  disputes  between  masters  and  luorkmen ;  (c)  the  second 
section  of  which  enumerates  the  causes  of  dispute  intended  to  be 

(y)  Cussons  v.  Skinner,  11  M.  &  W.  161,  which  turned,  however,  a  good  deal  on 
the  form  of  the  plea ;  and  Mercer  v.  Whall,  5  Q.  B.  447,  to  which  the  same  remark  is 
applicable. 

(z)  Amor  v.  Fearon,  9  Ad.  &  E.  548. 

(o)  Priestley  v.  Fowler,  3  M.  <fe  W.  1. 

(b)  But  deductions  for  the  use  of  frames  supplied  by  the  master  and  employed  in 
the  work,  are  legal,  Chawner  v.  Cummings,  15  L.  J.  Q.  B.  161. 

(c)  This  act  has  been  amended  by  stat.  1  Vict.  c.  67. 


536  MERCANTILE  CONTRACTS. 

Contracts  of  Hiring  and  Service. 

embraced  by  its  enactments,  which  apply  to  most  comphaints  rela- 
tive to  the  price  of  labor,  hours  of  work,  and  quality  of  materials. 
The  third  section  points  out  the  mode  of  decision,  which  is  either 
by  the  summary  award  of  a  justice,  if  the  parties  can  agree  to  it ;  or 
if  not,  by  two  arbitrators,  one  chosen  by  each  party,  out  of  a  num- 
ber of  not  less  than  four,  nor  more  than  six,  to  be  named  by  the 
justice  upon  application  to  him  by  one  of  the  parties.  The  other 
sections  provide  for  the  appointment  of  new  arbitrators,  in  case  of 
the  neglect  or  refusal  of  those  first  named ;  the  mode  of  investiga- 
tion ;  the  powers  with  which  the  arbitrators  are  to  be  invested  for 
the  purpose  of  procuring  evidence ;  the  course  to  be  adopted  where 
they  disagree,  and  the  enforcement  of  the  award  when  made.  It 
contains,  besides,  several  provisions  applicable  to  peculiar  circum- 
stances. 


CHAPTER  IX. 

CONTEACTS      WITH      SEAMEN. 

Sect.  1.  Nature  and  form  of  contract. 
,2., Duties  and  rights  cf  seamen. 

3.  Wages^  hoiu  lost  or  forfeited. 

4.  Remedies  of  seamen  for  their  wages. 

The  contract  under  which  seamen  in  the  merchant  service  are 
engaged,  deserves  a  separate  consideration  on  account  of  the  pecu- 
liarities which  distinguish  it  from  other  contracts  of  hiring  and 
service. 

This  subject  is  now  regulated  altogether  by  stat.  7  &  8  Vict.  c. 
112,  (a)  which  repeals  stat.  5  &  6  W.  4,  c.  19,  the  act  previously  in 
force,  except  so  far  as  it  repeals  former  acts  or  relates  to  the  main- 
tenance of  the  Register  Office  thereby  established.  It  recites  "  that 
the  prosperity,  strength,  and  safety  of  this  United  Kingdom,  and 
of  her  Majesty's  dominions,  do  greatly  depend  on  a  large,  constant, 
and  ready  supply  of  seamen,  and  it  is  therefore  expedient  to  pro- 
mote the  increase  of  the  number  of  seamen,  and  to  afford  them  all 
due  encouragement  and  protection,  and  that  it  is  also  expedient  to 
keep  a  register  of  seamen."  The  act  itself  is  set  out  at  large  in 
the  Appendix.  Its  provisions,  so  far  as  they  relate  to  the  contract 
between  mariners  and  their  employers,  may  be  most  aptly  con- 
sidered under  the  following  heads : — 

1.  Nature  and  form  of  contract. 

2.  Duties  and  rights  of  seamen  under  it. 
8.  Wages,  how  lost  or  forfeited. 

4.  Their  remedies  for  the  recovery  of  them. 

(a)  See  the  stat.  8  &  9  Viet.  c.  IIG,  which  requires  persons  employed  to  procure 
merchant  seamen  to  be  licensed. 


538  MERCANTILE  CO^TTRACTS. 

Nature  and  Form  of  Contract. 

Section  I. — Nature  and  Form  of  Contract, 

The  second  section  of  7  &  8  Vict,,  c.  112,  enacts, 
"  That  it  shall  not  be  lawful  for  any  master  of  any  ship,  of  whatever 
tonnage  or  description,  belonging  to  any  subject  of  her  Majesty,  proceed- 
ing to  parts  beyond  the  seas,  or  of  any  British  registered  ship  of  the 
burden  of  eighty  tons  or  upwards  employed  in  any  of  the  fisheries  of 
the  United  Kingdom,  or  in  proceeding  coastwise,  or  otherwise,  from  one 
part  of  the  United  Kingdom  to  another,  to  carry  to  sea  any  seaman  as 
one  of  his  crew  or  complement  (apprentices  excepted)  unless  the  master 
of  such  ship  shall  have  first  made  and  entered  into  an  agreement  in  writ- 
in"-  with  such  seaman,  specifying  what  wages  such  seaman  is  to  be  paid, 
the  quantity  of  provisions  he  is  to  receive,  the  capacity  in  which  he  is  to 
act  or  serve,  and  the  nature  of  the  voyage  in  which  the  ship  is  to  be 
employed,  so  that  such  seaman  may  have  some  means  of  judging  of  the 
period  for  which  he  is  likely  to  be  engaged ;  and  that  such  agreement 
shall  be  properly  dated,  and  shall  be  signed  by  such  master  in  the  first 
instance,  and  by  the  seamen  respectively  at  the  port  or  place  where  they 
shall  be  shipped ;  and  that  the  signature  of  each  of  the  parties  thereto 
shall  be  duly  attested  by  one  witness  at  the  least,  and  that  the  master 
shall  cause  the  agreement  to  be  read  over  and  explained  to  every  such 
seaman  in  the  presence  of  such  witness,  before  such  seaman  shall  execute 
the  same ;  and  it  shall  not  be  lawful  for  the  master  of  any  ship  to  carry 
to  sea  any  seaman,  being  a  subject  of  her  Majesty,  until  he  shall  also  have 
first  obtained  from  every  such  seaman  or  other  person  his  register  ticket, 
(to  be  procured  as  hereinafter  mentioned),  which  ticket  the  said  master  is 
hereby  required  to  retain  (except  in  the  cases  hereinafter  provided)  until 
the  service  of  such  seaman  shall  have  terminated,  and  at  the  termination 
of  such  service  the  said  master  shall  return  the  register  ticket  to  him." 

Sect.  3  enacts, 

"  That  in  the  case  of  any  ships  of  whatever  tonnage  or  description, 
belonging  to  any  subject  or  subjects  of  her  Majesty,  and  proceeding  to 
parts  beyond  the  seas,  (except  as  hereinafter  provided,)  the  agreement 
shall  be  in  the  form  set  forth  in  Schedule  (A.)  to  this  act  annexed,  and 
shall  contain  the  several  particulars  therein  mentioned  or  required ;  and 
the  master  shall  within  twenty-four  hours  after  the  ship's  arrival  at  her 
final  port  of  destination  in  this  United  Kingdom,  deliver  or  cause  to  be 
delivered  to  the  collector  or  comptroller  of  the  customs  at  and  for  such 


CONTRACTS  WITH  SEA:\IEX.  539 

Nature  and  Form  of  Contract. 

port  every  agreement  so  made  as  aforesaid,  or  a  true  copy  thereof,  and  of 
every  indorsement  thereon ;  the  agreement,  or  copy  thereof,  in  cither 
case,  to  be  certified  as  such  by  such  master  or  owner,  and  also  by  the 
mate  or  next  officer  (if  any)  of  such  ship  or  vessel,  each  of  whom  is 
hereby  required  to  sign  such  certificate  in  the  presence  of  one  attesting 
witness  at  the  least ;  and  if  the  original  agreement  be  delivered  to  such 
collector  or  comptroller  he  shall  retain  the  same  until  all  the  wages  to 
which  the  agreement  relates  shall  be  paid  or  satisfied,  and  then  he  shall 
transmit  such  original  agreement  to  the  registrar  of  seamen ;  and  no  such 
ship  shall  be  cleared  inwards  by  the  tide  surveyor  or  other  officer,  until 
the  master  shall  produce  and  show  a  certificate  from  such  collector  or 
comptroller  (which  he  is  hereby  required  to  give)  to  the  effect  that  he  has 
delivered  his  agreement,  or  an  attested  copy  thereof,  as  aforesaid ;  and  the 
tide-waiters  left  on  board  shall  be  maintained  at  the  expense  of  the  master 
or  owner  until  such  certificate  shall  be  produced  and  shown,  or  until  it 
shall  be  proved  to  the  satisfaction  of  the  tide-surveyor  or  other  officer  that 
such  agreement  or  agreements,  or  such  copy  thereof,  has  or  have  been  so 
delivered  as  aforesaid ;  and  in  the  case  of  any  ship  employed  in  fishing 
on  the  coasts  of  the  United  Kingdom,  or  proceeding  from  one  part  of  the 
United  Kingdom  to  another,  or  proceeding  to  any  of  the  islands  of  Jersey, 
Guernsey,  Alderney,  Sark,  and  Man,  or  to  any  place  on  the  continent  of 
Europe  between  the  river  Elbe  inclusive  and  Brest,  the  agreement  shall 
be  in  the  form  set  forth  in  Schedule  (B.)  to  this  act  annexed,  and  shall 
contain  the  several  particulars  therein  mentioned  or  required  ;  and  every 
such  agreement  shall  not  extend  beyond  the  thirtieth  of  June  and  the 
thirty-first  of  December  in  each  year,  or  on  arrival  in  any  port  of  the 
United  Kingdom  after  the  same  respective  dates ;  and  the  owner  or 
master  of  every  such  ship  as  last  aforesaid  shall,  within  twenty -one  days 
next  after  the  thirtieth  day  of  June  and  the  thirty -first  day  of  December 
in  each  year,  transmit  or  deliver,  or  cause  to  be  transmitted  or  delivered, 
to  the  collector  or  comptroller  of  the  customs  of  any  port  of  the  United 
Kingdom,  every  agreement  made  within  the  six  months  next  preceding 
such  thirtieth  day  of  June  and  thirty-first  day  of  December  respectively, 
or  a  true  copy  thereof,  and  of  every  indorsement  thereon,  certified  as 
aforesaid ;  and  such  collectors  and  comptrollers  respectively  shall,  and  are 
hereby  required  to  give  a  receipt  (specifying  the  nature  of  the  document) 
for  every  agreement  or  other  document,  or  such  copy  thereof,  to  the 
master,  owner,  or  person  so  delivering  the  same ;  and  no  master  or  owner, 
after  the  expiration  of  the  said  twenty-one  days,  shall  be  entitled  to  or 
receive  a  transire  or  any  other  customs  document  necessary  for  the  con- 


540  MERCANTILE  CONTRACTS. 

Nature  and  Form  of  Contract. 

duct  of  the  business  of  the  ship,  until  he  shall  produce  and  show  such 
receipt,  or  shall  prove  to  the  satisfaction  of  the  officer  that  every  such 
agreement,  or  such  copy  thereof  as  aforesaid,  has  been  duly  delivered  as 
aforesaid ;  and  the  owner  or  master  of  every  ship  under  the  burden  of 
eighty  tons,  employed  as  last  aforesaid,  who  is  not  required  by  this  act  to 
enter  into  any  written  agreement  with  his  crew,  shall,  before  employing 
any  seaman  or  other  person  in  the  service  of  his  ship,  receive  from  every 
such  seaman  or  other  person  his  register  ticket,  and  shall  retain  the  same 
until  the  service  of  such  seaman  or  other  person  shall  have  expired,  and 
at  the  expiration  of  such  service  the  master  shall  return  the  register  ticket 
to  the  person  entitled  thereto." 

And  by  sect.  4, 

"  That  if  any  master  or  owner  shall  carry  out  to  sea  any  seaman  (ap- 
prentices excepted)  without  having  first  entered  into  the  required  agree- 
ment with  such  seaman,  [b)  or  if  any  master  shall  not  obtain  from  any 
seaman  or  other  person,  being  a  subject  of  her  Majesty,  his  register  ticket 
according  to  the  provisions  of  this  act,  he  shall  in  either  and  every  of  such 
cases  forfeit  and  pay  the  sum  of  ten  pounds  for  and  in  respect  of  every 
such  seaman ;  and  if  any  master  or  owner  shall  neglect  to  cause  such 
agreement  to  be  read  over  and  explained  to  such  seaman  before  the  sign- 
ing or  execution  thereof  by  such  seaman,  the  said  master  or  owner  shall 
for  each  neglect  forfeit  and  pay  the  sum  of  five  pounds  for  every  such 
seaman ;  and  if  any  master  or  owner  shall  neglect  or  omit  to  deliver  or 
cause  to  be  delivered  to  such  collector  or  comptroller  any  such  agreement 
or  such  copy  thereof  as  aforesaid,  or  shall  not  deliver  up  any  register 
ticket  to  the  person  entitled  to  it  at  tne  expiration  of  his  service,  or  other- 
wise, as  required  by  this  act,  he  shall  for  every  such  neglect,  omission,  or 
offence,  forfeit  and  pay  the  sum  of  ten  pounds,  or  if  any  master  or  owner 
shall  deliver  or  cause  to  be  delivered  a  fiilse  copy  of  the  agreement,  he 
shall  for  every  such  offence  forfeit  and  pay  the  sum  of  twenty  pounds." 

By  sect.  5, 

"  That  no  seaman,  by  reason  of  any  agreement,  shall  forfeit  his  lien 
upon  the  ship,  nor  be  deprived  of  any  remedy  for  the  recovery  of  hia 
wages  to  which  he  would  otherwise  be  entitled  against  any  person  or  per- 
sons whatever ;  and  no  agreement  contrary  to  or  inconsistent  with  this 
act,  nor  any  clause,  contract,  or  engagement  whereby  any  seaman  shall 

(h)  But  the  omission  does  not  render  the  ship  unseaworthy,  oi-  the  voyage  illegal. 
It  is  simply  for  the  protection  of  tb«  seamen.     Redmond  v.  Smith,  1  M.  &  Gr.  457. 


CONTRACTS  WITH  SEAMEN.  54] 

Nature  and  Form  of  Contract. 

consent  or  promise  to  forego  or  give  up  any  right  or  claim  to  wages  in 
the  case  of  freight  earned  by  a  sh-ip  subsequently  lost,  or  any  right  or 
claim  to  salvage  or  reward  for  salvage  services  or  such  proportion  of  sal- 
vage or  reward  for  salvage  services  as  shall  or  may  be  due  to  him  by 
decree  or  award,  or  otherwise,  shall  be  valid  or  binding  on  such  seaman ; 
and  eveiy  copy  of  an  agreement  so  certified  and  delivered  as  aforesaid 
shall,  in  all  cases,  be  received  and  taken  as  evidence  of  the  contents  of 
the  agreement  for  and  on  behalf  of  the  seaman ;  and  no  seaman  shall  in 
any  case  be  required  to  produce  such  agreement,  or  such  copy  as  afore- 
said, or  to  give  notice  for  the  production  thereof;  but  in  case  the  agree- 
ment shall  not  be  produced  and  proved,  he  shall  be  at  liberty  to  prove 
the  contents  or  purport  thereof,  or  to  establish  his  claim  by  other  evi- 
dence, according  to  the  nature  of  the  case." 

It  was  decided  under  the  former  acts  (c)  that,  thougli  an  agree- 
ment contrary  to  their  provisions  was  void,  yet  it  was  not  avoided 
in  consequence  of  its  containing  stipulations  in  addition  to  those 
given  in  the  act,  if  not  contrary  to  them  in  letter  or  spirit.  Indeed 
the  acts  themselves,  by  invalidating  certain  clauses  tending  to  de- 
prive the  seaman  of  advantages,  it  was  thought  impliedly  recog- 
nized the  power  of  introducing  others  not  having  a  tyrannical  or 
unreasonable  operation.  In  construing  all  contracts  made  by  sea- 
men, however,  the  courts  follow  out  the  politic  inclination  of  the 
Legislature  to  protect  and  favor  that  deserving  class  of  laborers. 
And  it  has  been  expressly  stated  in  the  Court  of  Admiralty  (c?) 
that  the  tribunal  will  bear  in  mind  the  general  ignorance  and  im- 
providence of  seamen,  and  their  inability  to  appreciate  the  meaning 
and  effect  of  a  long  and  multifarious  instrument.  The  master  will 
not  be  allowed  to  obtain  any  advantage  from  the  use  of  general  or 
ambiguous  terms,  such,  for  instance,  as  "to  New  South  Wales  or  else- 
wlierer  (e)  It  was  held,  under  the  former  acts,  that  where  a  written 
agreement  has  been  made,  it  was  the  only  evidence  of  the  contract, 
and  that  no  new  term  could  be  introduced  by  parol.  (/) 

c)  The  Minerva,  1  Hagg.  347.     The  George  Home,  ibid.  377,  ad  finem. 

(d)  1  Hagg.  347.     And  see  also  8  <&  9  Vict.  c.  116. 

(e)  The  Minerva,  ubi  supra.     The  George  Home,  tihi  supra.     The  Westmoreland, 
1  W.  Rob.  206.     The  EHza,  1  Hagg.  182.     The  Countess  of  Harcourt,  ibid.  248. 

(/)  Wliite  V.  "Wilson,  2  B.  <fe  P.  116.     The  Isabella,  2  Rob.  241.     Elswcrth  v 
Woolmore.    Abbott  on  Shipping,  616,  8th  ed. 


542  MERCANTILE  CONTRACTS. 

Duties  and  Rights  of  Seamen  under  the  Contract. 


Section  II. — Duties  and  Rights  of  Seamen  imder  the  Contract. 

The  first  duty  of  the  seamen  under  the  contract  is,  of  course,  to 
join  and  work  the  ship  on  board  of  which  he  has  engaged  to  serve,  {g) 
and  the  due  performance  of  his  contract  in  this  respect  is  enforced 
by  7  &  8  Vict.  c.  112,  sect.  6,  viz. : 

*'  That  in  case  a  seaman,  whether  before  the  commencement  or  during 
the  progress  of  any  voyage,  shall  at  any  time  neglect  or  refuse  to  join  the 
ship  on  board  of  which  he  shall  have  engaged  to  serve,  or  shall  refuse  to 
proceed  to  sea  in  such  ship,  or  shall  absent  himself  therefrom  without 
leave,  or  shall  desert,  it  shall  be  lawful  for  any  justice  of  the  peace  in  and 
for  any  of  her  Majesty's  dominions,  or  the  territories  under  the  govern- 
ment of  the  East  hidia  Company,  where  or  near  to  the  place  where  such 
ship  shall  happen  to  be,-  or  where  such  seaman  shall  be  found,  and  such 
justice  is  hereby  required,  upon  complaint  made  upon  oath  by  the  master, 
mate,  or  owner,  or  his  agent,  to  issue  his  warrant,  and  cause  such  seaman 
to  be  apprehended,  and  brought  before  him ;  and  in  case  such  seaman  shall 
not  give  reason  to  the  satisfaction  of  such  justice  for  his  neglect,  refusal,  or 
absence,  as  the  case  may  be,  or  in  case  of  desertion,  it  shall  be  lawful  for 
any  such  justice,  upon  due  proof  of  such  neglect,  refusal,  absence,  or  deser 
tion,  to  commit  such  seaman  to  prison  or  to  the  house  of  correction,  there 
to  be  imprisoned,  with  or  without  hard  labor,  at  the  discretion  of  such 
justice,  for  a  period  not  exceeding  thirty  days ;  or  it  shall  be  lawful  for 
the  said  justice,  if  he  shall  so  think  fit,  at  the  request  of  the  master,  mate, 
or  owner,  or  his  agent,  instead  of  committing  such  seaman,  to  cause  him 
to  be  conveyed  on  board  the  ship,  or  to  be  delivered  to  the  master,  mate, 
or  owner,  or  his  agent,  for  the  purpose  of  being  so  conveyed  and  proceed- 
ing on  the  voyage,  and  also  to  award  to  the  master  or  owner  such  costs 
incurred  in  the  apprehension  of  the  seaman  as  to  such  justice  shall  seem 
reasonable,  not  exceeding  in  any  case  the  sum  of  forty  shillings,  which 
shall  be  chargeable  against  and  may  be  deducted  from  the  wages  of  such 
seaman  ;  and  whenever  any  seaman  shall  be  committed  to  prison  or  to 
any  house  of  correction,  the  justice  shall  cause  his  register  ticket  to  be  de- 
livered to  the  governor  or  keeper  of  such  prison  or  house  of  correction, 
who  shall  retain  the  same  during  the  period  of  the  seaman's  imprisonment, 
and  at  the  expiration  of  such  period  shall  return  the  register  ticket  to  the 

{g)  Sec  Kenno  v.  Bennett,  3  Q.  B.  168. 


COXTRACTS  WITH  SEAMEN.  543 

Duties  and  Rights  of  Seameu  under  the  Contract. 

seaman  ;  and  whenever  a  seaman  shall  be  sentenced  to  death  or  transpor- 
tation, the  officer  having  the  custody  of  such  seaman  shall  transmit  his  re- 
gister ticket  to  the  registrar  of  seamen." 

The  next  duty  of  a  seaman  under  tliis  contract  is  to  exert  him- 
self to  the  utmost  in  the  service  of  the  ship ;  and  therefore  any  prom- 
ise of  extra  pay  as  an  inducement  to  extraordinary  exertion,  is 
nudum  pactum^  and  void,  (/i)  On  the  other  hand,  he  will  have  a 
right  to  liis  full  wages,  although  prevented,  by  a  hurt  received  in 
the  performance  of  his  duty,  or  by  sickness,  from  performing  his 
service;  {i)  and  if  he  remain  with  the  ship,  he  has  a  right  to  wages, 
during  an  embargo,  provided  that  she  afterwards  perform  her  voy- 
age, and  earn  freight,  (y)  And  7  &  8  Yict.  c.  112,  sect.  49,  con- 
tains a  provision  for  the  payment  of  wages  due  to  seamen  left  be- 
hind under  a  certificate  of  their  not  being  in  a  condition  to  proqeed 
on  the  voyage.  A  seaman  entering  or  impressed  into  the  King's 
service,  does  not  forfeit  the  wages  or  prize  money  which  he  had 
previously  earned,  or  incur  any  other  forfeiture  whatever,  but  will 
have  a  right  to  a  rateable  portion  of  wages  up  to  the  time  of  quit- 
ting the  merchant  vessel,  which  right  is  liable  to  be  defeated,  in  the 
same  way  as  if  he  had  remained  on  board,  ex.  gr.  by  capture.  (Jc)  It 
appears  also,  that  if  he  die  during  his  voyage,  his  representatives 
may  claim  pro  rata.  (T) 

With  respect  to  the  time  for  the  payment  of  the  wages,  (m)  it  is 
enacted,  by  stat.  7  &  8  Vict.  c.  112,  sect.  11,  as  follows: 

"  That  the  master  or  owner  of  every  ship  shall  and  is  hereby  required 
to  pay  to  every  seaman  his  wages  within  the  respective  periods  following ; 
(that  is  to  say,)  if  the  ship  shall  be  emploj'^ed  in  coasting,  the  wages  shall 

{h)  Harris  v.  "Watson,  Peake,  72.  Stilk  v.  Myrick,  2  Camp.  31*7.  See  Tliompson 
».  Havelock,  1  Camp.  527.     But  see  Clutterbuek  v.  Coffin,  3  M.  &  Gr.  842. 

(i)  Abbott,  619,  8th  ed.     Chandler  v.  Grieves,  2  H.  Bl.  606,  n.  a. 

{j )  Beale  v.  Thompson,  3  B.  <fe  B.  405 ;  4  East,  546.  Johnson  v.  Broderick,  4  East, 
566. 

(/-•)  "Wiggins  V.  Ingleton,  2  Lord  Raj-m.  1211.  Clements  v.  Mayborn,  Abbott,  621, 
8th  ed.     Paul  v.  Eden,  ibid.     Anon.  2  Camp.  320,  n.     Stat.  5  »&  6  "Wm.  4,  c.  19,  s.  40. 

(0  Armstrong  v.  Smith,  1  N.  R.  299.     Cutter  v.  Powell,  6  T.  R.  320. 

(?h)  The  statute  8  &  9  Viet.  c.  116,  s.  7,  prohibits  any  advance  of  wages  until  the 
ship's  articles  have  been  signed,  and  then  only  in  money  until  they  have  been  signed 
on  board  six  hours.  Every  payment  must  be  to  the  seaman  himself,  and  paymenta 
contrary  to  the  Act  are  void. 


544  MERCANTILE  CONTRACTS. 

Duties  and  Rights  of  Seamea  under  the  Contract. 

be  paid  within  two  days  after  the  termination  of  the  agreement,  or  at  the 
time  when  any  such  seaman  shall  be  discharged,  whichever  shall  first 
happen ;  and  if  the  ship  shall  be  employed  otherwise  than  coasting,  then 
the  wages  shall  be  paid  at  the  latest  within  three  days  after  the  cargo  shall 
have  been  delivered,  or  within  seven  days  after  the  seaman's  discharge, 
whichever  shall  first  ha'ppen  ;  and  in  all  cases  the  seaman  shall,  at  the  time 
of  his  discharge,  be  entitled  to  be  paid,  on  account,  a  sum  equal  to  one- 
fourth  part  of  the  balance  due  to  him  :  and  in  case  the  master  or  owner 
shall  neglect  or  refuse  to  make  payment  in  manner  aforesaid,  he  shall  for 
every  such  neglect  or  refusal  forfeit  and  pay  to  the  seaman  the  amount  of 
two  days'  pay  (to  be  recovered  as  wages)  for  each  day,  not  exceeding  ten 
days,  during  which  payment  shall,  without  sufficient  cause,  be  delayed  be- 
yond the  respective  periods  aforesaid :  provided  always,  that  nothing  in 
this  clause  contained  shall  extend  to  the  cases  of  ships  employed  in  the 
Southern  Whale  Fishery,  or  on  voyages  for  which  seamen,  by  the  terms 
of  their  agreement,  are  wholly  compensated  by  shares  in  the  profits  of  the 
adventure." 

By  sect.  12, 

"  That  every  such  payment  of  wages  to  a  seaman  shall  be  valid  and 
effectual  in  law,  notwithstanding  any  bill  of  sale  or  assignment  which  may 
have  been  of  such  wages,  or  of  any  attachment  or  incumbrance  thereon, 
and  that  no  assignment  or  sale  of  wages  or  salvage  made  prior  to  the 
accruing  thereof,  nor  any  power  of  attorney  expressed  to  be  irrevocable 
for  the  receipt  of  any  such  wages  or  salvage,  shall  be  valid  or  binding  upon 
the  party  making  the  same,  and  any  attachment  to  be  issued  from  any 
court  whatever  shall  not  prevent  the  payment  of  wages  to  any  seaman ; 
and  if  during  the  voyage  the  allowance  of  provisions  which  a  seaman 
agreed  to  receive  shall  be  reduced  one-third  of  the  quantity  or  less,  he 
shall  receive  four  pence  per  day,  and  if  the  reduction  be  more  than  one- 
third,  he  shall  receive  eight  pence  per  day,  during  the  period  such  respec- 
tive deductions  may  be  made,  and  such  pecuniary  allowance  shall  be  made 
to  liim  in  addition  to,  and  be  recoverable  as  wages." 

The  following  section,  7  &  8  Vict.  c.  112,  sect.  51,  applies  to 
the  case  of  a  seaman  quitting  a  merchant  ship  and  entering  the 
King's  service  : 

"  That  when  any  seaman  shall  quit  any  such  ship  or  vessel  as  afore- 
said, in  order  to  enter  into  her  Majesty's  naval  service,  and  shall  thereupon 
be  actually  received  into  such  service,  not  having  previously  committed 


CONTRACTS  WITH  SEAilEN.  545 

Duties  and  Rights  of  Seamen  under  the  Contract. 

any  act  amounting  to  and  treated  by  the  master  as  desertion,  he  shall  be 
entitled,  immediately  upon  such  entry,  to  have  his  register  ticket  and  all 
his  clothes  and  effects  on  board  such  ship  or  vessel  delivered  to  him,  and 
to  receive  from  the  master  the  proportionate  amount  of  his  wages  up  to 
the  period  of  such  entry,  to  be  paid  either  in  money  or  by  a  bill  on  the 
owner ;  all  which  register  ticket,  clothes,  effects,  money,  or  bill,  such 
master  is  hereby  required  to  deliver  and  pay  to  him  accordingly,  under  a 
penalty  of  twenty  pounds  for  any  refusal  or  neglect,  to  be  recovered  with 
full  costs  of  suit  by  such  seaman  ;  but  in  case  the  master  shall  have  no 
means  of  ascertaining  the  balance,  he  shall  make  out  and  deliver  to  such 
seaman  a  certificate  of  the  period  of  his  service,  and  the  rate  of  wages  he 
is  entitled  to,  producing  at  the  same  time  tc  the  commanding  or  other 
officer  of  her  Majesty's  vessel  the  agreement  with  the  seaman  ;  and  every 
such  master,  upon  the  delivery  of  such  register  ticket,  clothes,  and  effects, 
and  the  settlement  of  such  wages  in  manner  herein  mentioned,  shall  re- 
ceive from  the  officer  in  command  of  the  vessel  into  which  the  seaman 
shall  have  entered  a  certificate  of  such  entry,  indorsed  on  the  agreement, 
and  signed  by  the  said  officer,  which  such  officer  is  hereby  required  to 
give." 

Tlie  owner  or  master  is  bound  during  the  voyage  to  keep  a 
proper  supply  of  medicine,  suitable  to  the  accidents  and  disease3 
likely  to  occur  during  the  voyage,  and,  in  certain  cases,  to  provide 
a  surgeon. 

The  enactment  (?^)  is  as  follows : 

"  That  every  ship  navigating  between  the  United  Kingdom  and  any 
place  out  of  the  same,  shall  have  and  keep  constantly  on  board  a  sufficient 
supply  of  medicines  and  medicaments  suitable  to  accidents  and  diseases 
arising  on  sea  voyages,  in  accordance  with  the  scale  which  shall  from  time 
to  time,  or  at  any  time,  be  issued  by  the  lord  high  admiral,  or  by  the  com- 
missioners for  executing  the  office  of  lord  high  admiral,  and  published  in 
the  London  Gazette;  and  every  ship  (except  those  bound  to  European 
ports  or  to  ports  in  the  Mediterranean  Sea)  shall  also  have  on  board  a 
sufficient  quantity  of  lime  or  lemon  juice,  sugar,  and  vinegar,  the  lime  or 
lemon  juice,  sugar,  and  vinegar  to  be  served  out  to  the  crew,  whenever 
they  shall  have  been  consuming  salt  provisions  for  ten  days  ;  the  lime  or 
lemon  juice  and  sugar  daily,  after  the  rate  of  half  an  ounce  each  per  day, 
and  the  vinegar  weekly,  at  the  rate  of  half  a  pint  per  week,  to  each  per* 

in)  1  <fe8  Vict.  c.  112,  8,  18. 
35 


546  MERCANTILE  CONTRACTS. 

Duties  and  Rights  of  Seamen  under  the  Contract. 

son,  SO  long  as  the  consumption  of  salt  provisions  De  continued  ;  and  in 
case  any  default  shall  be  made  in  providing  and  keeping  such  medicineS; 
medicaments,  and  lime  or  lemon  juice,  sugar,  and  vinegar,  the  owner  of 
the  ship  shall  incur  a  penalty  of  twenty  pounds  for  each  and  every  default ; 
and  in  case  of  default  of  serving  out  such  lime  or  lemon  juice,  sugar,  or 
vinegar  as  aforesaid,  the  master  shall  incur  a  penalty  of  five  pounds  for 
each  and  every  default ;  and  in  case  the  master  or  any  seaman  shall  re- 
ceive any  hurt  or  injury  in  the  service  of  the  ship,  the  expense  of  providing 
the  necessary  surgical  and  medical  advice,  with  attendance  and  medicines, 
and  for  his  subsistence  until  he  shall  have  been  cured,  or  shall  have  been 
brought  back  to  some  port  of  the  United  Kingdom,  shall,  together  with  the 
costs  of  his  conveyance  to  the  United  Kingdom,  be  defrayed  by  the  said 
owner  of  the  ship  without  any  deduction  whatever  on  that  account  from 
the  wages  of  such  master  or  seaman  ;  and,  if  paid  by  any  officer  or  other 
person  on  behalf  of  her  Majesty,  the  amount  with  full  costs  of  suit  shall 
be  recovered  as  a  debt  due  to  her  Majesty  ;  and  every  ship  having  one 
hundred  persons  or  upwards  on  board,  and  every  ship  the  voyage  of  which 
shall  be  deemed,  under  the  provisions  of  the  act  passed  in  the  sixth  year 
of  the  reign  of  her  present  Majesty,  intituled  '  An  act  for  regulating  the 
carriage  of  passengers  in  merchant  vessels,'  to  exceed  twelve  weeks,  hav- 
ing fifty  persons  or  upwards  on  board,  shall  have  on  board,  as  one  of  her 
complement,  some  person  duly  authorized  by  law  to  practise  in  this  king- 
dom as  a  physician,  surgeon,  or  apothecary  ;  (o)  and  in  case  of  every  de- 
fault, the  owner  shall  incur  a  penalty  not  exceeding  one  hundred  pounds." 

On  his  discharge,  the  seaman  is,  by  7  &  8  Yict,  c.  112,  s.  13, 
entitled  to  a  certificate,  specifying  the  period  of  service,  and  time 
and  place  of  discharge,  and  the  master's  refusal  to  give  it,  if  with- 
out reasonable  cause,  subjects  him  to  a  penalty  of  61.  And,  if  the 
ship  be  sold  at  a  foreign  port,  the  seamen  are,  by  sect.  17,  entitled 
either  to  be  provided  with  employment  in  a  British  vessel  home- 
ward bound,  or  to  be  provided  by  the  master  with  a  passage  and 
subsistence  home,  or  else  to  have  a  sufficient  sum  for  that  purpose 
deposited  with  the  British  Consul. 

To  prevent  the  improper  leaving  of  seamen  behind,  or  forcing 
them  on  shore,  the  same  statute  enacts  as  follows:  (i?) 

(o)  This  provision  as  to  carrying  a  medical  man  is  repealed  as  to  ships  carrying 
passengers  to  the  east  coast  of  North  America,  by  stat.  8  tfe  9  Vict.  o.  14. 
(p)  Sects.  46,  47,  48. 


CONTRACTS  WITH  SEAMEN. 


547 


Duties  and  Rights  of  Seamen  under  the  Contract. 


"  And  whereas  great  mischiefs  have  arisen  from  masters  of  merchant 
ships  leaving  seamen  in  foreign  parts,  who  have  been  thus  reduced  to  dis- 
tress,  and  thereby  tempted  to  become  pirates  or  otherwise  misconduct 
themselves,  and  it  is  expedient  to  amend  and  enlarge  the  law  in  this  be- 
half; be  it  therefore  enacted,  That  if  any  master  of  a  ship  belonging  to 
any  subject  of  her  Majesty  shall  discharge  any  person  belonging  to  his 
ship  or  crew  at  any  of  her  Majesty's  colonies  or  plantations,  without  the 
previous  sanction  in  writing  (to  be  indorsed  on  the  agreement)  of  the 
governor  or  other  officer  holding  the  chief  authority  there,  or  of  the  secre- 
tary or  other  officer  duly  appointed  by  the  government  there  in  that  be- 
half, or  in  the  absence  of  such  functionaries,  then  of  the  chief  officer  of 
customs  resident  at  or  near  such  port  or  place,  or  shall  discharge  any  such 
person  at  any  other  place  abroad  without  the  like  previous  sanction,  to  be 
so  indorsed  on  the  agreement  by  her  Majesty's  minister,  consul,  or  vice 
consul  there,  or  in  the  absence  of  any  such  functionary,  then  of  two  re- 
spectable merchants  resident  there,  such  master  shall  be  guilty  of  a  misde- 
meanor ;  or  if  any  master  of  any  such  ship  shall  abandon  or  leave  behind 
at  any  such  colony  or  plantation  any  person  belonging  to  his  ship  or  crew, 
on  the  plea  or  pretence  of  unfitness  or  inability  to  proceed  ui^on  the  voy- 
age, or  of  desertion  or  disappearance  from  the  ship,  without  a  previous  cer- 
tificate in  writing  (to  be  indorsed  on  the  agreement)  of  the  governor,  sec- 
retary, or  other  officer  as  aforesaid,  or  in  the  absence  of  such  functionary, 
then  of  the  chief  officer  of  customs  resident  at  or  near  such  port  or  place, 
certifying  such  unfitness,  inability,  desertion,  or  disappearance,  or  shall 
abandon  or  leave  behind  any  person  belonging  to  his  ship  or  crew  at  any 
other  place  abroad,  on  shore  or  at  sea,  upon  such  plea  or  pretence,  with- 
out the  like  previous  certificate  of  her  Majesty's  minister,  consul,  or  vice 
consul  there,  or  in  the  absence  of  any  such  functionary,  then  of  two  respect- 
able merchants,  if  there  be  any  such  at  or  within  a  reasonable  distance 
from  the  place  where  the  ship  shall  then  be,  such  master  shall  be  guilty 
of  a  misdemeanor  ;  or  if  any  master  of  any  such  ship,  in  case  any  person 
belonging  to  his  ship  or  crew  shall  desert  from  the  said  ship  at  any  place 
abroad,  shall  neglect  to  notify  the  same  in  writing  to  one  of  such  function- 
aries as  aforesaid,  if  there  be  any  such  resident  at  or  near  the  place,  and 
in  their  absence,  if  it  be  out  of  her  Majesty's  dominions,  then  to  two  re- 
spectable merchants,  if  there  be  such  at  or  near  the  place,  within  twenty- 
four  hours  of  such  desertion,  such  master  shall  be  guilty  of  a  misdemeanor  ; 
and  the  said  functionaries  are  hereby  authorized  and  required,  and  the  said 
merchants  are  authorized,  to  examine  into  the  grounds  of  such  proposed 
discharge,  or  into  the  plea  or  pretence  of  such  unfitness,  inability,  deser 


548  MERCANTILE  CONTRACTS. 

"Wages,  how  Lost  or  Forfeited. 

tion,  or  disappearance  as  aforesaid,  in  a  summary  way,  upon  oath  (which 
oath  they  are  respectively  authorized  to  administer),  and  to  grant  or  re- 
fuse such  sanction  or  certificate  according  to  the  circumstances,  and  as  it 
shall  appear  to  them  to  be  just. 

"  And  be  it  enacted,  That  if  the  master  of  any  ship  belonging  to  any 
of  her  Majesty's  subjects,  or  the  mate  or  other  officer  of  such  ship,  shall 
wrongfully  force  on  shore  and  leave  behind,  or  shall  otherwise  wilfully 
and  wrongfully  leave  behind  on  shore,  or  at  sea,  in  or  out  of  her  Majesty's 
dominions,  any  person  belonging  to  his  ship  or  crew,  before  the  comple- 
tion of  the  voyage  for  which  such  person  was  engaged,  or  the  return  of 
the  ship  to  the  United  Kingdom,  such  master,  mate,  or  other  officer,  shall 
be  guilty  of  a  misdemeanor ;  and  every  misdemeanor  mentioned  or  cre- 
ated by  this  act  shall  and  may  be  prosecuted  by  information  at  the  suit 
of  her  Majesty's  attorney  general,  or  by  indictment  or  other  legal  pro- 
ceeding in  any  court  having  criminal  jurisdiction  in  her  Majesty's  domin- 
ions at  home  or  abroad ;  and  the  offence  may  be  laid  and  charged  in  the 
said  information,  indictment,  or  other  legal  proceeding,  to  have  been  com- 
mitted in  the  county  or  place  where  the  offender  shall  happen  to  be,  who, 
being  convicted  thereof,  shall  be  liable  to  fine  or  imprisonment,  or  both, 
as  to  the  court  before  whom  he  is  tried  shall  seem  meet :  and  every  court 
is  hereby  authorized  to  issue  a  commission  or  commissions  for  the  exami- 
nation of  any  witness  or  witnesses  who  may  be  absent  or  out  of  the 
jurisdiction  of  the  court ;  and  at  the  trial,  the  depositions  taken  under 
such  commission  or  commissions,  if  such  witness  or  witnesses  shall  be 
then  absent,  shall  be  received  in  evidence. 

"  And  be  it  enacted.  That  if  any  master  shall,  contrary  to  the  provi- 
sions of  this  act,  discharge,  abandon,  or  leave  behind  any  seaman  or  other 
person  belonging  to  the  ship  or  crew,  with  or  without  his  consent,  it  shall 
be  incumbent  on  such  master,  in  any  information,  indictment,  or  other 
proceeding  against  him,  to  produce  or  prove  such  sanction  or  respective 
certificate  as  aforesaid,  or  prove  the  impracticability  of  obtaining  such 
certificate." 

Section"  III. —  Wages,  hoiu  lost  or  forfeited. 

The  wages  of  seamen,  whether  hired  by  the  voyage  or  the 
month,  are  sometimes  lost,  and  sometimes  forfeited.  Freight  is  said 
Lo  be  the  mother  of  loages  ;  {q)  and  if,  during  the  voyage,  a  total  loss 
or  capture  of  the  ship  take  place,  the  seamen,  except  when  stat. 

(y)  There  are  some  exceptions  to  this  doctrine.    See  The  Neptune,  1  Hagg.  227. 


CONTRACTS  WITH  SEAMEN.  54& 

Wages,  how  Lost  or  Forfeited. 

7  &  8  Yict,  c.  112,  s.  18,  protects  them,  lose  their  wages.  (?■)  But 
if  there  be  an  outward  and  a  homeward  voyage,  they  will  be  enti- 
tled to  wages  for  the  former,  if  the  ship  were  lost  durmg  the  hatter; 
unless  the  two  were  by  agreement  consolidated  into  one ;  (.s)  for 
then  no  freight  would  have  been  earned.  So  if  there  be  several 
cargoes  and  several  voyages,  they  have  a  right  to  wages  up  to  the 
conclusion  of  the  last.  If  the  ship  go  out  empty  to  look  for  freight 
and  return  without  procuring  any,  the  seamen  are  entitled  to  their 
wages,  (i)  And,  if  money  have  been  advanced  to  the  owner  in 
part  of  freight,  they  have  a  right  to  wages  j^^o  rata  out  of  that, 
although  the  vessel  have  been  wrecked  before  the  termination  of 
the  voyage,  {u)  If,  in  case  of  a  wreck,  the  cargo  be  saved,  and  the 
merchant  pay  part  of  the  freight  in  respect  thereof,  the  seamen 
seem  both  on  principle  and  authority  entitled  to  part  of  their 
wages,  (f)  Indeed  it  was  before  the  late  statute  questioned  whether 
their  right  to  this  part  could  be  prevented  from  accruing  by  an 
express  stipulation  in  the  contract  of  hiring,  and,  though  it  was  at 
last  settled  that  in  a  court  of  common  law  at  least  it  might  be 
so,  (w)  yet  the  late  statute  expressly  invalidates  any  clause  or  stipu- 
lation of  that  nature,  (a;)*  And  it  was  held,  where  by  great  labor 
they  had  saved  part  of  the  ship,  that  they  were  entitled  to  wages 
out  of  the  produce,  {y)  But  it  is  said,  that  if  the  ship  were  not 
seaworthy,  and  the  voyage  discontinued  on  that  account,  the  sea- 
men's remedy  is  not  for  wages,  but  by  a  special  action  for  the 


(r)  Abbott,  619,  8th  ed.  Appleby  v.  Dods,  8  East,  300.  Abernethy  v.  Landale, 
Dougl.  539;  1  Sid.  179.     Ilernaman  v.  Bawden.  3  Burr.  1844. 

(s)  Anon.,  1  Ld.  Raym.  639 ;  12  Mod.  408  ;  2  Magens,  113.  See  Appleby  v.  Dods, 
8  East,  300.  Jesse  v.  Roy,  4  Tyrwh.  626;  1  C.  M.  &  R.  316.  The  Juliana,  2  Doda. 
604. 

(t)  The  Neptune,  Clarke,  A.  R.  22Y;  Abb.  485. 

(m)  Anon.,  2  Shower,  283.     See  Saunders  v.  Drew,  3  B.  &  Ad.  445. 

(y)  Abbott,  631,  8th  ed. 

(w)  Jesse  V.  Roy,  4  Tyrwh.  626;  1  C.  M.  &  R.  316.  See  The  Juliana,  2  Dods. 
504. 

(x)  1  &  8  Vict.  c.  112,  s.  5. 

(y)  The  Neptune,  1  Hagg.  227.     The  Reliance,  2  W.  Rob.  120. 

*  As  to  the  genei-al  effeet  of  stipulations  in  shipping  articles  upon  the  wages  of 
seamen,  see  opinion  of  J.  Story  in  Brown  v.  Lull,  2  Sumn.  444. 


550  MERCANTILE  CONTRACTS. 

Wages,  how  Lost  or  Forfeited. 

breach  of  contract,  (z)  They  seem  entitled  to  their  wages,  subject, 
perhaps,  to  a  deduction  for  salvage,  in  case  of  capture  and  recap- 
ture, (a) 

The  statute  7  &  8  Yict.  c.  112,  s.  17,  enacts,  that,  in  all  cases 
of  wreck  or  loss  of  the  ship,  every  surviving  seaman  shall  be  en- 
titled to  his  wages  up  to  the  period  of  the  wreck  or  loss  of  the 
ship,  whether  such  ship  shall  or  shall  not  have  previously  earned 
freight,  provided  the  seaman  shall  produce  a  certificate  from  the 
master  or  chief  surviving  ofl&cer  of  the  ship,  that  he  had  exerted 
himself  to  the  utmost  to  save  the  ship,  stores,  and  cargo. 

According  to  the  doctrine  of  the  common  law,  [h)  which  has 
been  affirmed  and  extended  by  many  enactments  of  the  Legisla- 
ture, (c)  desertion  from  the  ship  forfeits  the  seaman's  wages.  The 
statutory  provision  now  in  force  upon  this  subject  is  7  &  8  Vict.  c. 
112,  s.  9,  which  enacts  as  follows : 

"  That  any  seaman  or  other  person  who  shall  desert  the  ship  to  which 
he  shall  belong  shall  forfeit  to  the  owner  thereof  all  his  clothes  and  effects 
which  he  may  leave  on  board,  and  he  shall  also  forfeit  all  wages  and 
emoluments  to  which  he  might  otherwise  be  entitled  ;  and  in  case  of  any 
seaman  deserting  abroad  he  shall  likewise  forfeit  all  wages  and  emolu- 
ments whatever  which  shall  be  or  become  due,  or  be  agreed  to  be  paid  to 
him  from  or  by  the  owner  or  master  of  any  other  ship  in  the  service 
whereof  such  seaman  may  have  engaged  for  the  voyage  back  to  the  United 
Kingdom  ;  and  that  all  wages  and  portions  of  wages  and  emoluments 
which  shall  in  any  case  whatever  become  forfeited  for  desertion  shall  be 
applied,  in  the  first  instance,  in  or  towards  the  reimbursement  of  the  ex- 

(z)  Eaken  v.  Thorn.  5  Esp.  6. 

(a)  Bergstrom  v.  Mills,  3  Esp.  36.  Sed  vide  Chandler  v.  Meade,  cited  2  Ld.  Raym. 
1211.     See  The  Friends,  4  Rob.  143.     And  Beale  v.  Thompson,  4  East,  546. 

(b)  The  Baltic  Merchant,  1  Edw.  86 ;  Molloj^  b.  2,  c.  3,  s.  10.  Bulmer,  1  Hagg.. 
163.  See  The  Eliza,  ibid.  182.  Countess  of  Harcourt,  ibid.  248.  The  Pearl,  5  Rob. 
224.  Neave  v.  Pratt,  2  N.  R.  408.  As  to  -what  constitutes  a  desertion,  see  the  West- 
moreland, 1  W.  Rob.  206. 

(c)  11  &  12  Wm.  3,  c.  1,  s.  IT ;  2  Geo.  2,  c.  36,  s.  3,  made  perpetual  by  2  Geo.  3, 
c.  31 ;  31  Geo.  3,  c.  39,  ss.  3,  4,  relating  to  the  coasting  trade.  37  Geo.  3,  c.  73,  s. 
1,  relating  to  West  India  Traders.  4  Geo.  4,  c.  25,  s.  9.  These  acts  -were  repealed 
by  the  5  &  6  Wm.  4,  c.  19,  and  are  only  mentioned  historicallj'.  The  application  of 
the  common  law  as  to  desertion  is  not  excluded  by  them.  The  Westmoreland,  1  W 
Rob.  206.     The  Two  Sisters,  2  W.  Rob.  125. 


CONTRACTS  WITH  SEAMEX.  551 

Wages,  how  Lost  or  Forfeited. 

pensGs  occasioned  by  such  desertion  to  the  owner  or  master  of  the  ship 
from  which  the  seaman  shall  have  deserted,  and  the  remainder  shall  be 
paid  to  the  Seaman's  Hospital  Society ;  and  the  master  shall,  in  case  of 
desertion  in  the  United  Kingdom,  deliver  up  the  register  ticket  of  such 
seaman  or  other  person  to  the  collector  or  comptroller  of  the  customs  at 
the  port :  provided  always,  that  every  desertion  be  entered  in  the  log 
book  at  the  time,  (d)  and  certified  by  the  signatures  of  the  master  and 
the  mate,  or  the  master  and  one  other  credible  witness  ;  and  that  the  ab 
sence  of  a  seaman  from  his  ship  for  any  time  within  twenty-four  hours 
immediately  preceding  the  sailing  of  the  ship  from  any  port,  whether 
before  the  commencement  or  during  the  progress  of  any  voyage,  wilfully 
and  knowingly,  without  permission,  or  the  wilful  absence  of  a  seaman 
from  his  ship  at  or  for  any  time  without  permission,  and  under  circum- 
stances showing  an  intention  to  abandon  the  same,  and  not  return  thereto, 
shall  be  deemed  a  desertion  of  and  from  the  same  ship;  and  in  case  any 
seaman  shall  desert  in  parts  beyond  the  seas,  and  the  master  of  the  ship 
shall  engage  a  substitute  at  a  higher  rate  of  wages  than  that  stipulated  in 
the  agreement  to  be  paid  to  the  seaman  so  deserting,  the  owner  or  master 
of  the  ship  shall  be  entitled  to  recover  from  the  deserter,  by  summary 
proceeding,  in  the  same  manner  as  penalties  are  by  this  act  made  recov- 
erable, (so  flir  as  the  name  can  be  applied.)  any  excess  of  wages  or  portion 
thereof,  which  such  owner  or  master  shall  pay  to  such  substitute  beyond 
the  amount  which  would  have  been  payable  to  the  deserter  in  case  he  had 
duly  performed  his  service  pursuant  to  his  agreement:  provided  always, 
that  no  seaman  shall  be  imprisoned  longer  than  three  calendar  months  for 
nonpayment  of  any  such  excess  of  wages." 

A  forfeiture  of  wages  may,  of  course,  be  waived  by  the  party 
entitled  to  take  advantage  of  it.  (e)  It  was  held,  before  the  late 
act,  that  quitting  the  ship  with  leave  of  the  master,  and  refusing 
to  return  when  ordered,  is  desertion ;  (/)  but,  quitting  the  ship, 
and  refusing  to  proceed  on  a  voyage  not  designated  by  the  articles, 
is  not  so]{g)  nor  is  a  man  a  deserter  who  has  been  compelled  to 
quit  the  ship  by  inhuman  treatment,  or  by  want  of  provisions,  (h) 

{d)  As  to  the  necessity  for  this,  in  order  to  -work  a  forfeiture  of  wages,  see  The 
Two  Sisters,  ubi  sup. 

(e)  Miller  v.  Brant,  2  Camp.  690. 

(/)  The  Bulmer,  1  Hagg.  163.    The  Pearl.  5  Rob.  224. 

{g)  The  Eliza,  1  Hagg.  182.     The  Countess  of  Harcourt,  ibid.  168. 

{h)  The  Castile,  1  Hagg.  59. 


552  MERCANTILE  CONTRACTS. 

"Wages,  how  Lost  or  Forfeited. 

or  dismissed  without  lawful  cause,  (i)  So  merely  quitting  the  ship 
without  leave  and  going  on  shore  for  a  temporary  purpose,  e.  g.  to 
obtain  legal  advice  as  to  the  effect  of  the  articles,  does  not  consti- 
tute desertion,  {j)  The  5  &  6  Wm.  4,  c.  19,  s.  9,  enacted  that  an 
absence  from  the  ship  for  any  time  within  the  space  of  twenty-four 
hours  immediately  preceding  her  sailing,  Avithout  permission  from 
the  master,  or  for  any  period,  however  short,  under  circumstances 
plainly  showing  that  it  was  not  his  intention  to  return,  should  be 
deemed  an  absolute  desertion.  But  this  section  was  held  not  to 
apply  to  a  desertion  after  the  ship's  arrival  at  her  port  of  discharge, 
that  case  being  provided  for  by  section  7.  (Ic) 

Tem'porary  alsence  from  duty  without  leave  and  wilful,  after  the 
ship  has  left  her  first  port  of  clearance,  is  by  the  same  act  (7  &  8 
Vict.  c.  112,  ss.  7,  8,)  punished  as  follows : 

"  And  be  it  enacted,  That  if  any  seaman  during  the  time  or  period 
specified  for  his  service  shall  wilfully  and  without  leave  absent  himself 
from  the  ship,  or  otherwise  from  his  duty,  he  shall  (in  all  cases  not  of  de- 
sertion, or  not  treated  as  such  by  the  master)  forfeit  out  of  his  wages  the 
amount  of  two  days'  pay,  and  for  every  twenty -four  hours  of  such  absence 
the  amount  of  six  days'  pay,  oi*,  at  the  option  of  the  master,  the  amount 
of  such  expenses  as  shall  have  been  necessarily  incurred  in  hiring  a  substi- 
tute ;  and  in  case  any  seaman  while  he  shall  belong  to  the  ship  shall  with- 
out sufficient  cause  neglect  or  refuse  to  perform  such  his  duty  as  shall  be 
reasonably  required  of  him  by  the  master  or  other  person  in  command  of 
the  ship,  he  shall  be  subject  to  a  like  forfeiture  in  respect  of  every  such 
offence,  and  of  every  twenty-four  hours'  continuance  thereof;  and  in  case 
any  such  seaman,  after  the  ship's  arrival  at  her  port  of  delivery,  and  be- 
fore her  cargo  shall  be  discharged,  shall  quit  the  ship,  without  a  previous 
discharge  or  leave  from  the  master,  he  shall  forfeit  one  month's  pay  out 
of  his  wages:  provided  always,  that  no  such  forfeiture  shall  be  incurred 
unless  the  fact  of  the  seaman's  absence,  neglect,  or  refusal  shall  be  duly 
entered  in  the  ship's  log  book,  the  truth  of  which  entry  it  shall  be  incum- 
bent on  the  owner  or  master,  in  all  cases  of  dispute,  to  substantiate  by  the 
evidence  of  the  mate  or  some  other  credible  witness. 

"  And  be  it  enacted,  That  in  all  cases  where  the  seaman  shall  have  con- 

(i)  Limland  v.  Stevens,  3  Esp.  2G9.     Sigard  v.  Roberts,  3  Esp.  '72. 
{j)  The  Westmoreland,  1  W.  Rob.  216. 
\k)  M'Donald  v.  Jopling,  4  M.  &  W.  285. 


CONTRACTS  WITH  SEAMEX.  553 

Remedies  of  SoMman  for  his  Wages. 

tracted  for  wages  by  the  voyage,  or  by  the  run,  or  by  the  share,  and  not  by 
the  month  or  other  stated  period  of  time,  the  amount  of  forfeitures  to  be 
incurred  by  seamen  under  this  act  shall  be  ascertained  in  manner  follow- 
ing :  (that  is  to  say,)  if  the  whole  time  spent  in  the  voyage  agreed  upon 
shall  exceed  one  calendar  month,  the  forfeiture  of  one  month's  pay  ex- 
pressed in  this  act  shall  be  accounted  and  taken  to  be  a  forfeiture  of  a  sum 
of  money  bearing  the  same  proportion  to  the  whole  wages  or  share  as  a  cal- 
endar month  shall  bear  to  the  whole  time  spent  in  the  voyage  ;  and  in  like 
manner  a  forfeiture  of  six  days'  pay,  or  less,  shall  be  accounted  and  taken, 
to  be  a  forfeiture  of  a  sum  bearing  the  same  proportion  to  the  whole  wages 
or  share  as  the  six  days  or  other  period  shall  bear  to  the  whole  time  spent 
in  the  voyage ;  and  if  the  whole  time  spent  in  the  voyage  shall  not  exceed 
the  period  for  which  the  pay  is  forfeited,  the  forfeiture  shall  be  accounted 
and  taken  to  be  a  forfeiture  of  the  whole  wages  or  share ;  and  the  master 
or  owner  is  hereby  authorized  to  deduct  the  amount  of  all  forfeitures  out 
of  the  wages  or  share  of  any  seaman  incurring  the  same."(^) 

Neglect  or  refusal  to  assist  the  master  in  his  defence  against 
pirates,  forfeits  the  wages;  {m)  and  so,  it  seems,  does  a  justifiable 
discharge  for  gross  misconduct,  (n)  And  if  the  cargo  be  embezzled 
or  injured  bj  the  fraud  or  negligence  of  the  seamen,  the  owner  has 
a  right  (as  the  agreement  given  in  the  schedule  to  the  act  states)  to 
deduct  a  compensation  from  the  wages  of  those  whose  misconduct 
has  produced  the  injury  ;  (0)  but  he  has  no  right  to  make  any  de- 
duction on  that  account  from  the  wages  of  the  innocent,  (p) 


Section  IT. — Remedies  of  Seaman  for  his  Wages. 

It  only  remains  to  state  the  remedies  which  the  law  has  pro- 
vided for  the  recovery  of  seamen's  wages.  If  the  hiring  be  on  the 
usual  terms,  and  made  by  words,  or  by  writing  only,  and  not  by 
deed,  the  seamen,  or  any  one  or  more  of  them,  and  every  officer, 

{I)  ^Jid  Bce,  on  tlie  corresponding  sections  in  the  former  statute,  Frontine  v.  Frost, 
3  B.  &  P,  302.  McDonald  v.  Jopling,  4  M.  &  W.  285.  The  Two  Sisters,  2  W.  Rolx 
VA. 

(w)  22  &  23  Car.  2,  c.  11,  s.  V. 

(n)  Robiaet  v.  The  Ship  Exeter,  Rob.  261.    The  Blake,  1  W.  Rob.  '73. 

(o)  Molloy,  b.  2,  c.  3,  s.  9;  2  Shower,  167 ;  1  Ld.  Raym.  650. 

(;>)  Thompson  v.  Collins,  1  N.  R.  347. 


554  MERCANTILE  CONTRACTS. 

Remedies  of  Seaman  for  his  Wages. 

except  the  master,  may  sue  in  the  Court  of  Admiralty,  and  may, 
by  the  process  of  that  court,  arrest  the  ship  as  a  security  for  their 
demand,  or  cite  the  masters  or  owners  personally  to  answer  them ; 
(q)  and  that  not  only  for  the  wages  earned  during  the  voyage,  but 
for  those  earned  in  fitting  the  ship  out,  if  the  owners  will  not  after- 
wards despatch  it ;  (r)  the  same  remedy  is,  generally  speaking,  open 
to  foreign  seamen,  whose  claim  is  founded  on  the  maritime  law.  {s) 
And,  where  the  seamen  thus  proceed  against  the  ship,  their  claim 
is  preferred  to  all  other  charges  on  her,  since  to  their  labor  alone  is 
her  preservation  and  existence  attributable.  (;!) 

If  the  agreement  be  by  deed,  or  contain  special  terms,  the  sea- 
man's remedy  is  by  action  in  the  courts  of  common  law ;  (w)  which 
remedy  is  also  open  to  him  in  cases  where  the  Admiralty  has  juris- 
diction, and  it  is  the  only  one  to  which  the  master  can  have  re- 
course, (v)  if  he  fail  to  reimburse  himself,  as  he  may,  out  of  the 
ship's  freight  and  earnings.  But  whether  the  party  sue  in  the 
Court  of  Admiralty,  or  at  law,  the  suit  must  be  commenced  within 
six  years,  except  in  case  of  disability,  (iv)  The  seaman  has  a  right 
to  sue  either  the  master  or  the  owners ;  and  whenever  it  becomes 
necessary  to  produce  the  agreement  in  court,  it  lies  on  them,  not 
upon  him,  to  do  so.  {x) 

By  7  &  8  Vict.  c.  112,  s.  14 : 

{q)  Abbott,  656,  8th  ed.,  citing  as  to  the  seamen,  "Winch.  8.  AUeson  v.  Marsh,  2 
Vent.  181.  Anon.,  3  Mod.  379.  Benns  v.  Parr,  2  Ld.  Raym.  1206.  The  Boatswain, 
King  V.  Ragg,  2  Str.  858 ;  1  Barnard,  297.  The  Carpenter,  Wheeler  v.  Tliompson,  1 
Str.  'TOT.  The  Surgeon,  Sayer,  136.  The  Mate,  Bayley  v.  Grant,  1  Ld.  Raym.  632 ; 
Salk.  33.     Read  v.  Chapman,  2  Str.  937. 

(r)  Wells  V.  Osman,  2  Ld.  Raym.  1044 ;  6  Mod.  238.  Mills  v.  Gregory,  Sayer, 
127.  But  see,  as  to  the  jurisdiction  of  the  Court  of  Admiralty  in  such  a  case.  The 
City  of  London,  1  W.  Rob.  88. 

(s)  Abbott,  657,  8th  ed.     The  Golubchick,  1  W.  Rob.  143. 

{t)  The  Favorite,  2  Rob.  232. 

{u)  See  Abbott,  656,  663,  8th  ed.;  2  Dodson's  A.  R.  p.  12.  Opy  v.  Child,  Salk. 
31.  Day  v.  Searle,  Abbott,  660,  8th  ed.  How  v.  Napier,  4  Burr.  1944.  Vide  Abbott, 
663,  8th  ed.,  and  Menetone  v.  Gibbons,  3  T.  R.  267,  and  Buck  v.  Attwood,  2  Str.  761. 
The  Mona,  1  W.  Rob.  137.     The  Riby  Grove,  1  W.  Rob.  52. 

{v)  Read  v.  Chapman,  2  Str.  937.  Favorite,  2  Rob.  233.  Ragg  v.  King,  2  Str. 
858.  Clay  v.  Sudgrave,  Sal.  33;  1  Ld.  Rfiym.  576;  12  Mod.  405 ;  Carth.  618;  but 
lee  7  <fe  8  Vict.  c.  112,  s.  16,  post,  p.  555. 

(u))  Stat.  4  Anne,  c.  16,  s.  17,  18,  19 ;  21  Jac.  1,  c.  16,  ss.  3,  7. 

{x)  Bowman  v.  Manzleman,  2  Camp.  315.     Stat.  7  &  8  Vict.  c.  112,  s.  6. 


CONTRACTS  WITH  SEAMEN.  555 

Remedies  of  Seaman  for  his  Wages. 

"  And  be  it  enacted,  That  if  three  days  after  the  termination  of  the 
stipulated  service,  or  if  three  days  after  a  seaman  shall  have  been  dis 
charged,  he  shall  be  desirous  of  proceeding  on  another  voyage,  and  in  order 
thereto,  or  for  any  other  sufficient  reason,  shall  require  immediate  payment 
of  any  amount  of  wages,  not  exceeding  twenty  pounds,  due  to  him,  it  shall 
be  lawful  for  any  justice  of  the  peace,  in  and  for  any  part  of  her  Majesty's 
dominions  or  the  territories  under  the  government  of  the  East  India  Com 
pany,  where  or  near  to  the  port  or  place  where  such  service  shall  have 
terminated,  or  such  seaman  shall  have  been  discharged,  or  the  party  or 
parties  liable  shall  be  or  reside,  on  application  from  such  seaman,  and  on 
satisfactory  proof  that  he  would  be  prevented  from  employment  or  incur 
serious  loss  or  inconvenience  by  delay,  to  summon  such  party  or  parties 
before  him,  and  if  it  shall  appear  to  the  satisfaction  of  such  justice  that 
there  is  no  reasonable  cause  for  delay,  to  order  payment  to  be  made  forth- 
with, and  in  defiult  of  immediate  compliance  with  such  order,  such  party 
or  parties  shall  forfeit  and  pay  to  such  seaman,  in  addition  to  his  wages, 
the  sum  of  five  pounds." 

And  by  sects.  15  and  16,  it  is  enacted, 

"  That  in  all  cases  of  wages,  not  exceeding  twenty  pounds,  which  shall 
be  due  and  payable  to  any  seaman,  it  shall  be  lawful  for  any  justice  of  the 
peace  in  and  for  any  part  of  her  Majesty's  dominions,  or  the  territories 
under  the  government  of  the  East  India  Company,  where  or  near  to  the 
place  where  the  ship  shall  have  ended  her  voyage,  cleared  at  the  custom 
house,  or  discharged  her  cargo,  or  where  or  near  to  the  place  where  the 
party  or  either  of  the  parties  upon  whom  the  claim  is  made  shall  be  or 
reside,  upon  complaint  on  oath  made  to  such  justice  by  such  seaman,  or 
on  his  behalf,  to  summon  such  party  or  parties  to  appear  before  him  to 
answer  such  complaint ;  and  upon  the  appearance  of  such  party  or  parties, 
or,  in  default  thereof,  on  due  proof  of  him  or  them  having  been  so  sum- 
moned, such  justice  is  hereby  empowered  to  examine  the  parties  and  their 
respective  witnesses  (if  there  be  any),  upon  oath,  touching  the  complaint 
and  the  amount  of  wages  due,  and  to  inspect  any  agreement  or  copy 
thereof,  if  produced,  and  make  such  order  for  payment  of  the  said  wages, 
not  exceeding  twenty  pounds,  with  the  costs  incurred  by  the  seaman  in 
prosecuting  such  claim,  as  shall  to  such  justice  appear  reasonable  and  just; 
and  in  case  such  order  shall  not  be  obeyed  within  two  days  next  after  the 
making  thereof,  it  shall  be  lawfui  for  such  justice  to  issue  his  warrant  to 
levy  the  amount  of  the  wages  awarded  to  be  due,  by  distress  and  sale  of 
the  goods  and  chattels  of  the  party  on  whom  such  order  for  payment  shall 


556  MERCANTILE  CONTRACTS 


Remedies  of  Seaman  for  his  Wages. 


be  made,  rendering  to  such  party  the  overplus  (if  any  shall  remain  of  the 
produce  of  the  sale),  after  deducting  thereout  all  the  costs,  charges,  and 
expenses  incurred  by  the  seaman  in  the  making  and  prosecuting  of  the 
complaint,  as  well  as  the  costs  and  charges  of  the  distress  and  levy  ;  or  to 
cause  the  amount  of  the  said  wages,  costs,  charges,  and  expenses,  to  be 
levied  on  the  ship  in  respect  of  the  service  on  board  which  the  wages  are 
claimed,  or  on  the  tackle  and  apparel  thereof:  and  if  such  ship  shall  not 
be  within  the  jurisdiction  of  such  justice,  or  such  levy  cannot  be  made,  or 
shall  prove  insufficient,  then  he  is  hereby  empowered  to  cause  the  party 
upon  whom  the  order  shall  be  made  to  be  apprehended,  and  committed  to 
the  common  gaol  of  the  district  or  county,  there  to  remain  without  bail 
until  payment  shall  be  made  of  the  amount  of  the  wages  so  awarded,  and 
of  all  costs  and  expenses  attending  the  recovery  thereof;  and  the  award 
and  decision  of  such  justice  as  aforesaid  shall  be  final  and  conclusive. 

"  That  all  the  rights,  liens,  privileges,  and  remedies  (save  such  reme- 
dies as  are  against  a  master  himself),  which  by  this  act,  or  by  any  law, 
statute,  custom,  or  usage,  belong  to  any  seaman  or  mariner,  not  being  a 
master  mariner,  in  respect  to  the  recovery  of  his  wages,  shall,  in  the  case 
of  the  bankruptcy  or  insolvency  of  the  owner  of  the  ship,  also  belong  and 
be  extended  to  masters  of  ships  or  master  mariners,  in  respect  to  the  re- 
covery of  wages  due  to  them  from  the  owner  of  any  ship  belonging  to  any 
of  her  Majesty's  subjects  ;  and  that  no  suit  or  proceeding  for  the  recovery 
of  wages  shall,  unless  they  exceed  twenty  pounds,  be  instituted  against 
the  ship,  or  the  master  or  owner  thereof,  either  in  any  Court  of  Admiralty 
or  Vice-Admiralty,  or  any  court  of  record  in  her  Majesty's  dominions  or 
the  territories  under  the  government  of  the  East  India  Company,  unless 
the  owner  of  the  ship  shall  be  bankrupt  or  insolvent,  or  the  ship  shall  bo 
under  arrest  or  sold  by  the  authority  of  any  Admiralty  or  Vice-Admiralty 
Court,  or  unless  any  magistrate  acting  under  the  authority  of  this  act  shall 
refer  the  case  to  be  adjudged  by  any  such  court  or  courts,  or  unless  neither 
the  owner  nor  master  shall  be  or  reside  at  or  near  the  port  or  place  where 
the  service  shall  have  terminated,  or  where  any  seaman  shall  have  been 
discharged  or  put  on  shore."  (y) 

(y)  See,  on  the  construction  of  the  sections  15  and  16  in  the  former  act,  5  &  6  Wm. 
4  c.  19,  which  gave  a  summary  "emedy  for  wages  under  20/.,  The  King  William,  2 
W.  Rob.  231.  The  language  of  those  sections  differed  materially  from  tlie  provisions 
abovs  set  forth. 


CHAPTER  X. 


APPKE»TICESHIP. 

The  contract  of  apprenticeship  is,  as  its  name  denotes,  (a)  a  bargain 
for  instruction  {b)  to  be  bestowed  by  one  person  upon  another,  who, 
in  return,  agrees  to  give  up  his  whole  time  and  services  to  his  in- 
structor, and  frequently  also  to  bestow  upon  him  a  pecuniary  re- 
muneration. The  relation  which  it  creates  is  one  of  very  ancient 
origin,  and  the  reciprocal  rights  and  duties  which  it  involves  greatly 
resemble  those  of  parent  and  child,  for  the  master  is  entitled  to  the 
whole  produce  of  the  labor  of  his  apprentice,  (c)  and  may,  in  case 
of  disobedience  by  the  latter  to  his  lawful  commands,  or  upon  the 
detection  of  any  immorality  in  his  behavior,  administer  to  him,  if 
an  infant,  reasonable  and  wholesome  corporal  chastisement,  such  as 
a  father  may  inflict  upon  his  child,  or  a  schoolmaster  upon  his  pu- 
pil :  the  right  to  do  so  issuing  in  each  case  out  of  the  patria  potestas, 
the  delegation  of  which  has  been,  in  all  ages,  allowed  for  the  sake 
of  the  good  government  and  education  of  young  persons,  {d)  The 
state  of  the  apprentice,  however,  differs  from  that  of  a  schoolboy  in 
this  material  particular,  viz.,  that  an  apprenticeship  being,  at  com- 
mon law,  looked  upon  as  a  contract  between  the  master  and  the 

(a)  From  Apprendre. 

{b)  See  Rex  v.  Crediton,  2  B.  <fe  Ad.  493.     Rex  v.  Igtham,  4  Ad.  &  E.  93*7. 
{c)  See  Anon.,  12  Mod.  415.    Puckington  v.  Chepton  Beauchamp,  Str.  582.     Bar- 
ber V.  Dennis,  1  Salk.  98.     Foster  v.  Stewart,  3  M.  <fe  S.  191.    Sed  vide  Carson  v.  Watts, 
3  Dougl.  350. 

{d)  Bl.  Comm.  428.     Penn  v.  "Ward,   5  Tyrwh.  979 ;    2  C.  M.  &  R  338.    Th« 
principle  was  well  known  t«.  the  ancients. 

Dii  majornm  umbris  tenueni  et  sine  pondere  terram 
Spirantes  que  crocos  ct  in  urna  perpetuum  ver. 
Qui  prseceptorem  sancti  voluere  parentis 
Esse  loco. 
The  master  cannot  delegate  this  power,  9  Co.  76. 


558  MERCANTILE  CONTRACTS. 

Apprenticeship. 

apprentice,  it  could  not  have  been  created  without  the  intervention 
of  the  latter,  (e)  In  the  case  of  parish  apprentices,  this  mutual  con- 
sent is  now,  however,  dispensed  with,  and  the  whole  subject  regu- 
lated by  statutes,  which  will  be  found  collected  in  the  various  trea- 
tises on  poor  laws.  (/)* 

The  contract  of  apprenticeship  is  one  of  those  bj  which  a  per- 
son under  age  is  permitted  by  law  to  bind  himself,  upon  that  gene- 
ral ground  adverted  to  by  Lord  Mansfield  in  Drury  v.  Drury,  (g) 
viz.,  that  "if  an  agreement  be  for  the  benefit  of  an  infant,  it  shall 
bind  him."  (h)  He  may  indeed  elect  to  avoid  the  agreement  at  his 
full  age,  (i)  or  even  while  under  age  if  it  be  manifestly  for  his  benefit 
so  to  do.  {j) 

The  Stat,  5  Eliz.  c,  4,  created  many  regulations  and  restrictions 
respecting  the  mode  of  binding  and  the  qualifications  of  appren- 
tices, which  being  found  extremely  inconvenient  in  practice,  it  was, 
by  54  Geo.  3,  c.  96,  enacted  that  any  person  may  take  or  become  an 
apprentice,  though  not  according  to  the  provisions  of  that  act,  pro- 
vided that  the  statute  shall  not  prej  udice  the  customs  or  by-laws  of 


(e)  Rex  V.  Arnesby,  3  B.  <fe  A.  584.     Rex  v.  Cromford,  8  East,  25. 

(/)  See  Burn's  Justice,  tit.  Apprentices  and  Poor,  and  see  a  summary  of  them, 
Arclib.  Poor  Laws,  p.  55.  See  also  4  <fe  5  Wm.  4,  c.  76,  s.  61 ;  and  as  to  apprentices  to 
the  sea  service,  the  Merchants'  Seamen's  Acts,  5  <fe  6  Wm.  4,  c.  19,  ss.  26  to  37  in- 
clusiYe,  and  7  &  8  Vict.  112,  ss.  32  to  43,  inclusive,  and  ss.  45,  43, 

{(;)  5  Bro.  P.  C.  570. 

(h)  Accord.  Rex  v.  St.  Petrox,  4  T.  R.  196.  Rex  v.  St.  Mary's,  1  Bott,  705.  Rex 
V.  Arundle,  5  M.  &  S.  257.  See  Maddon  v.  "White,  2  T.  R.  159.  Rex  v.  Weddington, 
1  Bott,  636. 

(i)  Ex  parte  Davis,  5  T.  R.  715. 

{j)  Rex  V.  Great  Wigton,  3  B,  <fe  C,  484,     See  Rex  v.  Gwinnear,  1  Ad.  &  E,  152, 


*  A  fatlier  has  no  authority  to  bind  his  son  as  apprentice  without  his  consent. 
The  King  v.  Arnesby,  3  B.  &  A.  584.  Lewin  on  Settlements,  251-2.  And  indentures 
of  apprenticeship,  executed  by  the  father  without  the  concurrence  of  his  son,  are  not 
only  voidable,  but  void.  Pierce  v.  Mossenbury,  4  Leigh's  Rep,  493.  But  the  child 
may  bind  himself  without  the  concurrence  of  the  father.  The  King  v.  Mount  Sorrel, 
3  M.  &  S.  497.  The  King  v.  Great  Wigston,  3  Barn.  <fe  Cress.  484.  It  has  been  held 
in  Massachusetts,  that  under  the  provisions  of  their  Revised  Statutes,  c.  80,  s.  3,  an 
Instrument  purporting  to  be  an  indenture  of  apprenticeship,  and  signed  by  the  minor, 
will  not  be  binding  upon  him,  unless  it  contains  words  expressing  his  consent  thereto. 
Harper  v.  Gilbert,  5  Cush.  R.  417. 


APPRENTICESHIP.  559 


Apprenticesliip. 


any  corporation  or  company,  {k)  The  contract  of  binding  must 
also,  by  the  statute  of  Elizabeth,  have  been  by  deed  indented,  {I) 
And  though  54  Geo.  3,  c.  96,  has  now  dispensed  with  that  for- 
mality, still,  even  under  it,  a  writing  is  required,  and  a  mere  parol 
binding  would  not  constitute  an  apprenticeship. 

The  binding,  is,  however,  even  now  usually  effected  by  deed,  (m) 
containing  covenants  by  the  master  and  apprentice  for  the  faithful 
discharge  of  their  respective  duties  to  each  other.  These  covenants, 
whether  entered  into  by  the  infant  and  master,  or  by  the  master 
and  some  other  person,  are  independent,  and  the  performance  of 
neither  side  is  a  condition  precedent  to  that  of  the  other,  (n)  An 
infant  may,  as  has  been  seen,  bind  himself  an  apprentice,  yet  no 
action  will  lie  against  him  upon  any  covenants  contained  in  the  in- 
strument by  which  he  does  so.  (0)  The  master  is  not,  however, 
without  remedy  for  the  misbehavior  of  his  infant  apprentice,  since 
he  may,  as  we  have  seen,  correct  him  personally  if  he  do  amiss, 
taking  care  to  use  due  moderation  in  the  infliction  of  the  punish- 
ment. He  may  also  complain  of  him  before  justices  of  peace,  {p) 
or  maintain  an  action  against  any  adult  person  who  has  covenanted 
for  the  good  behavior  of  the  inft^nt  in  the  deed  of  apprenticeship,  (q) 
and  the  liability  of  such  a  person  continues,  though  the  infan 
should,  on  coming  of  age,  elect  to  avoid  the  deed,  (r) 

The  apprentice,  on  his  part,  is  entitled  to  have  the  covenants  in 
the  indentures  duly  performed  towards  him.  (.s)     And,  even  inde- 

(k)  See  now  5  &  6  "Wm.  4,  c.  1Q,  s.  14,  the  Municipal  Corporation  Act. 

(l)  See  Smith  v.  Birch,  1  Bott,  628.     Castor  v.  Aickles,  Salk.  68. 

(m)  See  the  ordinary  printed  form  in  Burn's  Justice,  Apprentices,  and  see  Rex  v. 
Harrington,  6  Nev.  &  Mann.  165.  By  the  custom  of  some  towns,  indentures  of  Ap- 
prenticeship should  be  enrolled.  See  Com.  Dig.  London,  n.  2.  Barber  v.  Dennis,  6 
Mod.  69.     Rex  v.  Marshall,  2  T.  R.  2.     Rex  v.  Mayor  of  Cambridge,  2  Chitt.  144. 

(«)  Winstone  v.  Linn.  1  B.  &  C.  460.  H  ighes  v.  Humphries,  6  B.  &  C.  680.  Wise 
V.  "Wilson,  1  Car.  &  K.  662. 

(0)  Gilbert!'.  Fletcher,  Cro.  Car.  179;  1  Bott,  624. 

(p)  5  Eliz.  c.  4,  8.  35.  20  Geo.  2  c.  199,  and  6  Geo.  3,  e.  25.  32  Geo.  3,  c.  57 ; 
33  Geo.  3,  c.  55.     5  &  6  Vict.  c.  Y.     See  Burn's  Justice,  tit.  Apprentices. 

{q)  Whitley  v.  Loftus,  8  Mod.  IdO.  Elwes  v.  Vaughan,  1  Lutw.  386.  Branch  v. 
Ewington,  Dougl.  518.  Every  slight  absence  is  not  a  breach  of  the  covenant  against 
tthsenting.     Wright  v.  Gibbon,  3  C.  &  P.  583. 

(r)  Cuming  v.  Hill,  3  B.  <fe  A.  59. 

(«)  As  to  whether  the  law  would  imply  a  covenant  to  employ  the  apprentice,  see 
ispdin  V.  Austin,  5  Q.  B.  671.     Dunn  v.  Sayles,  ibid.  685. 


5G0  MERCANTILE  CONTRACTS. 

Apprenticeship. 

pendentlj  of  the  instrument  of  apprenticeship,  the  master  may  be 
sued,  or,  in  a  gross  case  of  misconduct,  even  indicted,  for  ill  usage 
and  neglect  of  him.  (t)  It  would  be  murder  in  him  were  he  to  suffer 
an  apprentice  of  tender  years  to  perish  for  want  of  food. 

There  are  a  number  of  statutory  enactments  which  will  be  found 
collected  in  Burn's  Justice,  giving  a  summary  power  to  justices  of 
the  peace  in  quarrels  between  masters  and  apprentices. 

The  apprenticeship  may  be  determined  by  consent  of  parties ; 
provided,  if  the  apprentice  be  under  age,  that  the  dissolution  be  for 
his  advantage,  (u)  and  provided  the  indentures,  if  any,  be  got  rid 
of;  (v)  or  by  an  infant's  election  at  his  full  age ;  or  by  the  master's 
bankruptcy ;  (to)  or  by  the  death  of  the  master  or  apprentice ;  or 
by  the  intervention  of  the  court  of  quarter  sessions ;  or,  in  some 
cases  of  one,  and  in  some  others  of  two,  justices,  (x)  upon  complaint, 
founded  on  just  grounds,  (y)  of  either  the  master  or  apprentice,  (z) 
It  was  long  thought  that  whenever  jurisdiction  is  given  by  the 
Legislature  to  discharge  an  apprentice,  the  power  of  ordering  a  pro- 
portionable restitution  of  the  apprentice  fee  was  incident  to  it.  (a) 
But  the  contrary  has  been  determined  upon  the  construction  of  the 
statute  5  Eliz,  c.  4,  s.  35,  in  the  late  case  of  Uast  v.  Pell,  {b) 

(t)  Rex  V.  Ridley,  2  Camp.  650.     Rex  v.  Friend,  R.  &  R.  C.  C.  20.    See  1  Leach,  137 

(m)  Rex  V.  Weddington,  Burr.  S.  C.  766. 

(v)  Rex  V.  Bow,  4  M.  &  S.  383. 

(w)  6  Geo.  4,  c.  16,  a.  49,  part  of  the  apprentice  fee  is  returnable;  but  see  as  to  an 
attorney's  clerk,  Ux  parte  Prideaux,  3  M.  &  Cr.  327. 

(a:)  See  5  Eliz.  c.  4,  s.  35,  and  54  Geo.  3,  c.  96,  s.  3,  and  Hawksworth  and  Hillary's 
case,  1  Wms.  Saund.  316,  et  notas.  See  as  to  the  application  of  the  act  in  case  of  de- 
fault by  the  master.  Rex  v.  Collingbourne,  8  Ld.  Raym.  1410 ;  Str.  663.  Coventry  v. 
Windall,  Brownl.  67  ;  1  Bott,  569.  Rex  v.  Amis,  1  Bott,  574.  Rex  v.  Eastman,  ibid. 
575.  la  case  of  the  apprentice's  default.  Rex  v.  Hales  Owen,  1  Str.  99  ;  1  Bott,  572. 
Anon.,  1  Botl,  570;  Skinn.  98.  As  to  the  jm-isdiction  of  the  sessions.  Rex  v.  Johnson, 
Salk.  67.  Rex  v.  Gill,  1  Str.  143.  Ditton's  case,  1  Salk.  290.  Of  one  justice,  Reg.  v. 
Daniel,  6  Mod.  182;  2  Raym.  1117.  See  stat.  20  Geo.  2,  c.  19,  and  4  Geo.  4,  c.  29, 
which  confers  jurisdiction  on  two  justices,  where  the  premium  was  not  more  than  25^. 
Finlay  v.  Jowle,  12  East,  248.  See  stat  5  &  6  Vict.  c.  7,  explanatory  of  the  former 
acts.     And  see  on  the  whole  subject,  Burn's  Justice,  tit.  Apprentices, 

{y)  1  Wms.  Saund.  313,  n.  2. 

{z)  Hawksworth  and  Hillary's  case,  1  "Wms.  Saund.  313,  a. 

(a)  1  Wms.  Saimd.  313,  in  notis.  Rex  v.  Vandeleer,  1  Str.  69.  Rex  v.  Amis,  1 
Bott,  574. 

(i)  East  v.  Pell,  4  M.  &,  W.  665. 


APPRENTICESHIP.  5G1 


Apprenticeship. 


It  is  necessary,  before  leaving  this  subject,  to  say  a  few  words 
upon  wliat  is  called  the  assignmeyit  of  an  apprentice.  A  master 
cannot  assign  his  apprentice  without  the  consent  of  the  latter,  (c) 
And  though,  by  the  consent  of  all  parties,  the  services  of  the  ap- 
prentice may  be  transferred,  yet,  in  the  generality  of  cases,  this 
operates  as  an  agreement  between  the  master  and  the  transferee, 
that  the  apprentice  shall,  with  his  own  consent,  perform  his  con- 
tract to  the  former,  by  doing  service  to  the  latter,  {d)  By  ihe  cus- 
tom of  London,  indeed,  an  assignment^  properly  so  called,  of  an 
apprentice,  may  be  made  bv  one  freeman  to  another,  (e)  so  as  to 
transfer  the  benefit  of  the  covenants  to  the  assio;nee. 


(c)  Coventry  v.  Woodhall,  Hob.  134.  Baxter  v.  Burfield,  2  Str.  12G6.  An  award 
that  an  apprentice  shall  be  assigned  was  in  one  case  held  void.  Home  v.  Blake,  2 
Str.  1267. 

(d)  See  Austin  v.  Eccles,  1  Lord  Raym,  683  ;  1  Bott,  580. 
(c)  Com.  Dig.  London,  Keble,  255 

36 


CHAPTER  XI. 

G^UA3^A^srTIES. 

Sect.  1.  Nature  and  form  of  contract. 

2.  Surety^  how  far  liable. 

3.  Surety^  how  discharged. 

4.  Surety^  how  indemnified. 

5.  Representations  in  the  nature  of  guaranties. 


Section  1. — Nature  and  Form  of  Contract,  (a) 

A  GUAKANTY  is  a  promise  to  answer  for  the  payment  of  some 
debt,  or  the  performance  of  some  duty,  in  case  of  the  failure  of  an- 
other iicrson,  who  is  himself,  in  the  first  instance,  liable  to  such 
payment  of  a  performance.  (/^)* 

((t)  As  (lispnfoa  nrc  froquontl}'  occasioned  by  the  iimrt.ificial  wording  of  guaran- 
ties, tlic  followini^  general  form,  ■which  ma}'  be  safely  adopted  in  anj'  case,  may,  it  is 
thought,  bo  useful. 

"  London,  tho  of  18 — . 

"In  coTisidcration  that  Mr.  C.  D.  will  at  m}^  request  (or  'has  at  my  request') — 
[hero  state  the  coim deration  for  whieh  the  guarantii  is  given^  I  do  hereby  guarantee  to 
him,  tho  said  Mr.  C.  D.,  \licre  stale  the  siun  or  thing giiaranteed.'\  This  guaranty  is  to 
continue  in  force  for  tho  period  of  [state  the  period  if  agreed  o»]  and  no  longer. 

"Witness  my  hand,  A.  B." 

(li)  Fell  on  Guaranties,  p.  1.  A  mere  offer  to  guarantee  is  insufficient  imtil  ac- 
cepted. M'lvor  V.  Richardson,  1  M.  cfe  S.  557.  Mozley  v.  Tinkler,  1  C.  M.  A  R.  692- 
5  Tyrwh.  420.  Symmons  v.  Want,  2  St.ark  371.  Gaunt  v.  Hill,  1  Stark.  10.  Sco 
Coleman  v.  Upcot,  5  Vin.  527.  Bird  v.  Blosse,  2  Vent.  861.  Hodgson  v.  Hutchinson, 
5  Yin.  522.  On  the  question  whether  a  dd  ercdcre  contract  be  a  guarant}'  M-ithin  tho 
Statute  of  Frauds,  sco  ante,  Book  1,  c.  5. 

*  Definition  of  Oitarantg. — Guaranty  is  substantially  the  same  word  as  warranty. 
They  arc  both  derived  from  the  French  verb,  garantir,  to  undertake,  and  are  used 
in  the  old  law  books  as  convertible  terms.    See  Burril's  Law  Dictionary. 

What  constitutes  a  Ouarantg. — With  the  growth  of  connncrce,  the  law  upon  the 


GUARANTIES.  503 


Nature  and  Form  of  Contract.. 


By  Stat.  29  Car.  2,  c.  3,  s.  4,  "No  action  shall  be  brought,  to 
charge  the  defendant  upon  any  special  promise,  to  answer  for  the 
debt,  default,  or  miscarriage  of  another  person,  unless  the  agree- 


subject  of  guaranty  has  expanded  into  an  extensive  title,  involving  numerous  points 
of  practical  interest.,  upon  which  there  prevails  great  diversity  of  judicial  opinion. 
The  more  general  and  important  of  these  points  we  propose  to  bring  under  a  brief 
review.  The  first  inquiry'  which  can  occasion  any  embarrassment,  is  as  to  what  con- 
stitutes a  guaranty,  or,  iu  other  words,  when  an  undertaking  to  answer  for  the  debt 
or  duty  of  another  is  original,  and  when  collateral.  Where  credit  is  given  primarily 
and  exclusively  to  one  person  with  his  consent,  although  the  consideration  of  such 
credit  ma}'  inure  wholly  to  the  benefit  of  another,  the  party  thus  lending  his  name 
is  not  a  guarantor,  but  an  original  debtor.  Birkmyr  v.  Darnell,  Sidk.  27.  Matson 
V.  Wharam,  2  T.  R.  80.  Forth  v.  Stanton,  1  Wms.  Saunders,  211.  According  to 
these  authorities,  there  must  be  an  exclusive  liability  on  the  part  of  the  person  mak- 
ing the  promise,  unless  some  portion  of  the  consideration  inures  to  his  benefit,  or 
unless  there  is  some  foundation  for  the  liability  independent  of  the  promise,  in  order 
to  withdraw  the  case  from  the  operation  of  the  Statute  of  Frauds.  The  great  weight 
of  American  authority  may  be  cited  in  favor  of  the  rule  thus  laid  down.  Rogers  v. 
Kueeland,  13  Wend.  ll-t.  Tileseston  v.  Nettleton,  6  Pick.  509.  Ware  v.  Stephenson, 
10  Leigh.  145.  Taylor  v.  Drake,  4  Shobh.  437.  Randle  v.  Harris,  6  Yerg.  508.  The 
principle  of  the  exception  is  illustrated  b}?  the  docti'ine  of  the  recent  cases,  in  which 
the  del  credere  contract  of  a  factor  has  been  decided  not  to  be  within  the  Statute.  It 
seems  at  one  time  to  have  been  supposed  in  Englaird,  that  if  the  contract  of  agency 
under  a  del  credere  commission  was  looked  upon  as  a  guaranty,  it  would  fall  witliin  the 
purview  of  the  4th  sect,  of  the  Statute  of  Frauds,  and  be  obligatory  only  when  evi- 
denced by  an  agreement  in  writing,  subscribed  b^'  the  party  to  be  charged,  and  ex- 
pressing an  adequate  consideration.  This  difilculty  was  suggested  by  Serg.  Best  in 
Gall  V.  Comber,  7  Taunt  558,  as  a  conclusive  reason  for  adhering  to  the  doctrine  of 
Lord  Mansfield,  denying  to  the  agent  the  character  of  a  surety',  and  constituting  him 
the  principal  debtor.  It  has,  however,  since  been  settled  by  the  Court  of  Exchequer 
in  England,  in  accordance  with  the  weight  of  American  authorit}-,  that  the  factor's 
contract  under  a  del  credere  conmiission,  although  subsidiary  to  that  of  the  principal 
debtor,  is,  in  its  nature,  an  original  undertaking,  and  therefore  not  witliin  the  pnv- 
view  of  the  Statute.  Couturier  v.  llastie,  IG  R  L.  <fe  E.  R.  562.  Wolff  i'.  Koppel,  5 
Hill  N.  Y.  R.  458 ;  S.  C.  2  Denio,  368.  Swan  v.  Nesmitli,  7  Tick.  220.  2  Duer  on 
Insurance,  838.  Baron  Parke,  delivering  the  opinion  of  the  Court  of  Exchequer,  thus 
states  the  principle  of  the  modern  rule.  "  If  the  factors  in  this  case  had  for  a  per 
centage  guaranteed  the  debt  owing  by  vendee,  being  totally  unconnected  with  the 
sale,  they  would  not  be  liable  without  a  note  in  writing  signed  by  them  ;  but  being 
the  agents  to  negotiate  the  sale,  the  commission  is  paid  in  respect  of  that  employ- 
ment A  higher  reward  is  paid  in  consideration  of  their  taking  greater  care  in  sales 
to  their  customers,  and  precluding  all  question  whether  the  loss  arose  from  nogli- 
genee  or  not,  and  also  from  assuming  a  greater  share  of  responsibilitj'  than  ordinsuy 
agents,  namelj',  responsibility  for  the  solvency  and  performance  of  their  contracts  by 
thoir  vendees.     This  is  the  main  object  (f  the  reward  being  given  them,  and  though 


564  MERCANTILE  CONTRACTS. 

Nature  and  Porm  of  Contract 

ment  upon  which  such  action  shall  be  brought,  or  some  memoran- 
dum or  note  thereof,  shall  be  in  writing,  signed  bj  the  party  to  be 
charged  therewith,  or  some  other  person  thereunto  by  him  lawfully 


it  may  terminate  in  a  liability  to  pay  the  debt  of  another,  that  is  not  the  immediate 
object  for  wliich  the  consideration  is  given  ;  and  the  case  resembles  in  this  respect 
those  of  Williams  v.  Leper,  8  Burr.  1886,  and  Castling  v.  Aubert,  2  East,  325."  In 
the  language  of  Judge  Cowen  in  Wolff  v.  Koppel,  "  The  contract  of  the  factor  has  an 
immediate  respect  to  his  own  duty  or  obligation.  The  debt  of  another  comes  inci- 
dentally as  a  measure  of  damages." 

Mr.  Hare,  in  his  note  to  BirkmjT  v.  Darnell,  1  Smith's  LeaCJng  Cases,  322,  suggests 
that  there  may  be  cases  in  which  a  verbal  contract  will  be  binding,  notwithstanding 
the  continuing  liability  of  the  party  enjoying  the  Avhole  benefit  of  the  consideration ; 
in  other  words,  that  where  the  contract  is  one  strictly  of  suretyship  and  not  of  gua- 
ranty, it  is  not  embraced  by  tlie  Statute.  "  If,"  says  he,  "  the  party  who  intervenes 
in  a  contract  for  the  benefit  of  another,  has  assumed  to  be  the  paymaster,  and  has 
thus  made  himself  directly  and  unconditionall}-,  although  jointly,  answerable  for  the 
debt,  the  Statute  would  seem  to  be  inapplicable ;  but  if  his  engagement  be  merely  to 
pay  if  the  other  does  not,  that  is,  if  it  be  one  of  guaranty,  and  not  merely  of  surety- 
ship, it  will  be  within  the  direct  terms  of  the  Statute,  and  must  be  expressed  in  writ- 
ing." It  is  conceded,  however,  by  the  annotator,  that  this  distinction  has  been  over- 
looked in  most  of  the  adjudged  cases. 

A  question  has  arisen  whether  a  promise  by  one  to  indemnify  another  against 
a  liability  assumed  by  him,  at  the  request  of  the  promisor,  for  the  debt  or  default 
of  a  third  person,  is  within  the  Statute.  Upon  this  question  a  discrepancy  is  to  be 
observed  between  the  later  and  earlier  English  and  American  cases.  In  Thomas  v. 
Cook,  8  Barn.  &  Cress.  '728,  15  E.  C.  L.  R.  333,  Bayley,  J.,  and  Park,  J.,  the  only 
judges  present,  said,  that  a  promise  to  indemnify  does  not  fall  within  either  the 
words  or  the  policy  of  the  Statute.  In  the  subsequent  case  of  Green  v.  Cresswell,  10 
Ad.  (feEU.  453,  3*7  E.  C.  L.  R.  142,  where  the  plaintiff  became  bail  for  a  stranger,  in  con- 
sideration of  defendant's  request,  and  also  the  defendant's  verbal  promise  to  indem- 
nify him  against  the  consequences  of  such  undertaking,  C.  J.  Denman,  delivering 
the  judgment  of  the  Court,  declared,  that  the  reasoning  in  the  preceding  case,  in  sup- 
port of  the  doctrine  there  laid  down,  did  not  appear  satisfactory,  and  that  if  taken 
in  its  full  extent  it  would  repeal  the  Statute  of  Frauds.  "  For  every  promise  to  be- 
come answerable  for  the  debt  or  default  of  another,  may  be  shaped  as  an  indemnity ; 
but  even  in  that  shape,  we  cannot  see  why  it  may  not  be  within  the  words  of  the 
Statute.     Within  the  mischief  of  the  Statute  it  most  certainly  falls." 

The  doctrine  of  Thomas  v.  Cook  has  been  followed  in  several  American  courts. 
Thus,  in  Holmes  v.  Knight,  10  N.  H.  175,  where  the  defendant  requested  the  plain- 
tiff to  become  surety  for  a  third  person  charg'ed  witli  an  offence,  and  made  a  verbal 
promise  to  indemnify  him,  it  was  held  not  to  be  witliin  the  Statute.  The  principle 
seems  also  to  have  been  recognized  by  C.  J.  Shaw  in  Chapin  v.  Lapham,  20  Pick. 
467  ;  but  the  point  was  not  necessary  to  the  decision  of  the  cause,  for  the  original 
debtor  being  a  minor,  the  whole  credit  was  in  effect  given  to  the  defendant.  Hia 
promise  was  not  collateral. 


GUARANTIES.  565 


Nature  and  Form  of  Contract. 


authorized."  This  section  prevents  a  verhal  guaranty  from  bind- 
ing ;  though,  it  is  to  be  observed,  that  if  money  have  been  paid  in 
pursuance  of  it,  that  money  cannot  be  recovered  back :  (c)   and, 

(c)  Shaw  V.  "Woodcock,  »?  B.  <fe  C.  73.     See  Griffith  v.  Young,  12  East,  513. 


In  New  York,  it  was  held  in  the  early  cases,  that  a  promise  by  one  person  to  in- 
demnify another  for  becoming  a  guarantor  for  a  third,  was  not  within  the  Statute  of 
Frauds.  Chapin  v.  Merrill,  4  Wend.  6o7.  Harrison  v.  Sawtel,  10  John.  R.  242.  These 
decisions  were  shaken  by  the  case  of  Caiville  v.  Crane,  5  Hill,  483.  The  Court  there 
held,  a  verbal  contract,  by  which  the  defendant,  in  consideration  that  the  plaintiff  at 
his  request  would  sell  and  deliver  goods  to  a  third  person,  undertook  that  he  would 
indorse  their  note  at  six  months  for  the  price,  to  be  within  the  Statute,  disapproving 
of  the  decision  in  Bashnell  v.  Beaven,  1  Bingh.  N.  C.  103,  27  E.  C.  L.  320,  where  an 
undertaking  by  the  defendant,  not  that  himself,  but  that  another,  shoidd  guarantee 
the  debt,  was  held  not  to  be  within  the  Statute.  J.  Cowen,  delivering  the  opinion  of 
the  Court,  commented  on  the  case  of  Chapin  v.  Merrill,  cited  above,  and  intimated 
that  a  liberal  construction  of  the  Statute  might  be  made  to  reach  it ;  and  in  the  con- 
clusion of  his  opinion,  declared  that  such  a  construction  was  due  to  the  Statute,  on  the 
ground  that  it  was  intended  to  prevent  fraud  and  perjury.  The  views  thus  taken 
have  been  confirmed  b}-  the  late  case  of  Kinsley  v.  Balcombe,  4  Barb.  S.  C.  R.  131, 
in  which  it  was  held  that  the  promise  to  indemnify  one  man  for  assuming  the  debt 
of  another,  was  in  effect  a  direct  and  immediate  assumption  of  the  debt,  and  conse- 
quently invalid,  unless  made  in  writing. 

Co)istruction  of  Guaranty. — Questions  frequently  arise,  growing  out  of  the  form 
of  a  guaranty.  Thus,  a  letter  of  credit  is  a  guaranty.  Letters  of  credit  usually  con- 
tain a  request  that  some  one  will  advance  money  or  sell  goods  to  a  third  person,  and 
an  undertaking  on  the  part  of  the  writer  that  the  debt  which  may  be  contracted  by 
the  third  person,  in  pursuance  of  the  request,  shall  be  duly  paid.  These  letters  have 
been  divided  into  two  classes — general  and«pecial.  They  are  general  when  addressed 
to  any  and  all  persons,  without  naming  any  one  in  particular.  They  are  sj^ecial 
when  addressed  to  a  particular  individual  or  firm,  by  name.  When  the  letter  is  ad- 
dressed to  all  persons,  it  is  in  effect  a  request  made  to  each  and  every  one  of  them, 
and  any  individual  may  accept  and  act  upon  the  proposition  contained  in  it ;  and  on 
his  doing  so,  that  which  was  before  indefinite  and  at  large,  becomes  definite  and 
fixed:  a  contract  immediately  springs  up  between  the  person  making  the  advance 
and  the  writer  of  the  letter,  and  it  is  thenceforward  the  same  thing,  in  legal  effect, 
as  though  the  name  of  the  former  had  been  inserted  in  the  letter  in  the  beginning. 
Bronson,  J.,  Birckhead  v.  Brown,  5  Hill,  642.  Citing  Watson's  Ex'rs  v.  McLaren,  19 
Wend.  557  ;  S.  C.  26  Wend.  425.  Boyce  v.  Edwards,  4  Wheat.  111.  Adams  v.  Jones, 
12  Pet.  207.  Lawrason  v.  Mason,  3  Cranch,  492.  Bradley  v.  Carj-,  8  Greenl.  234. 
Russell  V.  Wiggins,  2  Story's  R.  213.     Carnegie  v.  Morrison,  2  Mete.  381. 

When  the  letter  is  special,  or,  in  other  words,  addressed  to  a  particular  individual, 
he  alone  has  the  right  to  act  upon  and  acquire  rights  under  it.  If  any  one  else  at- 
tempts to  accept  and  act  upon  the  proposition  contained  in  the  letter,  he  comes  in 
as  a  mere  volunteer  ,  and  he  cannot,  by  thus  thrusting  himself  forward,  create  any 


500  ilERCA^TILE  CO^TRACT>. 

Xatnre  and  Form  of  Contract. 

thongli  no  action  can  be  brought  upon  a  guaranty  which  does  not 
satisfy  the  provisions  of  the  Statute,  yet  the  Court  will  enforce  it 
against  an  attorney  who  has  undertaken  to  pay  Lis  client's  debt 


legal  obligation  on  the  part  of  the  ■writer.  There  han  been  no  commnnication,  and 
is  no  privity  of  contract  between  them.  Bronson,  J.,  Birckhead  r.  Brown,  5  Hill, 
643.  Citing  Bobbin.?  v.  Bingham,  4  John.  476.  Walsh  v.  Bailey,  10  John.  180.  See 
also  Taylor  i».  Wetmore,  10  Ohio,  490.    Bleeker  v.  Hyde,  3  il'Lean,  279. 

Bnt  in  some  caaes  it  ia  a  difficult  qtieation  to  determine,  whether  there  exist?  that 
privity  of  contract  which  seems  to  be  required  ;  and  upon  the  construction  of  letters 
of  credit,  in  this  particular,  the  authorities  are  in  conflict.  Russell  v.  Wiggins,  2 
Story,  213.    Carnegie  v.  Morrison,  2  Mete,  381.     Birckhead  v.  Brown,  .5  Hill,  .534. 

Questions  also  arise  upon  ^a,Tant\e»  as  to  the  extent  of  the  undertaking  which 
they  import;  whether  a  guaranty  is  limited  to  a  particular  transaction,  or  is  a  con- 
tinuing guaranty ;  whether  it  covers  only  one  credit  or  advance,  or  whether  it  em- 
braces a  succession  of  credits  or  advances,  which  may  be  either  cumulative  or  a  re- 
newal of  thf/sc  first  given  or  made.  It  is  in  most  canes  a  nice  and  difficult  question  to 
determine  whether  the  guaranty  is  a  continuing  one  or  not.  The  intent  of  the  party, 
to  be  derived  from  the  words,  is  the  only  ture  guide ;  and  therefore  very  little  aid  is 
t<t  be  derived  from  the  adjudged  cases,  as  they  tuiTi  upon  the  peculiar  j)hraseology 
of  the  guaranty.  Nelson,  J.,  Whitney  v.  Groot,  24  Wend.  84.  Douglas  v.  Reynolds,  7 
Peters,  113.  White  v.  Reed,  l.*;  Conn.  457.  Lawrence  v.  McCalmont,  2  How.  S.  C.  R. 
426.  Rogers  v.  Warner,  8  Johns.  119.  Fellows  v.  Prentiss,  3  Denio,  512.  Boj'ce  v. 
Ewart,  1  Rice,  126.  There  is  s'^me  conflict  of  authority  as  to  whether  the  ordinary 
maxim,  that  the  words  of  an  instrument  are  U)  be  taken  mf^t  strongly  against  tho 
party  using  them,  should  apj»ly  to  a  guaranty.  It  has  been  held  in  some  cases  that 
where  the  guarantor  desires  to  confine  his  liability  to  any  specific  transaction,  he  must 
expressly  say  so.  Other  authorities  have  intimated  that  the  contract  of  guaranty 
stands  upon  the  ordinary  footing  of  an  engagement  as  surety,  and  is  to  be  construed 
$lricU»»imi  jurit.  Tlje  cases  of  Mason  v.  Britchard,  12  East,  227  ;  Drummond  v.  Prest- 
man,  12  Wheat,  515;  Mayer  v.  Isaac,  6  Mees.  A  W.  610,  favor  the  former  doctrine, 
Crcmer  v.  Higginson,  1  Mason,  836 ;  Nicholson  v.  Paget,  1  Cromp.  <fe  Mees.  48,  the 
latter,  Tlie  most  reasonable  rule  seems  to  be  that  laid  down  by  the  Supreme  Court 
of  the  Unit<jd  States,  viz.,  that  a  guaranty  is  a  mercantile  instrument,  and  as  such 
should  receive  a  liberal  interpretation.  By  a  reasonable  interpretation,  is  not  meant 
that  the  words  should  be  forced  out  of  their  natural  meaning,  but  simjdy  that  they 
should  receive  a  fair  and  liberal  construction,  so  as  to  atinin  the  object  for  which 
the  instrument  was  designed,  and  is  to  be  apf<li(;d.  J/awrence  v.  McCalmont,  2  IIow. 
H,  C.  R.  449,  Bell  v.  Bruen,  1  IIow.  H.  C.  R.  169.  A  guaranty  is  thus  conHtrued  ac- 
cording i/j  what  may  be  fairly  inferred  t<j  have  been  the  understanding  of  the  parties, 
without  any  strict  technical  nicety;  Ijna  v.  jyuiU,  10  Pet-^irs,  482;  neither  enlarging 
the  words  beyond  their  natural  import  in  favor  of  the  creditor,  nor  restricting  them 
in  aid  of  the  surety.  Musscy  v.  Raynor,  22  I'iek,  228,  Sec  also  Walrath  v.  Thomp- 
son, 4  Hill,  200.  Curtis  v.  Dennis,  7  Met.  510,  Guaranties,  however,  like  other 
commercial  contract.*,  are  ttj  be  construed  with  reference  to  the  usages  of  trade.  Smith 
V.  Dann,  6  Hill,  543, 


GrARA>-TIE?.  5^ 


yaruTc  and  Fona  of  Oo::tr^.:. 


and  costs,  by  yirtue  of  tiieir  summarjr  jorisdiction  over  iheir  own 
officers ;  ^f )  and,  if  a  party  admit  that  he  has  made  a  binding 
guaranty,  by  paying  money  into  court  on  a  count  charging  him 

(d)  Erans  r.  Dnncombe,  1  Tvrwli.  2?S :  1  C.  i  J.  STi.  Senior  r.  Butt,  HiL  T 
1827.     K.  R  and  Payne  r.  Johnson,  Trin.  T.  IT  ST.    Exdi.  ther«  cited.    ikreGreaTes 

eited  5  Do-wl.  1ST. 

C'ynsidiratiyn  cj  G-r.  'a  . : :  — A  guaranty  may  be  eiUier  of  a  prior  debt  or  previously 
eubsiiting  contract,  or  ::  ni.-.y  be  for  the  discharge  or  performance  of  some  debt  or  con 
tract  incurred  or  entered  into  contemporaneous  ■with  or  subsequent  to  the  euarantv, 
and  tipon  the  faith  thereof  In  the  first  case,  there  must  be  a  consideration  inde 
pendent  of  the  original  debt  or  contract ;  in  the  .atter,  the  giving  the  credit  or  making 
the  contract  is  a  sufficient  consideration,  and  no  other  is  required.  1  ATms.  Sannd. 
211.  Leonard  r.  Vredenburgh,  S  John.  2S.  "Verplanck,  S^n.,  McLaren  r.  "Watson,  26 
Vend.  435. 

A  valuable  consideration,  however  small  or  nominal,  if  given  or  stipulated  for  in 
good  faith,  is,  in  the  absence  of  fraud,  sufficient  to  support  an  action  on  anv  parol 
contract ;  and  this  is  equally  true  as  to  contracts  of  guaranty.  Thus,  in  a  case  of 
guaranty  by  -writing,  not  under  seal,  -where  one  dollar  \ras  expressed  as  the  consider- 
ation, the  Court  said,  '•  The  guarantor  ackno^s-ledged  the  receipt  of  the  one  dollar, 
and  is  no^  estopped  to  deny  it.  If  she  has  not  received  it,  she  \rould  nov  be  en- 
titled to  recover  it.  A  stipulation  in  consideration  of  one  dollar  is  just  as  effectual 
and  valuable  a  consideration  as  a  larger  srmi  stipulated  for  or  paid."  Lawrence  r. 
McCalmont,  2  How.  S^  C.  426,  452.  Dutchman  r.  Tooth,  5  Bingh.  X  C  5T7 ;  S5  E. 
C.  R  23o.  Haigh  r.  Brooks,  10  Ad.  «fc  EIL  309 ;  ST  R  C.  R.  lOS.  Oakley  r.  Boor- 
man,  21  "Wend.  5SS.  Train  v.  Gold,  5  Pick.  SSO.  An  important  distinction  is  to  be 
observed  between  those  cases  in  which  the  guaranty  is  contemporaneous  with,  and 
those  in  which  it  is  subsequent  to,  the  principal  debt.  In  the  case  of  Leonard  t» 
Vredenburgh,  S  Johns.  2S,  Chancellor  Kent  divided  the  cases  on  this  subject  into 
three  distinct  classes.  "  1.  Cases  in  which  the  guaranty  or  promise  is  collateral  to 
the  principal  contract,  but  is  made  at  the  same  time,  and  becomes  an  essential  ground 
of  the  credit  given  to  the  principal  or  direct  debtor.  Here,  as  we  have  already  seen 
is  not,  nor  need  be  any  other  consideration  than  that  moving  between  the  creditor 
dnd  original  debtor.  2.  Cases  in  which  the  collateral  tmdertaking  is  subsequent  to 
the  creation  of  the  debt,  and  was  not  the  inducement  to  it,  though  the  subsistinc  lia- 
bility is  the  ground  of  the  promise,  without  any  distinct  and  unconnected  induce- 
ment. There  must  be  some  further  consideration  shown,  having  an  immediate  re- 
spect to  such  liability ;  for  the  consideration  for  the  original  debt  -will  not  attach  to 
this  subsequent  promise.  3.  A  third  class  of  cases  is,  when  the  promise  to  pav  the 
debt  of  another  arises  out  of  some  new  and  original  consideration  of  benefit  or  harm, 
moving  between  the  newly  contracting  parties.  The  first  two  classes  of  cases  are 
within  the  Statute  of  Frauds,  but  the  last  is  not  1  Saimd.  211,  note  2."  This  das- 
eification  has  been  frequently  referred  to,  and  substantially  adopted  in  several  sub- 
sequent cases.  Farley  v.  Cleveland,  4  Cow.  432.  Hilton  v.  Dinsmore,  21  ilaine,  4U\ 
Grold  r.  Philips,  10  Johns.  412.     Slingerland  r.  Morse,  7  John.  463,  note  to  3d  ed. 


568  MERCANTILE  CONTRACTS. 

Nature  and  Form  of  Contract. 

with  it,  that  renders  proof  of  a  written  instrument  unnecessary ;  (e) 
but  it  is  otherwise,  if  he  do  an  act,  which  merely  admits  that  an 
agreement  was  made,  without  admitting  that  such  a  one  was  made 
as  would  be  binding  under  the  Statute.  (/) 


(e)  Middleton  v.  Brewer,  Peake,  15.  See  Prec.  in  Clianc.  208,  253,  3*74:.  And  see 
Whiteburch  v.  Bevis,  2  Bro.  Cha.  Ca.  564,  as  to  what  amounts  to  such  an  admission 
in  equity. 

(/)  Rondeau  v.  Wjatt,  2  H.  Bl.  63. 

Meech  v.  Smith,  Y  "Wend.  318.  Packard  v.  Richardson,  IT  Mass.  139.  Brown  v.  Cur- 
tiss,  2  Comst.  225.     Durham  v.  Manrow,  ib.  533.     Johnson  v.  Gilbert,  4  Hill,  128. 

As  to  the  first  class  of  cases,  it  seems  to  be  well  settled  that  tliey  are  within  the 
Statute.  In  De  Wolf  v.  Rabaud,  1  Pet.  499,  a  doubt  is  expressed,  whether  by  the 
true  intent  of  the  Statute  it  was  to  extend  to  such  cases ;  and  in  Townsley  v.  Sumrall, 
2  Pet.  182,  it  is  stated,  that  "in  cases  not  absolutely  closed  by  authority,  this  Com-t 
has  already  expressed  a  strong  inclination  not  to  extend  the  operation  of  the  Statute 
of  Frauds,  so  as  to  embrace  original  and  distinct  promises,  made  by  different  persons 
at  the  same  time,  upon  the  same  general  consideration."  But  in  the  former  case  it 
was  admitted,  that  the  point  had  "been  closed  within  very  narrow  limits  by  the 
course  of  authorities,  and  seems  scarcely  open  for  general  examination."  In  Purley 
II.  Spring,  12  Mass.  296,  Parker,  C.  J.,  expressed  an  opinion  that  this  class  of  cases  was 
not  within  the  Statute,  and  seemed  to  be  inclined  to  adopt  the  distinction  referred 
to  in  the  text,  between  a  promise  to  answer  for  a  past,  and  a  promise  to  answer 
for  a  future  debt,  default,  or  miscarriage  of  a  third  person.  But  this  opinion  has 
been  expressly  overruled  in  the  same  court.  Cahill  v.  Bigelow,  18  Pick.  369.  And 
Bee  also  note  12  Mass.  300,  Rand's  ed.     Rogers  v.  Kneeland,  13  Wend.  114. 

The  second  class  of  cases  defined  by  Chancellor  Kent,  is  admitted  by  all  to  be 
within  the  very  words  of  the  Statute.  But  to  distinguish  cases  under  that  class  from 
those  under  the  third — to  determine  whether  a  verbal  promise,  in  which  the  debt, 
default,  or  miscarriage  of  another  person  is  involved,  be  within  the  Statute  of  Frauds, 
and  void,  or  be  an  original  and  independent  contract,  and  valid — is  often  a  very  nice 
and  difficult  question ;  it  is  one  for  the  determination  of  which  there  is  no  satisfac- 
tory general  rule,  and  in  the  decision  of  which,  in  cases  analogous  as  to  their  circum- 
stances, there  is  a  direct  conflict. 

It  will  be  observed  that  Chancellor  Kent,  in  support  of  his  conclusion  that  the 
third  class  of  cases,  where  the  promise  is  founded  on  a  new  and  original  considera- 
tion, does  not  come  within  the  Statute  of  Frauds,  cites  1  Saund.  211,  note  2;  and  the 
author  in  the  text  refers  to  a  note  in  the  same  learned  work  as  controverting  that 
idea.  The  note  referred  to  by  the  author  was  added  in  an  edition  of  the  work  pub- 
lislioi  subsequently  to  the  case  of  Leonard  v.  Vredenburgh,  and  is  cited  by  Williams, 
J.,  in  Clancy  v.  Pigott,  2  Ad.  &  Ell.  473,  29  E.  C.  R.  149,  from  the  5th  edition.  In 
the  second  American,  from  the  third  London  edition  of  Williams'  Saimders,  the  opin- 
ion of  Chancellor  Kent  appears  to  be  fully  sustained;  and  the  opinion  of  a  judge  so 
eminent,  supported  by  an  authority  so  highly  esteemed,  might  well  justify  those 


GUARANTIES.  5^9 


Nature  and  Form  of  Contract. 


It  has  been  held  that  the  Statute  applies,  although  the  action  be 
not  brought  upon  the  parol  agreement,  provided  the  effect  of  allow- 
ing it  to  be  maintained  would  be  to  charge  the  defendant  thereby,  {g) 

{g)  See  Carrington  v.  Roots,  2  M.  &  W.  248.  Sykes  v.  Dixon,  9  Ad.  <fe  E.  G93. 
Sed  vide  Cresswell  v.  "Wood,  10  Ad.  &  E.  460.  Eastwood  v.  Kenyon,  11  Ad.  &  E. 
438. 


•who  hare  followed  the  rule,  although  on  a  critical  examination  of  the  cases  cited 
by  Sergeant  Williams  in  its  support,  there  be  good  reason  to  doubt  its  correctness. 

The  rule  on  this  subject,  as  laid  down  in  the  recent  editions  of  Williams'  Saun- 
ders, was  cited  by  the  counsel  for  the  defendant,  in  the  case  of  Butcher  v.  Stewart^ 
11  Mees.  &  Welsby,  810,  and  admitted  by  the  counsel  for  the  plaintiff  to  be  correct. 
Tlie  rule,  as  there  stated,  is  this — "  Whether  each  particular  case  comes  within  this 
clause  of  the  Statute  or  not,  depends  not  on  the  consideration  for  the  promise,  but 
on  the  fact  of  the  original  party  remaining  liable,  coupled  with  the  absence  of  any 
liability  on  the  part  of  the  defendant  or  his  jjroperty,  except  such  as  arises  from  his 
express  promise.  A  reference  was  also  made  to  this  rule  by  counsel  in  the  case  of 
Green  v.  Cresswell,  10  Ad.  &  Ellis,  460,  3Y  E.  C.  R.  145;  and  Lord  Denham,  in  the 
conclusion  of  his  opinion  in  that  case,  says,  "There  does  not  appear  any  objection  to 
the  test  laid  down  in  the  note  to  1  Williams'  Saunders,  211,  C,  and  it  is  decisive  io 
favor  of  the  objection.  Tlie  original  party  remained  liable,  and  the  defendant  in 
curred  no  liability  except  from  his  promise." 

The  reader  will  observe,  that  in  the  rule  just  quoted  there  is  an  important  exccp 
tion,  not  noticed  by  the  author  in  his  reference  to  it,  which  appears  to  be  this — 
that  where  there  is  a  liability  on  the  part  of  the  defendant  or  his  property,  other 
than  his  verbal  promise,  to  pay  the  debt  to  which  the  promise  relates,  then  the  fact 
that  the  original  party  still  remains  liable  constitutes  no  objection.  But  here  should 
be  noticed  an  important  qualification,  which  appears  to  be  established  by  the  case 
of  Thomas  v.  Williams,  10  B.  &  C.  664,  21  E.  C.  R.  143,  to  the  exception  above  stated ; 
that  in  such  cases  the  verbal  promise  cannot  be  sustained,  on  account  of  a  liability 
on  the  part  of  the  defendant  or  his  property-,  if  the  debt  to  which  the  promise  relates 
exceeds  the  amount  of  such  liability ;  the  promise  must  not  exceed  the  consideration. 
In  that  case  the  defendant,  an  auctioneer,  was  proceeding  to  sell  the  goods  of  a  ten- 
ant, who  was  indebted  to  the  plaintiff,  his  landlord,  for  rent  then  due,  and  also  for 
rent  to  become  due  at  a  future  time ;  the  plaintiff  demanded  security  for  his  rent, 
and  threatened  a  distress ;  and  the  auctioneer,  in  consideration  of  his  not  distraining, 
and  permitting  the  sale  to  proceed,  verbally  promised  to  pay  the  rent  then  due,  and 
also  that  to  become  due.  The  plaintiff  did  not  disti-ain,  and  the  sale  proceeded.  The 
Court  said  that  the  plaintiff  could  not  distrain  for  the  rent  not  due ;  the  defendant, 
by  paying  all  that  was  then  due,  might  have  proceeded  to  sell  the  goods ;  and  if  that 
sum  were  paid  or  secured,  the  plaintiff  sustained  no  loss  or  detriment  by  the  sale  of 
the  goods.  "So  that  the  promise  to  pay  the  accruing  rent  exceeded  the  considera- 
tion, and  cannot  be  sustained  on  the  ground  on  which  the  cases  referred  to  are  to  bo 
sustained,  but  is  nothing  more  than  a  promise  to  pay  money  that  would  become 
duo  from  a  third  person,  and  is  within  the  words  of  the  Statute,  and  the  mischief  in- 


MERCANTILE  CONTRACTS. 


Nature  and  Form  of  Contract. 


But  wlien  a  person  sued  upon  his  acceptance,  pleaded  that  it  waa 
for  the  plaintiff's  own  accommodation,  he  was  allowed  to  show  that 
it  was  discounted  to  raise  money  which  the  plaintiff  had  undertaken 
to  pay  pursuant  to  a  verbal  guaranty.  (A) 


(h)  Cresswell  v.  Wood,  10  Ad.  &  E.  460. 


tended  to  be  remedied  thereby.  And  as  to  so  much,  therefore,  the  promise  is  void  by 
statute."  And  the  promise  being  void  in  part,  was  held,  on  the  authority  of  the 
cases  of  Lexington  v.  Clark,  2  Vent.  223,  and  Chater  v.  Becket,  1  T.  R.  201,  to  be 
void  altogether. 

In  some  of  the  cases  in  the  United  States  the  decision  would  have  been  the  same, 
whether  the  test  stated  by  Chancellor  Kent,  or  that  which  seems  now  to  be  recognized 
in  England,  had  been  applied.  Farley  v.  Cleveland,  4  Cow.  432.  Gould  v.  Philips, 
10  John.  412.     Olmsted  v.  Greenly,  18  John.  12. 

Other  cases  would  appear  to  be  in  conflict  with  the  English  rule.  Slingerland  v. 
Morse,  7  John.  463.  Myers  v.  Morse,  15  John.  425.  Allen  v.  Thompson,  10  New 
Ilamp.  32.  Hilton  v.  Dinsmore,  21  Maine,  410.  Russell  v.  Babcock,  14  Maine,  138. 
Mercein  v.  Andrews,  10  "Wend.  461.     Randle  v.  Harris,  6  Yerg.  508. 

In  the  cases  in  Massachusetts,  a  difference  is  to  be  noted  from  those  in  New  York 
and  some  of  the  other  states.  While  the  latter  hold  that  a  new  and  original  consid- 
eration, whether  of  benefit  to  the  promisor  or  of  harm  to  the  promisee,  will  be  suf- 
ficient to  sustain  the  parol  promise,  the  former  seem  only  to  allow  such  a  considera- 
tion as  shall  be  of  benefit  to  the  promisor.  Thas,  in  the  recent  case  of  Nelson  v. 
Boynton,  3  Mete.  396,  where,  in  consideration  of  the  plaintiff's  discontinuing  a  suit 
and  discharging  an  attachment  on  the  property  of  the  original  debtor,  the  defendant 
made  a  verbal  promise  to  pay  the  debt,  the  Court  held  that  it  was  within  the  Statute. 
And  in  this  case  the  Court  lay  down,  as  the  rule  to  be  derived  from  the  decisions, 
"  that  cases  are  not  considered  as  coming  within  the  Statute,  when  the  party  promis- 
ing has  for  his  object  a  benefit  which  he  did  not  before  enjoy,  accruing  immediately 
to  himself;  but  where  the  object  of  the  promisee  is  to  obtain  a  release  of  the  person 
or  property  of  the  debtor,  or  other  forbearance  or  benefit  to  him,  it  is  within  the 
Statute."  A  rule  on  this  subject  is  also  laid  down  in  a  late  case  in  Indiana.  In  the 
case  of  Chandler  v.  Davidson,  6  Blackf  367,  the  Court  say,  "  There  are,  no  doubt,  cases 
in  which  a  verbal  promise  to  pay  the  amount  of  another  person's  debt,  is  an  original 
promise,  and  not  within  the  Statute  of  Frauds.  They  are  cases,  however,  in  which 
a  new  consideration  passes,  at  the  time  of  the  promise,  between  the  newly  contract- 
ing parties,  of  such  a  character  that  it  would  support  a  promise  to  the  plaintiff  for 
the  payment  of  the  same  sum  of  money,  without  reference  to  any  debt  from  another." 
Both  these  rules  approximate  more  nearly  to  that  which  seems  to  be  the  test  now 
applied  in  England,  than  the  rule  laid  down  by  Chancellor  Kent  in  Leonard  v.  Vre- 
denburgh.  The  rule  laid  lown  in  Nelson  v.  Boynton  seems  to  be  sanctioned  by  the 
recent  cases  of  Barker  v.  Bucklin,  2  Denio,  45 ;  Kingsley  v.  Balcombe,  4  Barb.  S.  C 
R.131. 

In  the  United  States  some  of  the  State  courts  have  followed  the  rule  of  Wain  « 


GUARANTIES.  57 1 


Nature  and  Form  of  Contract. 


As  conformity  to  the  provisions  of  tlie  Statute  is  tlius  requisite, 
it  will  be  proper  to  consider  them  separately. 

No  action   shall  he  brought^   to  charge  the  defendant^  ujwn  any 


Warlters  on  this  point,  and  have  held  that  the  consideration  must  be  expressed  in  th« 
writing.  New  York,  Sears  v.  Brink,  3  John.  210 ;  New  Hampshire,  Neilson  v.  San 
borne,  2  N.  H.  413 ;  Maryland,  Wyman  v.  Gray,  7  Har.  <fe  Johns.  400;  South  Caro 
lina,  Stephens  v.  "Wynn,  2  Nott  &  M'Cord,  372,  note  ;  Georgia,  Henderson  v.  Johnson, 

6  Georg.  390.  Others  have  held  that  the  term  agreement  is  to  be  construed  accord- 
ing to  its  popular  signification,  instead  of  its  legal  one,  and  only  require  that  the 
pro7nise  should  be  set  forth  in  writing.  Massachusetts,  Packard  v.  Richardson,  17 
Mass.  122  ;  Connecticut,  Stage  v.  Wilcox,  6  Conn.  81 ;  New  Jersey,  Buckley  v.  Beards- 
ley,  2  South,  570;  North  Carolina,  Gardner  v.  King,  2  Ired.  L.  297;  and  Tj-ler  v. 
Givens,  Riley's  L.  C.  56,  probably  overruling  Stephens  v.  "Winn,  before  cited,  in  South 
Carolina.  In  some  of  the  states,  Virginia,  Tennessee,  Alabama,  Mississippi,  and  per- 
haps others,  the  Statute  has  been  so  changed  as  to  read  "  unless  the  promise  or  agree- 
ment, <fec."  The  introduction  of  the  word  promise  would  seem  to  prevent  the  appli- 
cation of  the  English  rule  in  those  states,  as  the  reasoning  on  which  that  rule  is 
founded  does  not  apply.  Violet  v.  Patton,  5  Cranch,  142 ;  2  C.  R.  214.  And  it  has 
been  so  decided  in  Tennessee.  Taylor  v.  Ross,  3  Yerg.  330.  S.  P.  Pearce  v.  Wren,  4 
Sm.  &  M.  91.     Colgin  v.  Henley,  6  Leigh.  R.  80. 

Acceptance  of  Guaranti/. — When  the  guaranty  is  prospective  and  to  attach  upon 
future  transactions,  and  the  guarantor  is  uninformed  as  to  whether  his  guaranty  has 
been  accepted  and  acted  upon  or  not,  it  is  the  settled  doctrine  in  the  courts  of  the 
United  States,  that  notice  of  the  acceptance  must  be  given  within  a  reasonable  time. 
Lee  V.  Dick,  10  Peters,  482.  Russell  v.  Clark,  7  Cranch,  69,  92.  Edmonstone  v. 
Drake,  5  Peters,  624.  Douglas w.  Reynolds,  7  Peters,  113.  Adam?;.  Jones,  12  Peters, 
207.  Wilds  V.  Savage,  1  Story,  22.  Cremer  v.  Higginson,  1  Mass.  336.  This  rule 
seems  to  have  been  followed  in  most  of  the  State  courts.  Norton  v.  Eastman,  4 
Greenl.  521.  Babcock  v.  Bryant,  12  Picker,  122.  Mussey  v.  Raynor,  22  Pick.  223. 
Taylor  v.  Wetmore,  10  Ohio,  490.     Kay  v.  Allen,  9  Barr,  320.     Kincheloe  v.  Holmes, 

7  B.  Monr.  5.     Sollee  v.  Mengg,  1  Bai.  620. 

In  the  case  of  White  v.  Reed,  15  Conn.  457,  it  is  said,  that  as  a  general  rule,  a 
guarantor,  especially  a  party  giving  a  letter  of  guaranty,  is  entitled  to  notice  of  its 
acceptance ;  yet  this  is  far  from  being  a  universal  rule,  applicable  to  all  cases :  there 
are  many  exceptions  to  it ;  as,  where  there  is  an  acknowledgment  of  liability  and  a 
promise  to  pay,  which  is  sufiicient  evidence  of  notice,  if  it  did  not  supersede  the  ne- 
cessity of  giving ;  and  in  case  of  a  guaranty  of  a  pre-existing  debt,  where  the  gua- 
ranty appears  upon  the  evidence  of  debt  itself;  so,  where  the  guaranty  and  the  ac- 
ceptance of  it  are  simultaneous,  and  parts  of  the  same  transaction.  See  also  New 
Haven  Co.  Bank  v.  Mitchell,  15  Conn.  206. 

In  the  case  of  Train  v.  Jones,  11  Vermt.  444,  it  is  said  that  notice  of  acceptance, 
in  cases  of  guaranty,  to  take  effect  upon  future  credit,  is  required  by  the  American 
cases,  but  that  it  is  not  necessary  where  the  guarantor  is  standing  by  when  the  credit 
is  given,  or  otherwise  advertised  of  the  fact.  E.\-pres3  notice  is  not  required  of  what 
is  already  known. 


572  MERCANTILE  CONTRACTS. 

Nature  and  Form  of  Contract. 

special  promise  to  answer  for  the  debt,  default,  or  miscarriage  of  an< 
other. 

In  order  that  a  contract  may  fall  witliin  these  terms,  it  is  es- 


And  ill  the  same  ease  it  is  said  by  the  Court,  that  the  cases  requiring  notice  of  the 
acceptance  of  a  guaranty  do  not  "  seem  to  rest  upon  the  most  satisfactory  reasons." 
In  New  York,  the  courts  not  only  entertain,  but  act  on  such  an  opinion,  and  hold 
that  notice  of  the  acceptance  of  a  guaranty  need  not  be  given,  unless  where  it  is  re- 
quired by  the  terms  of  the  contract.  In  Douglas  v.  Howland,  24:  "Wend.  85,  it  is  said 
that  the  cases  requiring  notice  have  no  foundation  in  English  jurisprudence,  where 
the  adjudications  are  numerous  and  clear  the  other  way.  Citing  Hai-ris  v.  Ferrand, 
Hardr.  36,  42.  Com.  Dig.  tit.  Plead.  C.  75.  Warrington  v.  Furbor,  8  East,  242. 
Swynyard  v.  Bowers,  5  Maule  <fc  Selw.  621 ;  Saund.  33.  Philips  v.  Astling,  2  Taunt. 
206.  "The  guarantor,"  say  the  Court,  "  by  inquiring  of  his  principal,  with  whom  he 
is  presumed  to  be  on  intimate  terms,  may  inform  himself  perfectly  wliether  the  gua- 
ranty were  accepted,  the  conditions  fulfilled,  and  payment  made.  When  that  can 
be  done,  the  cases  all  hold  that  notice  is  not  necessary,  even  as  a  preliminary  to  the 
bi-inging  of  an  action,  much  less  to  found  a  right  of  action.  The  only  exception  is 
the  well  known  one  of  collateral  parties  to  bills  of  exchange  and  promissory  notes." 
See  also  Whitney  v.  Groot,  24  Wend.  82.  Smith  v.  Dann,  6  Hill,  543.  Curtis  v. 
Brown,  2  Barb.  S.  C.  R.  51.     Union  Bank  v.  Coster,  3  Comst.  203. 

The  omission  of  notice  does  not  imply  injury  to  the  guarantor  as  a  matter  of 
course.  The  guarantor  must  show  that  he  has  suffered  damage  by  the  neglect  to 
make  demand  upon  the  principal  debtor,  and  to  give  notice,  and  then  he  is  dis- 
charged only  to  the  extent  of  the  damage  suffered.  Rhett  v.  Poe,  2  How.  457. 
Bushnell  v.  Church,  15  Conn.  406.  Wildes  v.  Savage,  1  Storj'-,  22.  Gibbs  v.  Cannon, 
9  Serg.  &  Raw,  195.  Salisbury  v.  Hale,  12  Pick.  424.  Contra.  Lewis  v.  Brewster,  2 
M'Lean,  21.     Foote  v.  Brown,  ib.  369. 

Notice  of  Default. — In  the  case  of  Douglas  v.  Reynolds,  7  Peters,  113,  the  question 
arose,  as  to  whether  a  demand  of  the  debt  guaranteed,  and  notice  of  non-payment, 
was  necessar}"-  to  charge  the  guarantor.  The  Court  said,  that  "by  the  very  terms  of 
the  guaranty,  as  well  as  by  the  general  principles  of  law,  the  guarantors  are  only 
collaterally  liable  upon  failure  of  the  principal  debtor  to  pay  the  debt.  A  demand 
upon  him,  and  a  failure  on  his  part  to  perform  his  engagements,  are  indispensable  to 
constitute  a  casus  foederis.  The  creditors  are  not  bound  to  institute  any  legal  pro- 
ceedings against  the  debtor,  but  they  are  required  to  use  reasonable  diligence  to 
make  demand  and  to  give  notice  of  the  non-payment.  The  guarantors  are  not  to 
be  held  to  any  length  of  indulgence  which  the  creditors  may  choose,  but  have  a 
right  to  insist  that  the  risk  of  their  responsibility  shall  be  fixed,  and  terminated 
within  a  reasonable  time  after  the  debt  has  become  due." 

The  doctrine  thus  laid  down  has  not  met  with  general  approbation.  In  Douglas 
V.  Howland,  24  Wend.  35,  it  was  held  that  notice  of  default  was  in  no  ease  necessaiy. 
The  liability  of  the  guarantor  was  deemed  commensurate  with  that  of  the  principal, 
and  both  must  take  notice  at  their  peril.  In  Train  v.  Jones,  11  Verm.  444,  the  rule 
was  thus  laid  down  :  "An  absolute  guaranty  that  the  debt  of  a  third  person  shall  be 
paid,  or  that  he  shall  pay  it,  imposes  the  same  obligation  upon  the  guarantor.     The 


GUARANTIES.  573 


Kature  and  Form  of  Contract. 


scntial  tliat  it  sliould  be  for  the  payment  or  performance  of  some- 
thing/or  iL-hidi  cmother  i:serson  is  liable ;  since,  if  no  other  person  be 
liable,  the  contract  is  not  "to  answer  for  the  debt,  default,  or  miscar- 
riage of  anotherJ^  For  instance,  where  A.,  in  consideration  that  B. 
would  not  sue  J.  S.,  promised  to  pay  the  money  due  from  J.  S.,  this 
was  held  to  be  within  the  Statute ;  (i)  for  J.  S.  was  liable  to  the  pay- 
ment of  his  debt,  before  and  after  A.'s  promise,  which,  therefore, 
was,  strictly,  "to  answer  for  the  debt  of  J.  S^  But  where  it  was 
agreed,  between  A.,  his  creditors,  and  one  J.  S.,  that  J.  S,  should 
pay  the  creditors  ten  shillings  in  the  pound,  to  be  received  by  them 
in  full  satisfaction,  and  that  they  should  assign  their  debts  to  J.  S. ; 
this  contract  was  held  not  within  the  Statute,  because  J.  S.  had  not 
contracted  to  pay  the  debts  of  A.,  but  to  purchase  them  from  A.'s 
creditors,  and  would,  after  such  purchase,  have  a  right  to  use  the 
names  of  the  creditors,  in  order  to  recover  the  debts  from  A.  {j) 
So,  where  the  defendant,  in  consideration  that  the  plaintiff  would 
discharge  out  of  custody  a  person  whom  he  had  taken  on  a  ca.  sa., 
promised  to  pay  the  debt  on  a  certain  day,  or  render  that  person, 
the  Court  held  the  promise  not  within  the  Statute,  because  the  debt 
was  gone  by  the  discharge  of  the  debtor  out  of  custody.  [Ic) 

(i)  Rothery  v.  Curry,  B.  N.  V.  281.  Accord.  Kirkham  v.  Marter,  2  B.  <fc  A.  613. 
Fish  V.  Hutchinson,  2  Wils.  94.  Winckworth  v.  Mills,  2  Esp.  484.  Thomson  v.  Bond, 
1  Camp.  4.     JEx  parte  Adney,  Cowp.  460.     French  v.  French,  2  M.  &  Gr.  644. 

{j)  Anstey  v.  Marden,  1  K  R.  124.  Stephens  v.  Squire,  5  Mod.  205.  See  Read  v 
Nash,  1  AVils.  305.  Sed  qucere  whether  that  case  be  now  law ;  and  see  1  Wms.  Saund. 
211,  b.  n.  1.  Harris  v.  Huntbach,  1  Burr.  373.  Castling  v.  Aubert,  2  East,  325. 
Thomas  v.  Cook,  8  B.  &  C.  728.  Adams  v.  Dansey,  6  Bingh.  506.  Howes  v.  Martin, 
1  Esp.  162.  In  Thomas  v.  Cook,  it  was  laid  down  generally  that  a  promise  to  hidem- 
nify  was  not  within  the  Statute ;  that  is,  however,  overruled  by  Green  v.  Cresswell, 
10  Ad.  &  E.  453. 

{k)  Goodman  v.  Chase,  1  B.  <&  A.  297.  Butcher  v.  Steuart,  11  M.  <fe  W.  857. 
Browning  v.  Stallard,  5  Taunt.  450.  And  see  Bird  v.  Gammon,  3  Bingh.  K  C.  883, 
which  was  decided  on  the  same  ground.  The  civilians  recognized  a  distinction  of 
this  sort  under  the  terms  Uxpromissio  and  Adprojnissio. 


creditor  is  not  bound  to  use  diligence,  or  give  notice  of  non-payment.  This  is  in 
accordance  with  the  long  established  rule  of  the  common  law.  If  I  undertake  for 
the  act  of  a  third  person,  I  am  not  entitled  to  notice  of  his  default  before  suit 
brought ;  but  if  I  undertake  directly  for  your  act  or  success,  I  am  entitled  to  notice 
of  j'our  failure,  for  this  is  a  fact  peculiarly  iviihin  your  knoioledge."    See  also  Pecks  v. 


574  MERCANTILE  CONTRACTS. 

Nature  and  Form  of  Contract. 

If  C.  be  A.'s  debtor,  and  B.'s  creditor,  an  agreement  bj  B.  to 
pay  bis  debt  to  A.,  in  discharge  of  C.'s  liability,  is  not  within  the 
Statute,  (^)  But,  qucere,  if  the  debt  from  B.  to  C.  had  been  contin- 
gent at  the  time  of  making  such  agreement.  (?/^) 

A  promise  to  pay  another  man's  debt  out  of  that  other  man's 
own  funds,  when  they  shall  come  to  the  hands  of  the  person  pro- 
mising, is  not  within  the  Statute,  {n) 

The  Court  of  Queen's  Bench  has  decided  in  Eastwood  v. 
Kenyon^  (o)  that  if  A.  promise  B.  that  he,  A.,  will  pay  to  C.  a  debt 
due  to  C.  from  B,,  that  promi&e  is  not  within  the  fourth  section  of 
the  Statute  of  Frauds,  and,  consequently,  need  not  be  reduced  to 
writing.  The  Court  further  stated  its  opinion  that  the  Statute  ap- 
plies only  to  promises  (p)  made  to  the  person  to  whom  another  is 

(l)  Wilson  V.  Coupland,  5  B.  &  A.  228. 

(?«)  See  Perkins  v.  Moravia,  1  C.  <fe  P.  ol6.  There  seems  no  rational  distinction 
between  the  two  cases. 

(n)  Andrews  v.  Smith  2  C.  M.  &  R.  627.  See  Walker  v.  Rostron,  9  M.  &  W. 
411. 

(o)  11  Ad.  &  E.  438. 

(jo)  The  soundness  of  this  doctrine  may  possibly  be  thought  to  admit  of  soma 
question.  It  may  be,  probably,  guessed  that  the  framers  of  the  Statute  of  Frauds 
never  contemplated  the  occurrence  of  cases  other  than  those  of  promises  to  the  per- 
son to  whom  the  other  is  answerable :  still  such  cases  fall  within  the  words  of  the 
Statute  read  in  their  ordinary  sense.  The  amount  of  the  liability  of  the  person  pro- 
mising is  just  the  same,  and  the  contract  can  scarce  be  said  to  be  less  complex;  it 
may  be  even  more  so,  for  instance,  if  A.  promise  B.  that  he  Avill  pay  the  debt  dae  or 
to  become  duo  from  C.  to  D.,  here  is  a  case  in  which  the  promise,  not  being  made  to 
the  person  to  whom  C.  is  answerable,  would,  according  to  the  text,  be  sufficient  with- 
out writing;  and  yet  it  is  even  more  complex  than  an  ordinary  guaranty,  for  it  in- 
troduces one  more  person  into  the  arrangement,  and  the  time  for  its  performance 
will  be  as  long  delayed,  so  that,  whether  we  regard  the  nature  of  the  transaction  or 
the  length  of  time  that  is  to  precede  its  accomplishment,  it  seems  to  stand  in  quite 
as  much  need  as  an  ordinary  guaranty  does  of  some  written  memorial  for  the  pur- 
pose of  preventing  fraud  or  perjury  in  the  future  statement  of  its  terms.  Indeed  it 
would  not  be  difficult  to  put  cases  in  which  these  sort  of  promises  would  become  in 
effect  guarantiss  properly  so  called  ;  for,  suppose  the  promise  made  to  the  debtor  or 
the  stranger  as  a  trustee  for  the  creditor,  or  suppose  the  debtor  or  the  stranger  were 
to  assign  the  benefit  of  it  to  the  creditor,  in  these  cases  it  would  become  in  effect 
and  substance  a  guaranty,  with  this  only  difference,  that,  if  an  action  were  corn- 
Barney,  13  Verm.  93.  Bushnell  v.  Church,  15  Conn.  406.  Hammond  v.  Gilmore,  14 
Conn.  479.  An  instructive  examination  of  the  whole  doctrine  may  be  found  in  vol. 
2  A,  S,  C,  part  1,  and^os^ 


GUARANTIES.  575 


Nature  and  Form  of  Contract. 


answerable,  and  this  opinion  has  been  since  confirmed  and  acted 
upon  by  the  Court  of  Exchequer,  {q) 

A  distinction  was  once  taken,  between  a  promise  to  pay  for 
goods,  &c.,  for  another,  hefo7'e  and  aftei-  delivery ;  (r)  but  this  is  over- 
ruled, and  it  is  now  clear  that,  if  the  person  for  whose  use  the 
goods  are  furnished  is  liable  at  all,  any  promise  by  a  third  person, 
on  sufficient  consideration,  to  pay  that  debt,  must  be  in  writing,  (s) 
In  a  word,  the  question  by  which  it  must  be  tested,  whether  a 
contract  be  or  be  not  within  the  Statute,  is,  What  is  ike  promise  f 
Is  it  a  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
another,  for  which  that  other  remains  liable  ?  If  so,  it  must  be  in 
writing.  {() 

menced  upon  it,  the  contractee  must  be  the  plaintiff  upon  the  record,  a  character 
which  equity  would  not  allow  him  to  decline  on  receiving  a  proper  indemnity.  For 
these  reasons  it  may  be  doubted  whether  Eastwood  v.  Kenyon  has  finally  established 
(to  its  full  extent)  the  doctrine  in  the  text,  especially  since,  in  construing  other  parts 
of  the  same  section  of  the  Statute  of  Frauds,  a  disposition  has  been  shown  rather  to 
extend  than  to  confine  the  effect  of  the  expression  used  by  the  Legislature.  See 
Carrington  v.  Roots,  2  M.  &  "W.  248.  Sykes  v.  Dixon,  9  Ad.  &  E.  693.  Qmere,  how- 
ever, how  far  these  cases  are  consistent  with  Cresswell  v.  Wood,  10  Ad.  &  E.  460. 
I  have  only  further  to  observe,  that  the  opinion  expressed  by  the  Court  in  Eastwood 
V.  Kenyon,  may,  perhaps,  be  thought  to  diverge  somewhat  in  principle  from  the  de- 
cision in  the  prior  case  of  Green  v.  Cresswell,  10  Ad.  &  E.  453.  In  that  case,  Reay 
having  arrested  Hadley,  the  plaintiff  Green  became  bail  at  the  request  of  the  defen- 
dant Cresswell,  who  promised  to  indemnify  him.  It  was  held  that  this  promise 
ought  to  be  in  writing.  This  case  does  not  indeed  raise  the  precise  point  above  dis- 
cussed, for  Hadley  certainly  had  a  duty  to  perform  to  Green,  his  bail,  and  made  de- 
fault in  its  performance.  Still,  Iladley's  primary  liability  was  to  Reay,  and  the 
Court,  in  giving  judgment,  approves  of  Sergeant  "Williams'  test,  which  would  in- 
clude such  a  case  as  Eastwood  v.  Kenj'on.  In  making  these  observations,  however, 
it  is  intended  only  to  suggest  the  possibility  of  a  discussion  which  may  hereafter 
arise,  not  to  impugn  the  proposition  cited  from  Eastwood  v.  Ken3'on,  which  indeed 
must  ultimately  be  sustained  if  the  meaning  of  the  words,  promise  to  answer  for  the 
debt,  default,  or  miscarriage  of  another,  be  taken,  as  they  well  may,  to  refer  to  a  pro- 
mise to  become  a  substitute  to  every  intent  for  that  other — to  answer  to  the  same  call 
to  which  he  would  have  answered  under  pain  of  the  same  liability.  [See  also  the 
American  cases  of  Conkey  v.  Hoj^kins,  17  Johns.  Rep.  113;  Johnson  v.  Gilbert,  4 
Hill,  178 ;  Preble  v.  Baldwin,  6  Cush.  553,  in  which  the  doctrine  of  Eastwood  v. 
Kenyon  is  approved. — Am.  Ed.] 

{q)  Hargreaves  v.  Parsons,  13  M.  &  W.  561. 

(r)  Cowp.  228.     Jones  v.  Cooper. 

(s)  Matson  v.  Whearam,  2  T.  R.  80.  Anderson  v.  Hayman,  1  H.  Bl.  120.  Lirkmyr 
V.  Darnell,  1  Salk.  27 ;  2  Ld.  Raym.  ]  085. 

(t)  1  Wms.  Saund.  211  to  211  c.     Bushnell  v.  Beaven,  1  Bing.  N.  C.  103. 


576  MERCAXTILE  CONTRACTS. 

Nature  and  Form  of  Contract. 

The  reader  must,  however,  be  apprised,  that  it  has  been  thought 
to  follow  from  some  of  the  decisions,  {u)  that  a  man  may  bind  him- 
self to  pay  another's  debt,  by  a  parol  jDromise,  founded  on  a  new 
consideration.  This  idea  has  been  controverted,  and  the  cases  cited 
in  the  margin  explained,  and  reconciled  to  the  rule  as  above  stated, 
in  an  elaborate  note,  1  Wms.  Saund.  211,  c.  n.  1,  where  it  is  con- 
tended, that  the  nature  of  the  consideration  cannot  affect  the  terms 
of  the  promise  itself,  unless,  as  in  Goodman  v.  Chase,  it  be  an  ex- 
tinguishment of  the  liability  of  the  original  party ;  and,  indeed,  in 
Edwards  v.  Kelly ^  above  cited,  the  judges  all  professed  to  decide, 
on  the  ground,  that  the  promise  there  was  not  to  pay  the  debt  of 
another. 

"Where  A.  has  been  concerned  in  inducing  a  tradesman  to  de- 
liver goods  to  B.,  it  often  becomes  a  question,  whether  the  goods 
must  be  looked  upon  as  actually  sold  to  A.,  though  delivered  to  B., 
or  whether  they  must  be  considered  as  sold  to  B.,  A.  becoming  a 
surety  for  the  price :  in  the  former  case,  A.  would  be  liable  as  a 
principal,  and  the  contract  would  not  fall  within  the  Statute ;  in  the 
latter,  A.  would  be  liable  only  as  surety,  and  only  on  a  written 
guaranty.  To  decide  this  question.  To  luhom  vxis  credit  given  f  is, 
generally  speaking,  {v)  the  j^rovince  of  a  jury,  who  are  to  take  into 
their  consideration  all  the  circumstances  of  the  case,  {id)  If,  upon 
notice  given  to  the  plaintiff"  to  produce  his  books,  it  appear  that  the 
credit  was  not  originally  given  to  A.,  that  is  strong,  though  not 
conclusive  evidence  that  he  is  but  a  surety,  (x) 

It  has  been  laid  down,  that  a  parol  promise  to  pay  the  debt  of 
another,  and  also  do  some  other  thing,  is  void  altogether ,  {y)  this 
seems,  however,  to  hold  good  in  those  cases  only  in  which  the 

(m)  Holditch  V.  Milne,  3  Esp.  86.  Williams  v.  Leaper,  2  Wilson,  308.  3  Burr. 
1886,  recognized  in  Castling  v.  Aubert,  2  East,  325.  Edwards  v.  Kelly,  6  M.  &  S.  204. 
Bampton  v.  Paulen,  4  Bing.  264.  See,  however,  Thomas  v.  Williams,  10  B.  &  C.  664. 
See  Starkie  on  Ev.,  2d  ed.  vol.  ii.  347 ;  and  Clancy  v.  Pigott,  2  Ad.  &  E.  473. 

{v)  See  a  case  in  which  it  arose  on  the  record,  Taylor  v.  Hilary,  1  C.  M.  &  R.  741. 

\w)  Keate  v.  Temple,  1  B.  &  P.  158.  Darnall  v.  Tratt,  2  C.  <fe  P.  82.  Storr  v.  Scott, 
6  C.  &  P.  241.  Simpson  v.  Penton,  2  C  &  M.  430  ;  4  Tyrwh.  315.  Andrews  v.  Smith 
2  C.  M.  &,  R.  627. 

{x)  Keate  v.  Temple,  uhi  supra.     Croft  v.  Smalwood,  1  Esp.  121. 

{y)  Chater  v.  Beckett,  7  T.  R.  201.  Thomas  v.  Williams,  10  B.  <fe  C.  664.  See 
Head  v.  Baldrj-,  2  Nev.  &,  P.  217  ;  6  Ad.  <Ss  E.  459. 


GtJAKANTlES.  577 


Nature  and  Form  of  Contract. 


parts  of  the  contract  are  so  blended  together  that  they  cannot  be 
separated.  (2) 

Unless  the  agreement,  &c. — The  term  agreement  comprehends 
contracting  parties^  a  consideratio7i,  and  a  promise ;  all  these  must, 
therefore,  appear  in  the  writing,  (a)  It  is,  however,  sufficient  if  the 
consideration  can  be  gathered  from  the  whole  tenor  of  the  writing ; 
not  that  a  mere  conjecture^  however  j3lausible,  would  be  sufficient  to 
satisfy  the  Statute,  but  there  must  be  a  well-grounded  inference  to 
be  necessarily  collected  from  the  terms  of  the  memorandum ;  (IS)  and 
there  is  a  material  difference  in  this  respect  between  prospective  and 
retrospective  agreements ;  the  former  being  much  more  easily  sup- 
portable :  thus,  where  the  instrument  was  as  follows . — 

"  To  Mr  John  Kewhury. 
"  SlE, 

"  I,  the  undersigned,  do  hereby  agree  to  bind  myself  to  be  se- 
curity to  you  for  S.  Corcoran,  late  in  the  employ  of  J.  Pearson,  of 
London  Wall,  for  whatever  you  may  intrust  him  with  while  in 
your  employ,  to  the  amount  of  50?.,  in  case  of  any  default  to  make 
the  same  good. 

"  11th  March,  1828.  W.  Armsteong." 

It  was  objected  that  no  consideration  for  Armstrong's  promise 
appeared  upon  this  guaranty ;  but  the  Court  held  otherwise ;  and 
Tindal,  C,  J.,  said,  "  The  words  are  all  prospective;  it  may  fairly  be 
implied  that  Corcoran  had  left  one  service,  and  that  the  guaranty 
was  given  in  consideration  of  his  being  taken  into  another."  (c)  So 
where  the  guaranty  was,  "  I  guarantee  the  payment  of  any  goods 

(2)  Wood  V.  Benson,  2  Tyrwh.  97 ;  2  C.  &  J.  94. 

(a)  Wain  v.  Warlters,  5  East,  10.  Jenkins  v.  Eeynolds,  3  B.  &  B.  14.  Saunders  v. 
Wakefield,  4  B.  &  A.  595;  1  Wms.  Saund.  211,  in  notis. 

(b)  See  the  judgment  of  Tindal,  C.  J.,  in  Hawes  v.  Armstrong,  1  Bing.  K  C.  766. 
And  of  Patterson,  J.,  in  James  v.  Williams,  5  B.  <fe  Ad.  1109.  And  see  Tomlinson  v. 
Gill,  6  Ad.  <fe  E.  564;  Eaikes  v.  Todd,  8  Ad.  &  R  846;  Bentham  v.  Cooper,  5  M.  & 
W.  621 ;  Jarvis  v.  Wilkins,  7  M.  &  W.  410,  "where  the  following  guaranty  was  held 
good: 

"I  undertake  to  pay  6^.  4s.  for  a  suit  ordered  by  T.  W.  * 

(Signed)  "&  W.  W." 

(c)  Newbury  v.  Armstrong,  6  Bing.  201. 

37 


578  aiERCANTILE  COXTRACTS. 

Xature  and  Form  of  Contract. 


which  A.  shall  deliver  to  B.,"  this  was  held  sufficient,  {d)  Here, 
too,  the  agreement  was  prospective,  it  contemplated  a  future  delivery 
of  goods  to  B.     But  where  the  instrument  was — 

^^  Messrs.  Wain  &  Co.^ 
"  I  will  engage  to  pay  you,  by  half-past  four  this  day,  fifty-six 
pounds,  and  expenses,  on  bill,  that  amount,  on  Hall, 

John  Warlters." 

This  was  held  insufficient,  (e)     Here  the  agreement  was  clearly 

{d)  Stapp  V.  Lill,  1  Camp.  242 ;  9  East,  348.  Accord.  Russell  v.  Moseley,  3  B.  <fe 
B.  211.  Morris  v.  Stacey,  Holt,  N.  P.  C.  153.  Ryde  v.  Curtis,  8  D.  &  R.  62.  Emmott 
V.  Kears,  5  Bing.  N.  C.  560.  Kennaway  v  Treleavan,  5  M.  &  "W.  498,  and  in  next 
note.  Ex  parte  Gardom,  15  Ves.  287.  Combe  v.  "Woolf,  8  Bingh.  156.  In  Boehm 
V.  Campbell,  8  Taunt.  679,  and  Pace  v.  March,  1  Bingh.  216,  the  Court  held  the 
agreements  prospective  and  good  within  the  Statute:  that  construction,  however, 
seems  unsustainable,  and  those  two  cases  are  not  at  present  to  be  relied  on.  See 
Morley  v.  Boothby,  3  Bingh.  107. 

{e)  "Wain  v.  Warlters,  5  East,  40.  Accord.  Saunders  v.  Wakefield,  4  B.  <&  A.  595. 
Jenkins  v.  Eeynolds,  3  B.  &  B.  14.  Morley  v.  Boothby,  3  Bing.  107.  Allnutt  v 
Ashenden,  5  M.  &  Gr.  392.  Lyon  v.  Lamb,  Append,  to  Fell  on  Guaranties.  Whit- 
comb  V.  Lees,  5  Bingh.  34.  Cole  v.  Dyer,  1  C.  &  J.  461 ;  1  Tyrwh.  307.  Wood  v. 
Benson,  2  C.  &  J.  94;  2  Tyrwh.  98.  Bushnell  v.  Beavan,  1  Bingh.  N.  C.  103.  Hawes 
V.  Armstrong,  1  Bingh.  N.  C.  761.  Ellis  v.  Levi,  ibid.  767,  in  notis.  James  v.  Wil- 
liams, 5  B.  &  Ad.  1109.  Clancy  v.  Piggott,  2  Ad.  &  E.  473.  Price  v.  Richardson,  15 
M.  &  W.  537,  and  post,  sec.  2.  Raikes  v.  Todd,  8  Ad.  &  E.  846,  where  the  instrument 
was,  "  I  undertake  to  secure  to  you  the  payment  of  any  sum  you  have  advanced,  or 
may  hereafter  advance,  to  D.  on  his  account  with  you,  commencing  1st  November, 
1831,  not  exceeding  2,000/."  It  will  be  observed  that  this  guaranty  is  partly  for  past 
advances,  and  it  was  on  that  ground  Mr.  J.  Patterson  rested  his  opinion  of  its  insuf- 
ficiency. See,  however,  the  observation  of  Baron  Parke,  in  Kennaway  v.  Treleavan, 
5  M.  &  W.  500,  where  his  Lordship  seems  to  think  that  there  can  be  no  objection  to  a 
guaranty  for  past  as  well  as  future  defaults  in  consideration  of  a  future  employment. 
In  that  case  the  guaranty  was,  "  I  hereby  guarantee  to  you  the  sum  of  250/.,  in  case 
Mr.  P.  sho%dd  make  default  in  the  capacity  of  agent  and  traveller  to  you^  Baron  Parke 
said,  that  perhaps  the  parties  only  contemplated  such  sums  as  P.  should  receive  in 
future,  but,  even  if  its  effect  were  to  oblige  the  defendant  to  make  good  sums  he  had 
alread}'  received  and  neglected  to  account  for,  his  Lordship  did  not  see  why  he  should 
not  be  liable  for  those  sums  also,  the  consideration  being  the  futtire  employment  of  P. 
It  is  obvious  that,  in  such  a  case,  the  objection,  if  any,  to  the  guaranty-,  is  not  that 
the  consideration  does  not  appear,  but  that  the  consideration  which  does  appear  is 
inadequate,  a  sort  of  modification  of  the  doctrine  of  nudum  pactmn  which  the  courts 
seem  now  to  regard  with  disfavor.  In  the  recent  case  of  Johnson  v.  Nicholls,  1  C.  B, 
251,  the  following  guaranty  was  held  to  be  an  available  security  for  the  past  as  well 


GUARANTIES.  5-79 


Nature  and  Form  of  Contract. 


retrospective,  Warlters  engaging  to  guaranty  a  debt  already  con- 
tracted on  the  bill.  Yet,  even  where  the  agreement  is  retrospective, 
still  if  it  refer  to  a  p)asi  consideration,  which  it,  however,  states  to 
have  been  moved  hy  an  antecedent  request  from  the  guarantor,  there 
it  will  be  sufficient ;  (/)  for  such  a  consideration  would  be  suffi- 
cient at  common  law  to  support  a  promise,  and  the  Statute  of 
Frauds  has  made  no  alteration  whatever  with  regard  to  the  suffi- 
ciency of  the  consideration,  but  only  requires  that  it  should  be  in 
writing,  (g) 

Where  the  guaranty  was  in  consideration  that  the  plaintiff 
would  withdraw  "  the  promissory  note,''^  the  Court  of  King's  Bench 
held  that  it  was  stated  with  sufficient  certainty,  and  that  parol 
evidence  was  admissible  to  show  that  a  note  withdrawn  by  him  was 
the  thing  meant  by  the  agreement,  {h)  And  where  it  was,  "  In  con- 
sideration of  your  being  in  advance  to  L.  and  Sons  in  the  sum  of 
10,000/.  for  the  purchase  of  cotton,  I  do  hereby  give  my  guaranty 
for  that  amount  on  their  behalf,"  the  Exchequer  Chamber  held  that 
the  contract  might  be  shown  by  evidence  to  apply  to  future  ad- 
vances, and  would  be  in  that  case  valid,  ii) 

Though  the  parties'  promise  and  the  consideration  must  appear, 
the  amount  of  the  debt  guaranteed  need  not  be  mentioned,  (/c) 


as  the  future  debt.  "As  you  are  about  to  enter  upon  transactions  in  business  with 
Messrs.  Claridge,  Brothers,  and  NichoUs,  with  whom  j-ou  have  already  had  dealings, 
in  the  course  of  which  they  may  from  time  to  time  become  largely  indebted  to  you : 
in  consideration  of  your  danger  thereby,  I  agree  to  be  responsible  to  you  for,  and 
guarantee  j'ou  the  payment  of,  any  sums  of  money  which  that  firm — whether  it  may 
consist  of  the  same  members  as  at  present  or  others — now  is,  or  may  at  any  time  be 
indebted  to  you,  so  that  I  am  not  called  on  to  pay  more  than  the  sum  of  2,000/."  The 
Court  held  that  the  bona  fide  continuance  of  the  dealings  formed  a  good  considera- 
tion for  the  payment  of  the  antecedent  debt,  and  that  they  could  not  enter  into  the 
question  of  its  inadequacy.  See  also  Chapman  v.  Sutton,  2  C.  B.  634.  Boyd  v. 
Moyle,  ibid.  644.  See  Hitchcock  v.  Coker,  6  Ad.  &  E.  438.  Brooks  v.  Haigh,  10  Ad. 
&  E.  323. 

(/)  Payne  v.  Wilson,  Y  B.  &  C.  423.  Stead  v.  Liddard,  1  Bingh.  196.  Coe  v. 
Duffield,  7  B.  M.  252. 

{g)  See  Eann  v.  Hughes,  7  Bro.  P.  C.  556 ;  7  T.  R.  350,  n.  a.  Reech  v.  Kennegal 
I  Ves.  126.     Hawkes  v.  Saunders,  Cowp.  289. 

{h)  Shortrede  v.  Cheek,  1  Ad.  &  E.  57. 

(i)  Brookes  v.  Haigh,  10  Ad.  &  E.  4S8. 

(A;)  Bateraan  v.  Phillips,  15  East,  272. 


580  MERCANTILE  CONTRACTS. 

Nature  and  Form  of  Contract. 

Or  some  'memorandum  or  note  thereof^  &c. — Under  this,  as  well  aa 
under  the  17th  section,  the  contract  may  be  collected  from  several 
distinct  papers,  provided  they  can  be  sufficiently  connected  without 
oral  testimony ;  (Z)  and  as  the  writing  is  necessary  to  evidence  the 
contract,  not  to  constitute  it,  the  memorandum  need  not  have  been 
delivered  to  the  party  relying  on  it ;  therefore,  a  letter  from  a  man 
to  his  own  agent,  or  to  any  one  else,  setting  out  the  agreement,  is 
sufficient,  (m) 

Signed  by  the  party  to  he  charged^  or  some  other  person  thereunto 
by  him  lawfully  authorized. — See  the  remarks  upon  the  corresponding 
words  in  the  17th  section,  p)ost^  Ch.  XII.  Contracts  of  Sale. 

It  has  been  laid  down  that  a  signature  by  the  party,  as  a  witness, 
to  the  instrument  containing  or  referring  to  the  agreement,  is  suf- 
ficient, if,  when  he  signed,  he  was  aware  of  the  contents,  (n)  It  is 
immaterial  at  what  part  of  the  instrument  the  signature  is  placed, 
whether  at  the  beginning  or  end.  (o)  It  is  sufficient  if  it  be  signed 
by  the  party  to  be  charged^  though  it  be  not  signed  by  the  other  con- 
tracting party,  {p)  for  (to  use  the  words  of  the  L.  C.  J.  in  Laythoarp 
V.  Bryant,  (q)  "it  is  not  the  signature  of  both  parties  that  makes  the 
agreement.  The  agreement  is,  in  fact,  made  before  any  signature." 
Botli  parties  must,  it  is  true,  have  concurred  in  making  the  agree- 
ment, but  the  Statute  only  requires  that  one,  viz.,  the  party  to  be 
charged,  should  sign  the  document  that  is  to  evidence  it. 

It  is,  in  some  cases,  necessary  that  a  guaranty  should  be  stamped. 

{I)  Tawney  v.  Crowther,  1  Bro.  C.  C.  161,  318.  Clinan  v.  Cook,  Sch.  &  Lef.  22. 
Brodie  v.  St.  Paul,  1  Ves.  jun.  326.  Kain  v.  Old,  2  B.  &  C.  627.  See  Evans'  Statutes, 
vol.  i.  p.  32Y,  and  post,  Chapter  XII,  Co?itracts  of  Sale. 

{m)  Per  Lord  Hardwicke,  3  Atk.  503;  2  Cha.  R.  147;  1  Vern.  110.  Bateman  v. 
Phillips,  15  East,  272.  Longfellow  v.  Williams,  Peake's  Add.  Ca.  225.  See  Dobell  v. 
Hutchinson,  3  Ad.  &  E.  355. 

(«)  1  Wils.  118  ;  1  Ves.  6  ;  3  Atk.  502.  Coles  v.  Trecothick,  9  Ves.  251,  per  Lord 
Eldon  ;  sed  vide  Gosbell  v.  Archer,  2  Ad.  &  E.  500.  See  on  this  subject,  post,  Chapter 
XIL  s.  2. 

(o)  Ogilvie  V.  Foljambe,  3  Meriv.  62.  Selby  v.  Selby,  ibid.  6.  Knight  v.  Crockford, 
1  Esp.  190.     Right  V.  Price,  Dougl.  241. 

(p)  Laythoarp  v.  Bryant,  2  Bingh.  N.  C.  735.   See  3  Bro.  C.  C.  161,  318 ;  Str.  236 
1  P.  Wms.  618.     Hutton  v.  Gray  2  Ch.  Ca.  164.     Seton  v.  Slade,  7  Ves.  265.    Knighl 
y.  Crockford,  1  Esp.  190. 

(q)  2  Bingh.  N.  C.  744. 


GUARANTIES.  581 


Surety,  how  far  liable. 


Stat.  55  Geo.  3,  c.  184,  imposes  a  duty  on  agreements  the  subject 
matter  whereof  is  of  the  value  of  20^.  or  upwards :  to  this  there 
are,  however,  exceptions,  particularly  of  agreements  for  the  sale  of 
goods.  Contracts  of  guaranty  are  within  both  provisions :  where 
the  principal  contract  would  require  a  stamp,  so  does  the  guaranty, 
and  vice  versa,  (r) 

Section  VI. — Surety,  hoxo  far  liable. 

The  extent  of  the  surety's  liability  depends,  of  course,  on  the 
peculiar  construction  of  each  guaranty.  A  contract  to  gaurantee 
the  payment  of  "  any  debt  A.  B.  may  contract  in  his  business  as 
jeweler,  not  exceeding  one  hundred  pounds,  after  this  date,"  is  a 
contract  which  renders  the  guarantor  answerable  for  any  debts,  not 
exceeding  100/.,  which  A.  B.  may,  from  time  to  time,  contract  in  the 
way  of  his  business,  (s)  Such  a  contract  is  called  a  continuing  gua- 
ranty. Disputes  frequently  arise,  whether  an  instrument  fall  within 
this  description  or  not.  (f)     The  best  rule  on  the  subject  seems  to 

(r)  "Warrington  v.  Furbor,  8  East,  242.  Watkins  v.  Vince,  2  Stark.  368.  Martin 
V.  Wright,  6  Q.  B.  916. 

(s)*  Merle  v.  "Wells,  2  Camp.  413.  Accord.  Mason  v.  Pritchard,  12  East,  227.  Bas- 
tow  vi  Bennett,  3  Camp.  220;  Hargreave  v.  Smee,  6  Bingh.  244;  Simpson  v.  Manley, 
2  C.  <fe  J.  9.4;  2  Tyrwh.  86.  Allen  v.  Kinning,  9  Bingh.  618.  Mayer  v.  Isaac,  6  M.  & 
W.  605. 

{t)  For  instances  in  which  the  guaranty  has  been  confined  to  a  single  transaction, 
vide  Melville  v.  Hayden,  3  B.  &  A.  593 ;  Kay  v.  Groves,  6  Bingh.  276 ;  Nicholson  v. 
Paget^  1  C.  &  M.  48 ;  in  which  last  case,  the  Court  expressed  itselt  averse  to  extend- 
ing the  rule  of  construction  against  guarantors.  In  Hargreave  v.  Smee,  howevei', 
the  Court  thought  that  the  ordinary  rule  verba  fortius  acciphmtur  contra  proferentem 
applied  to  these  as  to  other  instruments.  In  Mayer  v.  Isaac,  Alderson,  B.,  said,  that, 
if  obliged  to  choose,  he  should  prefer  the  strict  construction.  The  decisions  run  very 
close,  ex.  gr.,  Nicholson  v.  Paget,  1  C.  <fe  M.  48;  3  Tyrwh.  164.  "I hereby  agree  to  be 
answerable  for  the  payment  of  5Ql.  for  F.  L.,  in  case  F.  L.  does  Hot  pay  for  the  gin,  c&c, 
he  receives  from  you."  Held  not  a  continuing  guaranty.  Mayer  v.  Isaac,  6  M.  &  "W. 
605.  "In  consideration  of  your  supplying  G.  with  china  and  earthenware,  I  guarantee 
the  payment  of  any  bills  you  may  draw  on  him  c:  accoicnt  thereof  to  the  amount  of 
200/."     Held  a  continuing  guaranty. 

"Messrs.  Allnutt  and  Arbouin,  50,  Mark  Lane, 

"  Sirs : — /  hereby  guarantee  Mr.  John  Jennings'  account  with  you  for  wine  and 
spirits  to  the  amount  of  lOOL  \        "  F.  Anhenden. 

"  Sittingbourne,  April  14,  1838." 
Held  not  to  be  a  continuing  guaranty,  Allnutt  v.  Ashenden,  5  M.  &  Gr.  392.     See 
also  Hitchcock  v.  Humfrey,  5  M.  &  Gr.  558.     Martin  v.  "Wright,  6  Q.  B.  917. 


582  MERCANTILE  CONTRACTS. 

Surety,  how  discharged. 

be  that  laid  down  by  Lord  Ellenborough,  in  Merle  v.  Wells^  viz.,  that 
"  if  a  party  mean  to  confine  bis  liability  to  a  single  dealing,  be  should 
take  care  to  say  so." 

In  Simpson  v.  Manley^  (u)  it  was  held  by  the  Court  of  Exche- 
quer, that  the  words,  "If  you  give  A.  credit  we  will  be  responsi- 
ble," were  not  equivalent  to  saying,  "K  you  give  him  the  credit 
ZLsual  in  your  trade,^^  viz.,  that  of  grocers.  In  Comhe  v.  Woolfe,  {v) 
the  guaranty  was : — 

''Messrs.  0.  D.  &  Co. 

"I  hereby  guarantee  and  engage  to  see  you  paid  for  any  porter 
you  may  send  Mr.  A.  B.  of  this  town,  until  you  receive  notice  to 
the  contrary  from  me.  L.  W." 

The  custom  of  the  plaintiffs  was  to  give  sis  months'  credit,  and 
then  sometimes  to  take  a  bill  at  two ;  having  given  A.  B.  eleven 
months'  credit,  it  was  held,  that  they  thereby  discharged  the 
surety. 

A  person  who  guarantees  the  due  payment  of  a  bill,  becomes 
liable  for  interest  if  it  be  not  paid  at  maturity,  {id) 

Sectiox  III. — Surety^  hoio  discharged. 

If  the  creditor  discharge  the  principal,  or  enter  into  any  agree- 
ment with  him,  by  which  the  surety's  situation  is  altered  for  the 
worse,  or  which  could  render  a  proceeding  against  the  surety  a 
fraud  upon  the  principal,  he  discharges  the  surety  :'^  for  instance, 

(m)  2  Tjr-wh.  86;  2  C.  <!:  J.  94.     Vide  Samuel  v.  Howard,  3  Merir.  ST 2,  and  Howell 
».  Jones,  4  Tjrwh.  548 ;  1  C.  M.  &  R.  97. 
(i')  8  Bingh.  156. 
(w)  Ackermann  v.  Ehrensperger,  16  M.  (fc  W  99, 

*  A  surety  can  only  be  charged  where  the  case  is  brought  within  the  very  terms 
of  his  contract,  and  the  Court  will  not  go  into  an  inquiry  whether  the  surety  has 
been  injured  by  a  departure  from  those  terms.  Birckhead  v.  Brown,  5  Hill,  634, 
640.  Edmonstone  v.  Drake,  5  Pet  524,  639.  Thus  a  guaranty  of  a  note,  to  be  made 
payable  at  a  particular  bank,  cannot  be  applied  to  a  note,  corresponding  in  other 
respects  with  the  guaranty,  but  payable  generally ;  and  the  fact  that  the  note  was 
deposited  in  the  particular  bank  before  maturity,  was  held  to  make  no  difference. 
Dobbin  v.  Bradley,  IT  Wend.  422.     So,  a  guaranty  of  drafts  to  be  drawn  at  sixty 


GUARANTIES.  533 


Surety,  how  discharged. 


if  he  agree  to  give  time  to  the  principal  :*  for  then,  if  he  forbear 
proceeding  during  the  time  given,  he  wrongs  the  surety  by  pro- 
longing his  responsibility ;  while,  on  the  other  hand,  if  he  proceed 
against  the  suretj^,  he  gives  him  a  remedy  over  against  the  princi- 
pal, and  thus  exposes  the  latter  to  proceedings,  contrary  to  the 
faith  of  his  agreement,  (x)  So,  if  he  substitute  a  new  agreement 
instead  of  that  for  the  performance  of  which  the  surety  was  re- 
sponsible. (?/)  But  the  surety  will  not  be  discharged  by  mere  for- 
bearance, (z)  unless,  indeed,  there  be  some  stipulation  in  the 
guaranty  binding  the  party  guaranteed  to  use  due  diligence  against 
the  principal,  (a)  nor  by  acceptance  of  a  collateral  security,  {h)  nor 
if  he  himself  have  agreed  to  the  indulgence  given  the  principal,  (c) 
or  have  subsequently  assented  to  it.  {d)  And,  even  where  the 
creditor  has  altogether  released  and  discharged  the  principal,  still, 


(r)  Combe  v.  Woolfe,  ubi  supra.  Howell  v.  Jones,  4  Tjrwh.  548 ;  1  C.  M.  <fe  R. 
9Y.  Jones  v.  Lewis,  4  B.  <fe  C.  506.  Hawkshaw  v.  Perkins,  2  Swanst.  539.  Eees  v. 
Berrington,  2  Ves.  jun.  540.  Low  v.  E.  L  Compj.,  4  Ves.  jun.  824.  Nisbet  v.  Smith, 
2  Bro.  C.  C.  579.  IIx  parte  Smith,  3  Bro.  C.  C.  1.  IJx  parte  Gifford,  6  Ves.  805. 
Boultbee  v.  Stubbs,  18  Ves.  20.  Ux  parte  Glendinning,  Buck,  5l1.  Kearsley  v.  Cole, 
16  M.  &  W.  128.     See  the  notes  to  Jones  v.  Lewis. 

(y)  Whitcher  v.  Hall,  5  B.  &  C.  269.  Eyre  v.  Bartrop,  3  Madd.  221.  Bonser  v. 
Cox,  6  Beav.  110. 

(z)  Orme  v.  Young,  Holt,  84.  Goring  v.  Edmonds,  6  Bingh.  94.  Muskett  v. 
Rogers,  5  Bingh.  N".  C.  728. 

(a)  HoU  V.  Hadley,  2  Ad.  &  R  758.    See  Muskett  v.  Rogers,  5  Bingh.  K  C.  728. 

(6)  Twopenny  v.  Young,  3  B.  &  C.  208.     Bell  v.  Banks,  3  M.  &  Gr.  238. 

(c)  Tyson  v.  Cox,  1  Turner,  395.     Maltby  v.  Carstairs,  7  B.  <fe  C.  735. 

{d)  Smith  V.  Winter,  4  M.  &  W.  454. 


days'  sight,  will  not  cover  drafts  drawn  at  ninety  days.  Birckhead  v.  Brown,  5  Hill, 
634.  Nor  will  a  guaranty  of  a  credit  to  be  given  until  the  1st  of  January,  1840, 
cover  one  given  until  the  twenty-fifth  of  December,  1839.  "Wal wrath  v.  Thompson. 
4  Hill,  200.  A  variance  of  even  three  days  will  be  fatal ;  but  where  the  guaranty 
■was  of  a  credit  for  three  months,  and  the  note  taken  from  the  person  to  whom  it 
was  given,  was  for  three  months,  not  excluding  the  days  of  grace,  it  was  held  suffi- 
cient, the  guaranty  as  well  as  the  note  being  considered  as  having  been  made  with 
reference  to  the  usage.     Smith  v.  Dann,  6  Hill,  543. 

*  That  an  extension  of  the  time  of  papnent  will  discharge  a  guarantor,  where  it 
would' have  that  effect  on  an  ordinary  contract  of  suretyship,  was  settled  in  Massa- 
chusetts, in  Chace  et  ah.  v.  Brooks,  5  Cush.  R.  43. 


584  MERCANTILE  CONTRACTS, 

Surety,  bow  discharged. 

if  the  surety  have  expressly  consented  to  remain  liable,  his  liability 
will  continue,  (e) 

"Where  a  surety  has  entered  into  a  bond  for  payment  in  default 
of  the  principal  debtor,  and  by  parol  agreement,  time  has  been 
given  to  the  principal  debtor,  the  surety  is  compelled  to  resort  to 
a  Court  of  Equity;  because,  by  the  rules  of  law,  a  parol  agree- 
ment cannot  be  pleaded  in  discharge  of  an  instrument  under 
seal.  (/) 

If  the  creditor  omit  to  perform  any  condition,  express  or  im- 
plied, imposed  upon  him  by  the  guaranty,  the  surety  will,  of 
course,  not  be  liable,  (g)  And  fraud — for  instance,  the  concealment 
of  some  material  part  of  the  principal's  original  contract  from  the 
surety — vitiates  and  avoids  his  engagement,  (h)  "  The  principle  to 
be  drawn  from  the  cases,"  said  Tindal,  C.  J.,  delivering  the  judg- 
ment of  the  Court  in  Stone  v.  Compton^  {i)  "  we  take  to  be  this, 
that  if  with  the  knowledge  or  assent  of  the  creditor  any  material  part 
of  the  transaction  between  the  creditor  and  his  debtor  is  misrepre- 
sented to  the  surety,  the  misrepresentation  being  such  that  but  for 
the  same  having  taken  place,  either  the  suretyship  would  not  have 
been  entered  into  at  all,  or,  being  entered  into,  the  extent  of  the 
surety's  liability  might  be  thereby  increased,  the  securiij  so  given 
is  voidable  at  law  on  the  ground  of  fraud."  It  is  said  by  Mr. 
Starkie  to  have  been  decided  that  a  continuing  guaranty  is  counter- 
mandable  by  jDarol.  (/)  And  the  executor,  it  seems,  is  not  liable, 
in  respect  of  advances  made  after  the  testator's  death,  which  oper- 
ates as  a  revocation,  (Jz) 

(e)  Cowper  v.  Smith,  4  M.  &  "VV.  519. 

(/)  Per  Tindal,  C.  J.,  ia  Combe  v.  "Woolfe.  See  Davey  v.  Prendergrass,  5  B.  (fe  A. 
187.  Prendergrass  i».  Davey,  6  Madd.  124.  Rees  v.  Berrington,  2  Ves.  jun.  540.  See 
Trent.  Nav.  Compj'.  v.  Ilarley,  10  East,  34.     Bulteel  v.  Jarrold,  8  Price,  467. 

{fj)  Glyn  V.  Hertel,  8  Taunt.  208.  Bacon  v.  Cbesney,  1  Stark.  N.  P.  C.  192,  per 
Lord  Ellenborough.  HoU  v.  Hadley,  5  Bingh.  54.  Evans  v.  "Whyle,  5  Bingb.  485. 
Bulkley  v.  Lord,  2  Stark.  406.     Elwortby  v.  Maunder,  5  Bingh.  295. 

(A)  Pidcock  V.  Bishop,  B.  &  C.  605.  See  also  Railton  v.  Mathews,  10  C.  <fc  Fin, 
934. 

(i)  Stone  v.  Compton,  5  Bingb.  N.  C.  182. 

(_/)  Starkie  on  Evidence,  2d  ed.  vol.  ii.  p.  371,  n.  n.  Brocklebank  v.  Moore.  See 
Goss  V.  Lord  Nugent,  5  B.  <fe  Ad.  58. 

{k)  Potts  V.  Ward,  1  Marsh.  366.  See  Cooper  v.  Johnson,  2  B.  &  A.  394.  Kin 
guel  V.  Knapman,  Cro.  Eliz.  10.     Joyner  v.  Vyner,  L.  Raym.  415. 


GUARANTIES.  585 


Surety,  how  indemnified. 


It  has  been  decided  that  if  a  guaranty  has  been  altered,  while 
in  the  creditor's  hands,  in  a  material  particular,  without  the  consent 
of  the  guarantor,  it  becomes  void.  {!) 


Section  IY. — Surety,  how  indemnified. 

As  soon  as  the  surety's  obligation  to  pay  is  become  absolute, 
he  has  a  right  to  apply  to  equity  to  be  exonerated  by  his  princi- 
pal, (m)    .But  this  he  cannot  do,  till  he  is  under  actual  liability,  (n) 

After  he  has  paid  the  debt  of  his  principal,  or  any  part  of  it,  he 
may  obtain  reimbursement  at  law,  (o)  and  may  sue  toties  quoties  as 
often  as  he  is  compelled  to  make  a  payment  on  account  of  it,  [p) 
and  has  a  right  in  equity  to  have  any  fund,  which  was  charged 
with  the  principal  debt,  applied  for  his  indemnification,  {rj)  Nay, 
it  appears  that,  if  the  surety  be  under  a  disability,  which  prevents 
him  from  obtaining,  in  his  own  person,  the  benefit  of  securities 
which  have  been  set  apart  for  the  creditor,  equity  will  restrain  the 
creditor  from  proceeding  against  the  surety  till  he  has  resorted  to 
those  securities ;  (?■)  though  such  circumstances  would  furnish  no 
defence  at  law.  (s)  And  where  the  principal  has  assigned  his 
effects  to  a  trustee  for  his  creditors,  a  creditor  who  has  a  guaranty 

(I)  Davidson  v.  Cooper,  11  M.  &  W.  "778 ;  13  M.  &  W.  343. 

(wi)  Per  L.  C.  in  Nisbet  v.  Smith,  2  Bro.  C.  C.  579,  per  M.  R.  in  Lee  v.  Rook,  Mos. 
818.  See  Ranelagh  v.  Hayes,  1  Ves.  190.  Antrobus  v.  Davidson,  3  Meriv.  578.  Cox 
V.  Tyson,  1  T.  &  R.  395. 

{n)  See  Cock  v.  Ravie,  6  Ves.  283. 

(o)  Warrington  v.  Furbor,  8  East,  242.  And  this  he  may  do  notwithstanding  he 
has  executed  a  composition  deed  between  the  principal  and  his  creditors  including 
the  debt,  but  containing  a  reserve  of  remedies  against  sureties,  under  which  he  has 
been  afterwards  compelled  to  pay  the  debt.    Kearsley  v.  Cole,  16  M.  <fc  W.  128. 

(jo)  Davies  v.  Humphreys,  6  M.  &  W.  153. 

((j)  See  Wright  i;.  Morley,  11  Ves.  12.  Harrison  v.  Glossop,  Coop.  61.  See  Ex 
parte  Rusliforth,  10  Ves.  409.  In  re  Westzinthus,  5  B.  <fe  Ad.  835.  See  for  the  quali- 
fication of  this  doctrine  in  case  of  a  bond,  Copis  v.  Middleton,  1  Turn.  224-  See 
Robinson  v.  Wilson,  2  Madd.  435.     Dowbiggan  v.  Bourne,  Young,  111. 

(r)  Wright  v.  Nutt,  3  Bro.  C.  C.  326  ;  1  11.  Bl.  137.  Cottin  v.  Blane,  2  Anst.  544. 
Wright  V.  Simpson,  1  Ves.  728. 

(s)  FoUiott  V.  Ogden,  1  H.  BI.  124.  At  least  in  the  absence  of  express  words  to 
«,hat  effect,  see  Gwynne  v.  Burnell,  6  Bingh.  IST.  C.  453. 


586  MERCANTILE  CONTRACTS. 

Surety,  liow  indemnified. 

will  be  forced,  even  at  law,  to  apply  ia  discharge  thereof  a  rateable 
part  of  any  payment  he  may  receive  from  the  trustee,  {t) 

As  the  surety  has  a  right  to  reimbursement  from  his  principal, 
in  toio,  so  he  has  from  his  co-sureties  jp?'o  tanto  ;  this  latter  right  is 
called  the  right  to  contribution,  and  is  recognized  both  in  law  and 
equity,  with  this  distinction,  that,  at  law,  a  surety  is,  in  every  case, 
entitled  to  contribution  from  his  co-sureties,  in  proportion  to  their 
number,  without  regard  to  the  insolvency  of  any  one  of  them, 
which  equity,  on  the  contrary,  regards.  Thus,  if  A.  B.  and  C.  be 
co-sureties,  A.  having  paid  the  debt,  would  be  entitled  to  recover, 
at  law,  a  third  only  from  B.,  though  C.  may  have  become  insol- 
vent ;  {u)  whereas,  m  equity,  he  will  be  entitled  to  one  half,  {v) 
But,  both  in  law  and  equity,  if  he  have  been  reimbursed  in  part, 
the  contribution  must  be  calculated  by  the  residue,  (iv)  And,  it  i? 
said,  that,  where  one  surety  becomes  so  at  the  instance  of  another, 
that  other  cannot  call  on  him  for  contribution,  {x) 

"We  have  seen  that  the  surety's  right  to  reimbursement  from  his 
principal  accrues  toties  quoties  as  often  as  he  is  compelled  to  make  a 
payment.  With  regard  to  his  right  to  contribution,  it  is  different ; 
for  until  one  has  paid  more  than  his  proportion  either  of  the  whole 
debt  or  of  the  part  which  remains  due  from  his  principal,  it  is  not 
clear  that  he  ever  will  be  entitled  to  demand  any  thing  from  the 
other,  and,  before  that,  he  has  no  equity  to  receive  a  contribution, 
and  consequently  no  right  of  action,  which  is  founded  on  the  equity 
to  receive  it.  Thus,  if  the  surety,  more  than  six  years  before  the 
action,  have  paid  a  portion  of  the  debt,  and  the  principal  has  paid 


(<)  Bardwell  v.  Lydall,  7  Bing.  489.  And  see  Raikes  v.  Todd,  1  P.  &  D.  138 ;  8  Ad. 
&  E.  846. 

(m)  Cowell  V.  Edwards,  2  B.  &  P.  268.     Browne  v.  Lee,  6  B.  <fe  C.  689. 

{v)  Peter  v.  Rich,  1  Cha.  Rep.  19.  Holt  v.  Harrison,  1  Cha.  Ca.  246.  Layer  v 
Nelson,  1  Vern.  456.  The  decree  of  Hadrian  proceeded  on  this  principle,  "  Ex  epis- 
tola  Divi  Hadriani  compellitur  creditor  a  singulis  qui  modo  solvendo  sunt  litis  con- 
testatffi  tempore  partes  petere.  Iileoqite  si  qiiis  ex  fidejussoribus  eo  tempore  solvendo  non 
sit  hoc  ecBteros  onerat!'    Inst.  1.  3,  tit.  21. 

{w)  Knight  V.  Hughes,  3  C.  &  P.  467  ;  M.  &  M.  247.  Roach  v.  Thompson,  ibid. 
487.     Swain  v.  Wall,  1  Cha.  Rep.  80. 

{x)  Turner  v.  Davies,  2  Esp.  478.  See  Thomas  v.  Cook,  8  B.  <fe  C.  728.  In  Turner 
V.  Davies,  the  surety  who  induced  the  other  to  join,  had  taken  a  bill  of  sale  from  the 
principal  for  his  own  security. 


GUARANTIES.  587 


Representations  in  the  Nature  of  Guaranties. 


the  residue  within  six  years,  the  Statute  of  Limitations  will  not  run 
from  the  payment  by  the  surety,  but  from  the  payment  of  the  re- 
sidue by  the  principal,  for,  until  the  latter  date,  it  does  not  appear 
that  the  surety  has  paid  more  than  his  share.  The  practical  ad- 
vantage of  this  rule  is  considerable,  as  it  would  tend  to  a  multipli- 
city of  suits  and  to  a  great  inconvenience  if  each  surety  might  sue 
the  others  for  a  rateable  proportion  of  what  he  has  paid,  the  instant 
he  had  paid  any  part  of  the  debt.  But  whenever  it  appears  that 
one  has  paid  more  than  his  proportion  of  what  the  sureties  can  ever 
be  called  upon  to  pay,  then,  and  not  till  then,  it  is  also  clear  that 
such  part  ought  to  be  repaid  by  the  others,  and  the  action  will  lie 
for  it.  {y) 

The  right  to  contribution  equally  exists  whether  the  sureties  were 
engaged  jointly  or  severally,  in  one  instrument,  or  in  several  in- 
struments, and  whether  they  knew  of  each  other's  engagements  or 
not ;  for,  in  all  these  cases  alike,  a  payment  by  one  is  a  benefit  to 
all.  (2)  But  any  surety  may,  of  course,  by  using  words  to  that 
effect,  so  modify  his  contract,  that  he  will  be  liable  only  on  the  de- 
fault of  previous  sureties,  who  will  then  be  entitled  to  no  contribu- 
tion from  him.  (a) 

Section  Y, — Representatioiis  in  the  Nature  of  Guaranties. 

This  chapter  would  be  hardly  complete  if  we  were  to  take  no 
notice  of  certain  representations  which  have  very  much  the  same 
effect  as  guaranties,  and  for  some  time  materially  interfered  with 
the  operation  of  the  4th  section  of  the  Statute  of  Frauds.  In  con- 
sequence of  the  case  of  Pasley  v.  Freer^mn^  (5)*  (where  such  an 

{y)  Per  curiam,  p.  169,  of  Davies  v.  Humphreys,  6  M.  &  "W". 

{z)  Deering  v.  "Winchelsea,  2  B.  <fe  P.  270.    See  the  judgment  in  Craythorne  v. 
Swinburne,  14  Ves.  160. 

(a)  Craythorne  v.  Swinburne,  14  Ves.  160. 
lb)  3  T.  R.  51. 


*  It  is  said  in  Kidney  v.  Stoddard,  Y  Mete.  255,  "From  the  time  of  the  judgment 
in  the  great  case  of  Pasley  v.  Freeman,  3  T.  R.  51,  to  the  present  day,  through  the 
long  line  of  decisions  both  in  England  and  America,  the  principle  of  that  case,  though 
with  some  statute  modifications,  remains  unshaken  and  imimpaired."  See  also  Pat- 
ron «.  Gurnev.  17  Mass.  182.    Lang  v.  Lee,  3  Rand.  410.    Upton  v.  Vail,  6  Jolin.  Rep. 


588  MERCANTILE  CONTRACTS. 

Representations  in  the  Nature  of  Guaranties. 

action  was  decided  to  be  maintainable,)  it  became  the  practice  to 
bring  actions  in  wliicli  parties  were  charged,  not  strictly  as  guaran- 
tees for  others,  in  which  case  the  Statute  of  Frauds  would  have 
applied,  and  the  guaranty  must  have  been  in  writing,  but  as  hav- 
ing made  wilfully  false  representations  as  to  the  credit  of  others, 
whom  the  plaintiffs  were  thereby  induced  to  trust,  and  so  com- 
mitted a  tortious  act,  for  which  they  were  liable  to  the  party  de- 
ceived in  damages.  Now  these  representations  might  have  been 
made  the  ground  of  an  action,  although  not  in  writing,  for  they  did 
not  amount  to  guaranties,  but  were  of  the  same  description  as  the 
false  representations  spoken  of  hereafter  in  the  chapter  on  Sales ; 
and  yet  it  very  often  happened,  that  the  same  evidence  which  would 
have  proved  a  parol  guaranty,  would  also  prove  such  representa- 
tion of  solvency  as  has  just  been  described.  The  4th  section  of  the 
Statute  of  Frauds  being  thus  frequently  evaded,  it  was,  in  order  to 
remedy  the  mischief,  enacted  in  stat,  9  Geo.  4,  c.  14,  commonly 
called  Lord  Tenterden's  Act,  "  that  no  action  shall  be  brought  to 
charge  any  person  by  reason  of  any  representation  or  assurance, 
made  or  given  concerning  or  relating  to  the  conduct,  credit,  ability, 
trade,  or  dealings,  of  any  other  person,  to  the  intent  or  purpose  that 
such  other  person  may  obtain  credit,  money,  or  goods  upon,  (c)  un- 
less such  representation  or  assurance  be  made  in  writing,  signed  by 
the  party  to  be  charged  therewith."  The  effect  of  this  section  was 
elaborately  discussed  in  the  great  case  of  Lyde  v.  Barnard^  {cD 
where  the  Barons  were  equally  divided,  Lord  Abinger  and  Gurney, 
B.,  holding  that  a  representation  of  the  solvency  of  a  fund  belong- 


(c)  Sic  in  the  statute. 
{d)  IM.  &  W.  101. 


181.  Boyd's  Ex'rs  v.  Browne,  6  Barr  Pa.  R.  310.  Russell  v.  Clark's  Ex'rs,  7 
Cranch  Rep.  69.  2  Smith's  L.  Cases  (Hare  v.  WaUace),  65,  146.  2  Kent.  Com.  489. 
The  act  referred  to  by  the  author  in  this  section,  has  been  adopted  in  Massachusetts, 
Vermont,  and  Virginia.  It  is  settled  by  the  highest  American  authority,  that  the 
simple  fact  of  making  representations  which  turn  out  not  to  be  true,  unconnected 
with  any  fraudulent  design,  is  not  sufficient  to  sustain  an  action.  There  must  be 
actual  fraud  in  the  defendant,  or  an  intention  to  deceive  the  plaintiff  by  false  repre- 
sentations. Lord  et  ah.  v.  Goddard,  13  How.  S.  C.  R.  198,  where  the  autliorities, 
English  and  American,  are  reviewed  by  counsel  in  argument.  See  also  State  Bank 
V.  Hamilton,  2  Ind.  Rep.  457. 


GUARANTIES.  539 


Representations  in  the  Nature  of  Guaranties. 


ing  to  A,,  in  order  tliat  a  tliird  party  might  advance  money  on  the 
security  thereof,  was  a  representation  within  the  meaning  of  this 
act.  Parke,  B.,  and  Alderson,  B.,  holding  the  reverse,  unless,  in- 
deed, it  should  appear  that  the  representation,  though  concerning 
the  state  of  the  fund,  had  partly  reference  to  A.'s  own  personal  sol- 
vency. 

This  question  has  been  since  touched  on  in  Swann  v.  Phillips^  (e) 
where  the  leaning  of  the  opinion  of  the  Court  of  Queen's  Bench 
seems  to  have  been  in  favor  of  the  opinion  of  Lord  Abinger  and 
Baron  Gurney. 

Where  the  defendant  has  received  the  proceeds  of  goods  ob- 
tained by  his  debtor  from  the  plaintiff  by  means  of  a  misrepresen- 
tation by  the  defendant  falling  within  this  Statute,  though  assump- 
sit may  possibly  lie  to  recover  back  the  money,  still,  if  the  whole 
case  rests  on  the  misrepresentation,  the  Statute  applies,  and  it  must 
be  shown  to  have  been  in  writing.  (/) 

The  act  applies  to  a  representation  made  by  one  partner  con- 
cerning the  credit  of  the  firm,  {g) 


(e)  Swann  v.  Thillips,  8  Ad.  &  E.  457. 
(/)  Haslock  V.  Fergusson,  7  Ad.  &  E.  86. 
(^)  Devaux  v  Steinkeller  6  Bingh,  N  C,  84 


CHAPTER  XII 


OONTEACTS     OF     SALE. 

Sect.  1.  Ability  of  vendor  to  sell. 

2.  Form  and  requisites  of  contract. 

3.  Duties  of  vendor. 

4.  Duties  of  vendee. 

5.  Effect  of  illegality. 

Sale  is  a  transmutation  of  property  (a)  from  one  man  to  another  iu 
consideration  of  a  money  price.  It  differs  from  Barter  or  Exchange 
in  this  resjpect,  viz.,  that  Exchange  is,  correctly  speaking,  a  transmu- 
tation of  property  from  one  man  to  another,  for  a  consideration  not 
given  in  money,  but  in  some  other  sort  of  commodity. 

There  appears  to  have  been  a  great  contest  among  the  Eoman 
jurists  on  the  question,  whether  Sale  and  Exchange  were  not  in 
reality  the  same  contract,  and  whether  the  2^'^^iiu'^'n,  which  they  all 
admitted  to  be  the  true  criterion  of  a  sale,  might  not  be  paid  in  any 
thing  as  well  as  money.     The  history  of  the  dispute  is  curious  : — 

^^Pretium  in  numerata pecunia  consistere  debet.  Nam  in  cceteris  rebus 
an  pretium  esse  posset  valde  qucerebatur ;  veluti,  an  homo,  ant  fundus, 
aut  toga  p)retium  alterius  rex  esse  p)Osset.  Et  Sabinus  et  Cassias  etiara 
in  alia  re  reputabant  pretium  posse  consistere,  unde  illud  est  quod  vulgo 
dicebatur,  permutatione  rerum  emtionem  et  venditionem  contrahi,  earn 

(a)  A  recovery  in  trespass  or  trover  for  chattels,  follo'wedby  satisfaction,  appears 
to  operate  as  a  sale,  for  solutlo  pretii  empilonis  loco  habetur ;  otherwise,  if  not  followed 
by  satisfaction.  See  the  authorities  collected  in  a  learned  note  to  Holmes  v.  Wilson, 
10  Ad.  &  E.  503.  Cooper  v.  Shepherd,  3  C.  B.  267.  And  see  per  Maule,  J.,  Hearne  v. 
Turner,  2  C.  B.  540,  and  Sergeant  Manning's  note,  6  M.  &  Gr.  64:0.  But  a  vesting 
order  and  possession  taken  b}'  the  assignee  will  not  prevent  the  operation  of  a  writ 
previously  delivered  to  the  sheriff.  Woodland  v.  Fuller,  11  Ad.  &  E.  859.  [The 
American  authorities  are  collated  and  discussed  in  American  Law  Magazine,  April, 
1844,  and  in  a  note,  vol.  2,  Kent's  Commentaries,  p.  467.] 


CONTRACTS  OF  SALE.  591 


Contracts  of  Sale. 


que  speciem  eyntionis  et  vendltionis  vetustissimam  esse.  Argumento  que 
utehantur  Groeco  poeta  Homer o  qui  aliquam partem  exercitus  Acliivorum 
vinum  sibi  comparasse  ait  per  mutatis  quibusdam  rebus — his  verbis: 

l!irjeg  (5'  ek  ArjfxvoLo  "rrapeoraaav,  olvov  dyovoat, 
'Evt9£V  dp  olvi^ovTO  Kapr]fcon6o)vreg  'A;^aiot, 
'AA/loi  [lev  xc-Xkco,  dXXoi  6'  ald(j)VL  otdi^pco, 
'AAAoi  6e  pivolg,  dXXoi  d'  avrolai  (ioeoaiv^ 
'AAAoi  (J'  dvdpanodeoot,, 

Advecta  ^  Lemno  tunc  vinafuere  carinis, 
Inde  capillati  sibi  vina  parare  Pelasgi^ 
jEre  viicante  allii,  nitido  pars  altera  ferro, 
Pars  buhulis  tergis^  ipsis  plerique  juvencis, 
Pars  quoque  mancipiis. 

"  Sed  ^  Proculi  sententia  dicentis  Permutationem  propriam  esse 
speciem  contractus  a  Yenditione  separatayn  merito  proivaluit  cum  et 
ipse  aliis  Homericis  versibus  adjuvabatur  et  validioribus  rationibus 
arguinentabatury  (b) 

With  regard  to  the  meaning  of  sale,  it  may  be  added  that  it 
Beems  prima  facie  to  imply  an  entire  disposition,  as,  in  case  of  land, 
of  the  fee  simple,  (c)* 

(6)  Inst.  b.  3,  tit.  24.  The  English  law  regards  these  contracts  as  entirely  dis- 
tinct, and  the  omission  of  one  of  the  parties  for  any  period  of  time  to  deliver  the 
goods  bartered  for,  will  not  enable  the  other  to  maintain  an  action  for  goods  sold 
and  delivered.     Harrison  v.  Luke,  14  M.  139. 

(c)  Hughes  V.  Parker,  8  M.  «fe  W.  244. 


*  It  is  sometimes  difficult  to  determine  whether  a  contract  is  one  of  sale  or  bail- 
ment. The  distinction  generally  taken  by  the  text  writers,  is  between  an  obligation 
to  restore  the  specific  thing,  and  the  duty  of  returning  others  equal  in  value.  In  the 
first  case,  it  is  a  bailment ;  in  the  latter,  it  becomes  a  debt.  A  different  doctrine  was 
at  one  time  ruled  in  New  York.  See  Seymour  v.  Brown,  19  Johns.  Rep.  44.  In  that 
case,  a  quantity  of  wheat  had  been  sent  to  a  niller  to  be  exchanged  for  flour  at  the 
rate  of  a  barrel  of  flour  for  every  five  bushels  '.f  wheat.  There  was  no  evidence  of 
an  understanding  that  the  wheat  delivered  was  to  be  kept  separate  and  returned  in 
flour.  The  miller  mixed  the  wheat  with  the  mass  of  other  wheat  in  the  mill,  of  the 
same  quality,  belonging  to  himself  and  others.  The  mill,  with  its  entire  contents, 
was  destroyed  by  fire  before  the  delivery  of  the  flour.  The  court  held  that  there 
had  been  no  sale  of  the  wheat,  and  as  no  laches  was  imputed  to  the  miller,  that  he 
vTas  not  responsible  for  the  loss.     This  case  has  been  overruled  by  the  later  decisions 


592  MERCA^rriLE  CONTRACTS. 

Contracta  of  Sale. 

In  considering  this  subject,  we  will  touch  successively  upon  the 
following  topics : — 

1.  The  ability  of  the  vendor  to  sell. 

2.  The  form  and  requisites  of  the  contract  of  sale. 

3.  The  duties  it  imposes  on  the  vendor. 

4.  Those  which  it  imposes  on  the  vendee. 

5.  The  effect  of  illegality  upon  the  contract. 


of  Hood  V.  West,  1  Cow.  152 ;  Smith  v.  Clark,  21  Vend.  85 ;  and  Norton  v.  "Wood- 
rup,  2  Comst  153.  It  is  also  inconsistent  with  the  case  of  Ewing  v.  French,  1  Black 
Ind.  Eep.  353. 

In  Slaughter  v.  Green,  1  Eand.  3,  the  Court  of  Appeals  of  Virginia  considered  the 
question  under  a  state  of  facts  very  similar  to  those  of  Seymour  v.  Brown.  "Wheat 
had  been  delivered  at  a  mill  to  be  ground,  upon  an  agreement  that  the  miller 
should  return  to  the  farmer  a  given  quantity  of  flour  for  so  many  bushels  of 
wheat.  The  wheat  being  consumed  by  an  accidental  fire,  the  Court  held  that 
the  miller  was  not  responsible  for  the  loss ;  that  he  stood  in  the  relation  of  a 
bailee  and  not  a  purchaser;  and  that  this  construction  of  the  contract  would  not 
be  affected  by  an  understanding  that  the  miller  was  not  boimd  to  return  flour  made 
from  that  identical  wheat,  but  flour  of  a  certain  quantity  made  from  any  wheat  in 
the  mill.  Judge  Eoane,  delivering  the  opinion  of  the  Court,  says,  that  where  wheat 
is  delivered  at  a  mill  for  the  purpose  of  being  converted  into  flour  for  the  use  of  the 
bailee,  the  transaction  does  not  lose  its  character  of  a  bailment  because,  for  general 
convenience,  there  is  an  agreement,  by  common  usage  or  otherwise,  among  the  cus- 
tomers of  a  mill,  that  all  the  wheat  delivered  shoiild  be  put  into  a  common  stock  and 
return  made  to  each  out  of  the  common  mass  of  floiu-.  A  condition  of  this  character, 
imposing  no  hardship  on  the  bailee,  and  to  which  there  is  an  assent  of  all  parties, 
cannot  convert  a  bailment  into  a  sale,  or  an  exchange  of  wheat  for  flour.  The  pro- 
perty in  the  wheat  is  not  conveyed  to  the  millers,  when  they  cannot  sell  the  wheat 
in  specie  without  violating  their  contract,  which  is  to  grind  it  into  flour ;  nor  even 
seU  the  flour  itself  without  violating  their  agreement  to  return  it  to  the  several 
bailors.  That  is  a  curious  kind  of  ownership  in  which  the  party  has  no  absolute 
power  over  the  subject  either  in  its  original  state  or  after  it  has  been  manufactured. 
The  miller,  in  this  case,  has  the  absolute  ownership  of  nothing  but  the  excess  of 
flour  which  may  remain  after  returning  the  stipulated  quantity  to  the  several  farmers. 
Upon  the  general  subject  of  the  distinction  between  bailment  and  sale,  the  following 
authorities  may  be  consulted,  yiz. :  Collins  v.  Forbes,  3  T.  R.  316.  Barker  v.  Roberts, 
8  Greenl.  101.  Bufi'um  v.  Merry,  3  Mass.  478.  Holbrook  v.  Armstrong,  3  Fairf.  31. 
Pierce  v.  Shenck,  3  Hill,  28.  Dykers  v.  Allen,  1  Hill,  497.  King  ti.' Humphrey,  10 
Barr  R.  217. 


C0XTRACT3  OF  SALR  593 


Ability  of  Vendor  to  sell. 


Sectiox  I. — Ability  of  Vendor  to  sell.^ 

Where  a  man  has  in  himself  the  property  of  goods,  the  generai 
rule  is,  that  he  may  dispose  of  them  hy  sale  to  whomever  and 
however  he  pleases ;  provided  that  judgment  have  not  been  ob- 
tained against  him,  and  the  writ  of  execution  actually  delivered  to 
the  sheriff,  for  then  the  goods  are  bound  to  answer  the  debt  from 
the  time  of  delivering  the  writ  to  the  sheriff,  as  they  formerly  were 
from  its  teste,  id)  Even  in  that  case,  as  the  property  remains  in 
him,  he  may  dispose  of  them,  subject  to  the  sheriff's  right  to  seize 
by  virtue  of  the  execution,  and  a  valid  sale  may  be  made  of  them 
in  marTcet  overt,  even  after  the  delivery  of  the  writ  to  the  sheriff,  (e) 

Where  a  man  has  not  in  himself  the  'property  of  goods,  but  only 
the  possession,  as,  if  he  be  a  thief  or  finder,  he  nevertheless  may 
make  a  valid  sale,  so  that  the  buyer  will  be  secure  of  his  purchase ; 

((f)  Stat.  29  Car.  2,  c.  3 ;  2  Bl.  Comm.  446.  See  "Woodland  v.  Fuller,  11  Ad.  <fc  E. 
859. 

{e)  Per  Ld.  Hardwicke.  LoTrthall  v.  Tonkins,  Barnard,  42 ;  S.  C.  Eq.  Ca.  Ab.  381. 
Samuel  v.  Duke,  3  M.  <fc  "W.  622.  So  a  pawnor  retains  liis  property  and  the  right  to 
sell,  subject  to  the  pawnee's  power  to  do  so.     Franklin  v.  Xeate,  13  M.  &  "W.  481. 

*  Some  elementary  writers  on  this  subject  have  a  division  imder  the  head  of  the 
things  sold,  which  it  is  said  must  have  an  actual  or  potential  existence.  The  expecta- 
tion of  the  existence  of  the  thing  must  be  founded  on  a  right  in  esse,  for  a  mere  pos- 
sibility or  contingency,  not  coupled  with  any  interest  in  or  growing  out  of  property, 
cannot  be  the  subject  of  a  sale.  Thus  a  sale  may  be  made  of  the  wool  that  shall 
grow  on  the  sheep  then  owned  by  the  seller,  but  not  of  the  wool  of  the  sheep  he 
may  thereafter  buy.     2  Kent.  Com.  468 ;  Story  on  Cont  303,  304. 

If  the  article  intended  to  be  sold  has  no  existence,  there  can  be  no  contract  of 
sale.  And  even  though  ;he  subject  of  the  contract  be  known  to  both  parties  to  be 
liable  to  a  contingency,  which  may  destroy  it  immediately,  yet  if  the  contingency 
has  already  happened,  it  will  be  void.  As  if  a  horse  be  sold,  which  both  parties  be 
lieved  to  be  alive,  but  which  was,  in  fact,  dead,  the  contract  is  void.  Allen  v.  Ham- 
mond, 11  Pet.  63.     2  Kent  Com.  468. 

In  the  case  of  the  brig  Sarah  Ann,  2  Sumn.  211,  it  is  said  by  Judge  Story,  that  he 
knows  of  "no  principle  of  law,  that  establishes,  that  a  sale  of  personal  goods  is  in- 
valid, because  they  are  not  in  the  possession  of  the  rightful  owner,  but  are  withheld 
by  a  wrong-doer.  The  sale  is  not,  under  such  circumstances,  the  sale  of  a  right  of 
action ;  but  it  is  a  sale  of  the  thing  itself,  and  good  to  pass  the  title  against  every 
person,  not  holding  the  same  under  a  bona  fide  title,  for  a  valuable  consideration 
without  notice ;  and  a  fortiori  against  a  wrong-doer." 
38 


594  MERCANTILE  CONTRACTS. 

Ability  of  Vendor  to  sell. 

provided  that  such  sale  be  made  in  market  overt^  during  the  usual 
market  hours.*  This  market  overt,  in  the  country,  is  only  held  on 
special  days  provided  for  particular  places  by  charter  or  prescrip- 
tion ;  but  in  the  city  of  London,  every  day,  except  Sunday,  is  mar- 
ket day :  the  market  place,  or  spot  of  ground  set  apart  by  custom 
for  the  sale  of  particular  goods,  is,  also,  in  the  country,  the  only 
market  overt ;  but,  in  London,  every  shop  in  which  goods  are  ex- 
posed publicly  to  sale  is  viarket  overt,  but  for  such  things  only  as 
the  owner  professes  to  trade  in.  (/) 

{/)  Case  of  Market  Overt,  5  Rep.  83,  b. ;  L'Evesque  de  "Worcester's  case,  Moore, 

*  It  is  a  general  rule  of  law,  that  a  sale  by  a  person  -who  has  no  right  to  sell,  is 
not  valid  against  the  rightful  owner ;  and  it  has  been  frequently  held  in  the  United 
States,  tiiat  the  English  law  of  markets  overt  had  not  been  adopted.  "Wheelwright 
V.  Depej-ster,  1  John.  4*78.  Dame  v.  Baldwin,  8  Mass.  518.  "Ventress  v.  Smith,  10 
Pet.  161.  It  seems,  therefore,  that  in  this  country  a  sale  of  stolen  goods  can  in  no 
case  be  valid ;  and  further,  that  a  bona  fide  purchaser  of  stolen  goods,  who  after- 
wards, without  any  notice  of  the  felony,  sells  them  as  his  own,  is  liable  to  the  owner 
of  the  goods,  in  an  action  of  trover,  for  such  conversion  thereof  to  his  own  use. 
Thus  in  the  case  of  Hoffman  v.  Carow,  22  "Wend.  285,  S.  C.  20  "Wend.  21,  where  goods 
had  been  stolen  from  the  plaintiff  in  New  York,  and  forwarded  by  the  thief  to  the 
defendants,  auctioneers  in  Baltimore,  to  be  sold  at  auction ;  and  the  goods  had  been 
sold  and  the  proceeds  paid  over  to  the  thief  by  the  defendants,  without  any  notic< 
of  the  felony,  and  before  either  the  arrest  or  conviction  of  the  thief;  it  was  held, 
that  the  defendants  were  liable  in  trover  to  the  plaintiff  for  the  value  of  the  goods. 

The  general  principle,  that  no  man  can  be  divested  of  his  property  without  his 
own  consent  or  by  operation  of  law,  and,  consequently,  that  even  the  honest  pur- 
chaser under  a  defective  title  cannot  hold  against  the  true  owner,  is  strongly  illus- 
trated in  the  case  of  Saltus  v.  Everett,  20  Wend.  26Y,  S.  C.  15  "Wend.  474.  Goods 
were  shipped  at  New  Orleans,  and  a  bill  of  lading  taken  for  their  delivery  to  con- 
signees in  New  York ;  the  vessel  put  into  Norfolk  in  distress,  part  of  the  goods  were 
sold  by  the  master  to  pay  charges,  and  the  rest  were  shipped  by  him  on  another 
vessel,  and  a  bill  of  lading  taken  for  their  delivery  to  his  own  order  in  New  York; 
and  by  his  order  they  were  delivered,  not  to  the  original  consignees,  but  to  a  differ- 
ent mercantile  house,  from  whom  the  defendants  purchased  them  in  good  faith,  at 
the  full  market  value,  without  any  notice  of  the  claim  of  the  plaintiff,  to  whom  the 
goods  belonged  when  shipped  from  New  Orleans.  It  was  contended  that  the  defen- 
dants, purchasing  for  a  fair  price,  in  the  usual  course  of  trade,  from  persons  holding 
the  usual  evidence  of  such  proj^erty  (a  bill  of  lading  indorsed  to  them),  and  in  ac- 
tual possession  of  the  goods,  should  be  protected;  but  the  Supreme  Court  and  Court 
of  Errors  of  New  York  both  unanimously  decided  that  the  plaintiff  was  entitled  to 
recover,  in  an  action  of  trover,  the  value  of  the  goods  thus  purchased  by  the  defen- 
dants. 


CONTRACTS  OF  SALE.  595 


Ability  of  Vendor  to  sell. 


There  are  some  cases  in  wliich  even  a  sale  in  market  overt  will 
not  secure  the  purchaser :  as,  if  the  goods  were  the  property  of  the 
King,  or  if  the  buyer  knew  they  were  not  the  seller's,  or  was  guilty 
of  any  other  fraud  in  the  transaction ;  nor  do  the  privileges  of  a 
market  overt  embrace  sales  made  in  a  covert  place  within  its  limits, 
as  in  a  back  room  or  warehouse,  or  in  a  shop  whose  windows  are 
closed  up  ;  (^)  nor  sales  between  sunsetting  and  sunrising,  (A)  nor 
cases  in  which  the  treaty  for  sale  was  begun  out  of  market  overt ;  {i) 
neither  does  the  rule  respecting  sales  in  market  overt  extend  to 
gifts (y)  or  pawns (/c)  there;  and,  notwithstanding  any  intervening 
sales,  if  the  original  vendor,  who  sold  without  having  the  property, 
come  again  into  possession  of  the  goods,  the  original  owner's  right 
to  them  will  revive.  (/)  And  although,  in  general,  a  sale  in  market 
overt  will  secure  the  purchaser,  though  the  goods  purchased  have 
been  stolen,  yet  stat.  7  &  8  Geo.  4,  c.  29,  s.  57,  {m)  enacts,  that  if 
any  person  guilty  of  any  such  felony  or  misdemeanor  as  is  before 
mentioned  in  that  act,  in  stealing,  taking^,  obtaininsf,  or  convertino-, 
or  in  knowingly  receiving,  any  chattel,  money,  valuable  security, 
or  other  property  whatsoever,  shall  be  indicted  by,  or  in  behalf  of 
the  owner,  his  executor,  or  administrator,  and  convicted,  in  such 
case  the  property  shall  he  restored  to  the  owner,  or  his  representative, 
and  the  Court  shall  have  power  to  award  writs  of  restitution,  or  to 
order  restitution  in  a  summary  manner.  But  this  does  not  extend 
to  charge  a  person  who  purchased  the  goods  in  market  overt  after 
the  felony,  and  disposed  of  them  again  before  the  conviction,  {n) 

360,  S.  C.  Poph.  84,  Comyn's  Di.  Market  0 ;  Bl.  Comm.  449.  "Wilkinson  v.  King,  2 
Camp.  336.  Lyons  v.  De  Pass,  11  Ad.  &  E.  326,  which  see,  on  the  question,  What  is  a 
shop  ?  withiQ  the  custom. 

(ff)  2  List  713;  5  Kep.  836;  Poph.  84;  2  Rolls,  Ab.  tit.  Market  Overt,  50,  p.  122. 

(h)  2  List.  714. 

(i)  2  Inst.  713. 

(j)  2  Inst.  713. 

(k)  Hartop  v.  Hoare,  Str.  1187;  1  Wils.  8;  3  Atk.  44.  Packer  v.  Gillies,  2  Camp 
336. 

(l)  2  Bl.  Comm.  450. 

(m)  21  Hen.  8,  c.  11,  was  the  corresponding  statute,  but  only  extended  to  felonies 
See  Parker  v.  Patrick,  5  T.  R.  175.  And  see  on  the  present  act.  Peer  v.  Humphrey,  4 
Nev.  &  M.  480 ;  2  Ad.  &  E.  495.  A  person  whose  goods  have  been  stolen  may  re- 
cover them  by  action  from  an  innocent  vendee,  though  he  has  taken  no  steps  te 
prosecute  the  thief     White  v.  Spettigue,  13  M.  &  W.  603. 

(n)  llorwood  v.  Smith,  2  T.  R.  750. 


59G  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

Moreover,  the  statute  provides  "  that  if  it  shall  appear,  before  any 
award  or  order  made,  that  any  valuable  security  shall  have  been 
hona  fide  paid  or  discharged  by  some  person  or  body  corporate  lia- 
ble to  the  payment  thereof,  or,  being  a  negotiable  instrument,  shall 
have  been  bona  fide  taken  or  received  by  transfer  or  delivery  for  a 
just  and  valuable  consideration,  without  any  notice  or  cause  to  sus- 
pect the  same  had  been  stolen,  taken,  obtained,  or  converted  as 
aforesaid :  in  such  case  the  Court  shall  not  award  or  order  the  restitu- 
tion of  such  security."  There  are  some  very  peculiar  provisions 
with  respect  to  the  sale  of  horses  in  marhei  overt,  enacted  by  stat.  2 
P.  &  M.  c.  7,  and  31  Eliz.  c.  12. 

There  are  some  cases  in  which  a  valid  sale  may  be  made  by 
virtue  of  a  power  conferred  by  law  on  the  vendor  not  being  the 
owner  of  the  goods  sold.  Thus,  a  sheriff  may  sell  according  to 
the  exigency  of  writ  of  execution,  and  if  that  writ  be  afterwards 
set  aside,  the  vendee  does  not  seem  liable  to  return  the  goods,  pro- 
vided he  have  acted  bona  fide,  (o)  But  the  vendee  under  an  invalid 
distress  warrant,  issued  upon  a  conviction,  has  been  thought  not  to 
be  similarly  protected,  (p) 

An  agent  or  a  person  in  possession  of  certain  documents  gene« 
rally  used  as  symbols  of  property,  is,  in  many  cases,  able  to  make 
a  valid  sale  of  the  goods  of  another  by  the  provisions  of  the  Fac- 
tor's Acts,  which  are  set  out  at  length  and  commented  upon  in  a 
preceding  chapter,  {q) 

Negotiable  instruments  are  also  an  exception  to  the  general  rule, 
that  a  valid  sale  cannot  be  made,  except  in  market  overt,  of  property 
to  which  the  vendor  has  no  right:  the  nature  of  these,  and  their 
transferability,  has  already  been  discussed  in  Book  II.,  Cap.  lY.,  to 
which  the  reader  is  referred. 

Section  II. — Form  and  Requisites  of  a  Contract  of  Sale. 

A  sale  of  goods  must  either  be  by  deed  or  parol.  A  sale  by 
deed  is  not,  at  present,  very  usual,  except  in  cases  where  the  thing 

(o)  Manning's  case,  8  Co.  191.     Doe  v.  Thorn,  1  M.  &  S.  425;  and  the  cases  cited 
in  Lock  V.  Selwood. 

{p)  Lock  V.  Selwood,  1  Q.  B.  736. 
{q)  Ante,  B.  1,  c.  5,  s.  4. 


CONTRACTS  OF  SALE  597 


Form  and  Requisites  of  a  Contract  of  Sale. 


sold  is  of  some  importance,  as  where  the  vendor  wishes  to  convey 
his  entire  property  to  the  vendee,  or  where  the  sheriff  sells  under 
an  execution.  "When  such  a  deed,  which  is  denominated  a  hill  of 
sale,  is  executed,  the  property  in  the  goods  conveyed  by  it  passes 
out  of  the  vendor  into  the  vendee,  by  its  delivery,  (r) 

A  2^(^'>''^T'  sale  of  goods  might,  according  to  the  common  law, 
have  been  in  every  instance  effected,  either  by  an  agreement  to  be 
completed  in  2^')'cesenti,  coupled  with  tender,  imrt  payment,  or  a  de- 
livery of  part  of  the  goods  by  way  o^  earnest;  or,  by  an  agreement 
to  be  completd  infuturo.  (s)  Thus,  if  A.  agree  to  pay  so  much  for 
goods,  and  B.,  the  owner,  had  agreed  to  take  it,  this  was  an  agree- 
ment to  be  completed  in  p)i'<xsenti,  since,  by  its  terms,  it  contemplated 
an  immediate  performance  on  both  sides;  and,  if  no  more  had 
passed,  but  the  parties  had  separated,  this  agreement  would  have 
become  void  and  unavailable ;  {t)  such  separation  being  equivalent 
to  a  mutual  consent  to  rescind  it.*     But,  if  B.  had  tendered  the 

(r)  Noy's  Max.  c.  42 ;  Com.  Dig.  Biens,  D.  3.  Carr  v.  Burdiss,  1  C.  M.  &  R.  '782; 
5  Tyrw.  316.  Brighton  Railway  Co.  v.  Faircloiigli,  2  M.  &  Gr.  674  Gale  v.  Burnell, 
1  Q.  B.  850. 

(s)  Com.  Dig.  Agreement,  B.  3,  and  the  other  authorities  cited  by  Holroyd,  J.,  in 
Tarling  v.  Baxter,  S  B.  &  C.  362.  Sheppard's  Touchstone,  224.  See  Dunmore  v.  Tay- 
lor, Peake,  41,  et  notas. 

{t)  Lutw.  252;  Dyer,  fol.  40,  pi.  203;  14  Hen.  8,  c.  22  ;  2  Bl.  Comm.  447. 


*  This,  however,  must  be  understood  only  as  applicable  to  cases  where,  from  cir- 
cumstances, such  a  condition  as  to  nullity  may  be  fairly  implied.  Long  on  Sales,  43. 
"When  the  terras  of  sale  are  agreed  on,  and  the  bargain  is  struck,  and  every  thing 
that  the  seller  has  to  do  with  the  goods  is  complete,  the  contract  of  sale  becomes 
absolute  as  between  the  parties,  without  actual  payment  or  delivery,  and  the  property 
and  the  risk  of  accident  to  the  goods  vest  in  the  buyer."  2  Kent  Com.  492.  "Inde- 
pendently of  the  statute,  any  words  importing  a  bargain,  whereby  the  owner  of  a 
chattel  signifies  his  willingness  and  consent  to  sell,  and  whereby  another  person  shall 
signify  his  willingness  and  consent  to  buy  it,  in  prcesenti,  for  a  specified  price,  would 
be  a  sale  and  transfer  of  the  right  to  the  chattel."  De  Fouclear  v.  Shottenkirk,  3 
John.  173.  "It  is  not  the  delivery  or  tender  of  the  property,  nor  the  payment  or 
tender  of  the  purchase  money,  which  constitute  a  sale.  The  sale  is  good  and  com- 
plete so  soon  as  both  parties  have  agreed  to  the  terms;  that  is,  so  soon  as  the  vendee- 
says,  'I  will  pay  the  price  demanded,'  and  the  vendor  says,  'I  will  receive  it,'  the 
rights  of  both  are  instantly  fixed."  Potter  v.  Coward,  Meigs  R.  26.  See  also  Willis 
V.  Willis,  6  Dana,  48.  Hurlburt  v.  Simpson,  3  Ired.  L.  233.  The  distinction  is  be- 
tween the  right  of  properti/,  which  the  vendee  acquires  by  the  contract  of  sale  as 
above  stated,  and  the  right  of  possessioji,  which  he  does  not  acquire  until  he  pays  oi 


598  MERCA^TTILE  C0^TRACT3. 

Form  and  Requisites  of  a  Contract  of  Sale. 

goods,  or  A.  the  price,  {u)  or  B.  had  received  any  part  of  the  price, 
though  but  a  penny,  or  A.  any,  even  the  very  smallest  portion  of 
the  goDds,  (f)  both  would  have  been  bound  to  their  bargain ;  though 
B.  would  in  no  case  have  had  a  right  to  the  remainder  of  the  price, 
until  he  was  himself  ready  to  deliver  the  goods  to  A.,  and  A.  no 
right  to  the  possession  of  the  goods,  till  he  was  ready  to  pay  the 
whole  of  the  price  to  B.  {iv) 

It  was  quite  clear,  that,  after  a  payment  or  tender  of  the  entire 
price,  the  property  of  the  goods  became  vested  in  the  vendee,  so 
that  he  might,  if  the  vendor  had  refused  to  deliver  them,  have 
maintained  trover,  and  would  have  had  to  bear  the  loss,  had  he  of 
his  own  will  permitted  them  to  remain  in  the  vendor's  hands,  and 
they  had  there  been  accidentally  destroyed,  {x)  But  it  does  not 
seem  so  clear,  whether  the  effect  of  part  payment  or  earnest  be  to 
bind  the  bargain,  and  alter  the  property,  or  merely  to  bind  the  bar- 
gain, (y)  In  Langford  v.  Tiler^  (2)  the  rule  was  said  to  be,  "  After 
earnest  given,  the  vendor  cannot  sell  the  goods  to  another  without 
default  in  the  vendee,  and  therefore,  if  the  vendee  do  not  come  and 
pay  for,  and  take  away,  the  goods,  the  vendor  ought  to  go  and  re- 
quest him;  and  then  if  he  do  not  come  and  pay  for,  and  take 
away,  the  goods,  in  convenient  time,  the  agreement  is  dissolved, 


(m)  2  Comm.  447  ;  Sheppard's  Touchstone,  225. 

{v)  2  Bl.  448 ;  K"oy,  c.  42.  See  Hinde  v.  "Whitehouse,  7  East,  558 ;  Sheppard's 
Touchstone,  224. 

(m)  Hob.  41 ;  2  Bl.  Conam.  448.  Peeters  v.  Opie,  2  Saund.  352,  b.  in  notis.  See 
Bach  V.  Owen,  5  T.  R.  409.  Rawson  v.  Johnson,  1  East,  203.  There  is  one  case  in 
■which  it  -was  laid  down  by  Mr.  J.  Bayley,  that  a  vendor  who  had  sold  goods  on  ready 
money  terms,  and  whose  servant  by  mistahe  delivered  them  without  receiving  the 
money,  might  after  a  demand  and  refusal  bring  trover.  Bishop  v.  Shillito,  2  B.  »fe  A. 
329.     See  Brandt  v.  Bowlby,  2  B.  <t  Ad.  932. 

{x)  Sheppard's  Touch.  225 ;  2  BL  Comm.  448.  See  Tarling  v.  Baxter,  6  B.  (t  C. 
360.     Hinde  v.  Whitehouse,  7  East,  558. 

(«/)  See  Key's  Max.  88.  Sheppard's  Touch.  224.  Bach  v.  Owen,  5  T.  R.  409  B. 
N.  P.  50. 

{£)  Salk.  113. 

tenders  the  price,  unless  by  the  terms  of  the  contract  it  be  otherwise  provided. 
And  the  vesting  of  the  property  casts  the  risk  of  accident  to  the  goods  upon  the 
vendee.  Tarling  v.  Baxter,  6  B.  <fc  C.  360 ;  13  E.  C.  R.  199.  Crawford  v.  Smith,  7 
Dana,  59. 


CONTRACTS  OF  SALE.  50£ 


Form  and  Requisites  of  a  Contract  of  Sale. 


and  the  vendor  is  at  liberty  to  sell  them  to  any  other  person." 
This  rule,  which  certainl}''  is  the  most  convenient,  seems  to  have 
been  approved  by  Lord  Ellenborongh,  in  Ilinde  v.  Whitehouse ;  (ci) 
and  his  Lordship  appears  to  have  considered  all  the  authorities  as 
reconcilable,  and  to  have  understood  the  effect  of  them  to  be,  that, 
after  earnest,  and  before  the  payment  of  the  whole  price,  the  pro- 
perty is  in  the  vendee,  subject  only  to  the  vendor's  lien^  but  that 
the  vendor  ma}^,  upon  finding  the  vendee  delay  to  accomplish  his 
bargain,  go  to  him  and  request  him  to  do  so,  and  if  he,  after  that, 
delay  for  an  unreasonable  time,  may  treat  such  further  delay  as 
equivalent  to  a  consent  to  rescind  the  sale,  and  the  property  will 
thereupon  become  revested  in  himself  And  so  it  has  been  thought 
e  converse  might  the  vendor's  unreasonable  delay  to  deliver  the 
goods  when  he  had  stipulated  to  do  so,  perhaps  entitle  the  vendee 
to  rescind,  (i) 

The  Court  of  Queen's  Bench  has,  however,  decided,  in  a  late 
case,  (c)  that  where  the  property  has  once  passed  to  the  vendee,  his 
failure  to  pay  the  price  at  the  appointed  time  does  not  entitle  the 
vendor  to  rescind  the  contract.  That  case  does  not  seem  to  decide 
what  would  be  the  consequences  of  an  express  refusal. 

In  Martindale  v.  Smith,  (d)  oats  standing  on  the  defendant's  pre- 
mises were  sold  by  him  to  the  plaintiff  under  the  following  con- 
tract : — 

Aj^ril  23,  1838. 

Sold  to  Mr.  John  Martindale,  of  Cottenham,  six  oat-stacks  for 
85Z. 

John  Smith  gives  John  Martindale  liberty  to  let  the  stacks 
stand,  if  he  thinks  fit,  until  the  middle  of  August  next ;  and  John 
Martindale  is  to  pay  to  John  Smith  for  the  stacks  in  twelve  weeks 
from  the  date  hereof. 

Signed  by  the  parties. 

The  plaintiff  did  not  pay  at  the  appointed  time.  He  afterwards 
tendered  payment,  which  was  refused  by  the  defendant,  who  sold 

(rt)  1  East,  558. 

(6)  See  Barber  v.  Taylor,  5  M.  &  W.  527. 

(c)  Martindale  v.  Smith,  1  Gale  «fe  Dav.  1 ;  1  Q.  B.  897 

Id)  1  Q.  B.  397. 


600  MERCA^'TILE  CONTRACTS. 


Form  and  Requisites  of  a  Contract  of  Siile. 


tlie  oats,  on  which  the  plaintiff  brought  trover  against  him,  and  waa 
held  entitled  to  recover. 

The  Court,  having  cited  with  approbation  the  rule  of  the  civil 
law  as  stated  by  Pothier,  viz.,  that  a  purchaser's  delay  in  paying 
the  price  does  not  give  the  vendor  a  right  to  require  a  dissolution 
of  the  contract,  goes  on  to  say,  the  vendor's  right  to  detain  the 
thincr  sold  against  the  purchaser,  must  be  considered  as  a  right  of 
lien  till  the  price  is  paid,  not  a  right  to  rescind  the  bargain. 

Even  when  goods  are  actually  delivered  to  the  vendee,  the 
delivery  may  be  on  condition,  a  breach  of  which  revests  the  pro- 
perty .in  the  vendor,  and  entitles  him  to  recover  back  the  goods  in 
trover,  (e)* 

(e)  Bishop  v.  Sliillito,  2  B.  <t  A.  329.     Brandt  v.  Bowlby,  2  B.  &  Ad.  932. 


*  If  a  vendor  rely  on  the  promise  of  the  vendee  to  perform  the  conditions  of  the 
Bale,  and  deliver  the  goods  absolutely,  the  right  of  property  will  be  changed,  although 
the  conditions  be  never  performed.  Harris  v.  Smith,  3  Serg.  &  Rawle,  20.  And  so 
where  the  ownei*  of  a  chattel  delivers  it  to  another,  and  takes  his  promise  in  writing 
to  return  it  on  a  day  specified,  or  pay  a  sum  of  money  therefor,  the  property  in  the 
chattel  passes  from  the  former  to  the  latter.  The  security  vested  in  the  contract. 
Dearborn  v.  Turner,  4  Shep.  17.    See  also  Hurd  v.  West,  7  Cow.  752. 

On  a  sale  it  may  be  agreed  between  vendor  and  vendee,  that  possession  shall  pass, 
but  not  the  title,  until  payment  is  made ;  this  will  be  good  as  to  them,  but  not  as  to 
creditors  or  third  persons ;  it  will,  however,  be  sufficient  if  the  vendor  retain,  with 
the  title,  either  the  exclusive  or  joint  possession.  Rose  v.  Story,  1  Burr.  190.  And 
it  is  said  by  Pirsons,  C.  J.,  in  Hussey  v.  Thornton,  4  ilass.  407,  that  as  to  creditors 
whose  demands  originated  while  the  goods  were  in  the  possession  of  such  a  vendee, 
60  that  it  might  be  fairl}'  presumed  that  a  false  credit  was  given  him,  or  as  to  bona 
fide  purchasers  for  a  valuable  consideration,  such  a  condition  would  not  avail  the 
vendor.  See  also  Ward  v.  Shaw,  7  Wend.  405.  Haggerty  v.  Palmer,  6  John.  Ch.  R. 
437.  But  in  the  case  of  Tibbets  v.  Towle,  3  Fairf.  341,  the  Court  say  that  in  condi- 
tional sales  no  property  passes  but  subject  to  tlie  condition,  and  held  that  a  subse- 
quent purchaser,  bona  fide,  for  a  valuable  consideration  without  notice,  could  not 
hold  the  property  against  the  prior  title  of  the  vendor.  And  in  the  case  of  Gamb- 
ling V.  Read,  Meigs  R.  281,  the  decision  of  the  Court  was  to  the  same  effect.  The 
condition  may  be  precedent,  as  that  no  title  or  property  shall  pass  until  the  price  is 
paid,  or  some  other  act  be  done,  in  which  case  it  is  rather  a  contract  for  a  sale  than 
an  actual  sale,  and  when  possession  of  the  article  is  given,  the  parties  stand  in  the 
situation  of  bailor  a  d  bailee  rather  than  that  of  vendor  and  vendee;  or  the  condi- 
tion may  be  subsequent,  as  that  the  title  shall  determine,  or  the  property  revest  in 
the  vendor,  on  the  failure  to  pay  the  price,  or  to  do  some  other  act.  The  nature  of 
the  condition  may  make  an  important  difference  in  reference  to  the  rights  of  third 


C0XTRACT3  OF  SALE.  601 


Form  and  Requisites  of  a  Contract  of  Sale. 


The  delivery  of  tlie  goods  wbicli  is  to  pass  the  propert}^  may  be, 
of  course,  to  an  agent  of  the  vendee ;  and,  if  the  goods  are  in  the 
hands  of  a  third  person  as  agent  for  the  vendor,  a  notice  given  to 
and  assented  to  by  him  will  render  him  the  agent  of  the  vendee  for 
this  purpose.  (/)  To  use  the  words  of  Parke,  B.,  delivering  the 
judgment  of  the  Exchequer  in  Bryar.s  v.  Kix,  "  If  the  intention  of 
the  parties  to  pass  the  property,  whether  absolute  or  special,  in  cer- 
tain ascertained  chattels  is  established,  and  they  are  placed  in  the 
hands  of  a  depositary,  no  matter  whether  that  depositary  be  a  com- 
mon carrier  or  ship-master  employed  by  the  consignor  or  a  third 
person,  and  the  chattels  are  so  placed  on  account  of  the  person  who 
is  to  have  that  property,  and  the  depositary  assents,  it  is  enough, 
and  it  matters  not  by  Avhat  documents  this  is  effected."  {g) 

An  agreement  to  be  completed  in  futuro  may  be  such,  on  ac- 
count of  the  postponement  cither  of  the  payment  of  the  price,  or  of 
the  delivery  of  the  goods,  or  of  both :  in  all  these  cases  the  rule  is, 
that,  if  nothing  remains  to  he  done  on  the  jiart  of  the  seller,  as  between 
him  and  the  buyer,  before  the  goods  2^UTchased  are  to  he  delivered,  the 
property  in  the  goods  immediately  passes  to  the  buyer,  and  that  in  the 
price  to  the  seller,  (/i)  But  that  if  any  act  remains  to  he  done  on  the 
part  of  the  seller,  then  the  prop)erty  does  not  pass  until  that  act  has  been 


(/)  Bryans  v.  Nix,  4  M.  <t  T^T.  VVo.  Evans  v.  Xicbol,  3  M.  tfe  Gr.  6U.  Jenkyns  v. 
Usborne,  7  M.  &  Gr.  678. 

{g)  4  M.  &  W.  "791 ;  and  see  Anderson  v.  Clark,  2  Bingb.  20,  explained  by  Parke, 
B.,  in  the  same  judgment 

(/;)  Per  Holroyd,  J.,  in  Tarling  v.  Baxter,  6  B.  i  C.  364.  JIartindale  v.  Smith,  1 
G.  &  D.  1 ;  1  Q.  B.  397.  See  B.  N.  P.  50.  Phillimore  v.  Barry,  1  Camp.  513.  El- 
more V.  Stone,  1  Taunt.  458.  Fragano  v.  Long,  4  B.  «fe  C.  219.  Alexander  v.  Gard- 
ner, 1  Bingb.  X.  C.  GTl.     Tansley  v.  Turner,  2  Biugb.  X.  C.  151. 


persons.  And  thus  in  the  case  of  Strong  v.  Taylor,  2  Hill,  826,  wbere  payment  of 
the  price  was  a  condition  precedent,  the  Court  held  that  no  interest  in  the  property 
passed,  save  ■what  rested  in  contract,  an  interest  -which  could  not  be  subject  of  levy 
and  sale ;  and  on  the  contrary,  the  Court  conceded,  that  "  vrbere  a  party  takes  and 
is  possessed  of  an  interest  in  the  property,  liable  to  be  divested  on  his  failure  to  com- 
ply -with  a  condition  subsequent,  such  interest  may  be  seized  and  sold  on  execution, 
and  the  purchaser,  on  comj^lying  with  the  condition,  would  acquire  an  absolute 
title."  See  also  Fairbank  v.  Phelps,  22  Pick.  535.  Reed  v.  Upton,  10  Pick.  522 
Barrett  v.  Pritchard,  2  Pick.  512. 


602  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

done,  (i)*  Thus,  where  there  was  a  bargain  for  the  sale  of  hay, 
which  was  not  paid  for  till  a  future  period,  and  not  to  be  cut  till 
paid  for,  it  was  held  that  the  property  nevertlieless  passed  to  the 

(i)  Hanson  v.  Meyer,  6  East,  614.  Zagury  v.  Furnell,  2  Camp.  2-40.  "Withers  v. 
Lyss,  4  Camp.  237.  Wallace  v.  Breeds,  13  East,  522.  Simmons  v.  Swift,  5  B.  <fe  C. 
857.  Gillett  v.  Hill,  2  C.  <fe  M.  530;  4  Tyrwh.  290,  ubi,  per  Bayley,  B.,  "The  cases 
may  be  divided  into  two  classes,  one  in  which,  though  a  bargain  and  sale  of  the  spe- 
cific goods  has  taken  place,  yet  as  something  remains  to  be  done  to  them  by  the  seller, 
the  property  remains  in  him  till  that  is  done,  and  does  not  pass  to  the  vendee  so  as 
to  enable  him  to  maintain  trover.  The  other  case,  where  the  bargain  is  for  a  certain 
quantity  of  goods,  ex  a  larger  quantity,  and  the  vendor  has  a  power  to  select  what 
part  he  chooses  to  deliver,  there,  before  a  division  takes  place  by  the  vendoi-,  no  in- 
dividuality is  ascertained  in  the  part  sold,  so  as  to  sustain  an  action  of  trover  by  the 
vendee."  See  also  Swanwick  v.  Sothern,  9  Ad.  &,  E.  895,  where  the  distinction  is 
drawn  between  a  weighing  necessary  to  ascertain  the  price  and  one  for  the  mere  sat 
isfaction  of  the  buyer. 


*  The  general  principle  is,  that  where  any  operation  of  weight,  measurement, 
counting,  or  the  like,  remains  to  be  performed,  in  order  to  ascertain  the  price,  the 
quantity,  or  the  particular  commodity  to  be  delivered,  and  to  put  it  in  a  deliverable 
state,  the  contract  is  incomplete  until  such  operation  is  performed.  See  Crofoot  v. 
Bennett,  2  Coms.  258.  But  where  the  goods  or  commodities  are  actually  delivered, 
that  shows  the  intent  of  the  parties  to  complete  the  sale  by  the  delivery,  and  the 
weighing,  or  measuring,  or  counting  afterwards,  would  not  be  considered  as  any 
part  of  the  contract  of  sale,  but  would  be  taken  to  refer  to  the  adjustment  of  the 
final  settlement  as  to  the  price.  The  sale  would  be  as  complete  as  a  sale  upon  credit 
before  the  actual  payment  of  the  price.  Maeomber  v.  Parker,  13  Pick.  183.  And 
in  the  case  of  sales,  where  the  property  to  be  sold  is  in  a  state  ready  for  delivery, 
and  the  payment  of  money,  or  giving  security  therefor,  is  not  a  condition  precedent 
to  the  transfer,  it  may  well  be  the  understanding  of  the  parties  that  the  sale  is  per- 
fected, and  the  interest  passes  immediately  to  the  vendee,  although  the  weight  or 
measure  of  the  articles  sold  remains  yet  to  be  ascertained.  Such  a  case  presents  a 
question  of  the  intention  of  the  parties  to  the  contract.  The  party  afiirming  the  sale 
must  satisfy  the  jury  that  it  was  intended  to  be  an  absolute  transfer,  and  all  that  re- 
mains to  be  done  was  mei'ely  for  the  purpose  of  ascertaining  the  price  of  the  articles 
sold,  at  the  rate  agreed  upon.  Riddell  v.  Varnum,  20  Pick.  283.  See  also  Crawford 
V.  Smith,  7  Dana,  59.  When  the  thing  to  be  done  is  necessary  to  ascertain  the  price, 
and  the  sale  is  for  cash,  it  makes  no  difference  whether  that  thing  is  to  be  done  by 
the  vendor  or  vendee,  and  an  actual  delivery  to  the  vendee  for  such  purpose  will  not 
pass  the  property  till  payment  is  made.  Thus  where  the  owner  of  cattle  agreed  to 
sell  them  to  a  butcher  at  a  certain  price,  to  be  determined  by  the  weight  of  the  quar- 
ters after  the  cattle  should  be  slaughtered,  and  delivered  them  to  the  butcher  to 
slaughter,  and  when  slaughtered  to  take  them  to  market,  weigh  them,  and  pay  for 
the  cattle  according  to  the  weight  of  the  quarters,  it  was  held  that  the  right  o  pro- 


CONTRACTS  OF  SALE.  GOJ 


Form  and  Requisites  of  a  Contract  of  Sale. 


vendee,  and  that  the  hay  having,  before  the  day  of  payment,  been 
accidentally  destroyed,  the  loss  must  fall  njDon  him,  (/)  So  the 
property  in  a  chattel  does  not  pass  by  a  contract  of  sale,  even 
though  the  value  be  paid,  unless  it  be  in  existence  at  the  time  of 
the  contract ;  (Jc)  though  it  (or  rather  its  materials)  may  be  from 
time  to  time  appropriated,  while  in  the  course  of  making,  by  spe- 
cial circumstances  evidencing  such  an  intention,  {I)  or  by  acceptance 
or  part  payment  after  its  completion,  {m)  So  a  grant  of  goods 
which  do  not  at  the  time  belong  to  the  grantor,  but  which  he  ex- 
pects to  acquire,  will  pass  no  property  in  them.  {?i)  And  where  the 
goods  sold  are  part  of  a  larger  stock,  and  a  separation  is  necessary 
previous  to  deliver}^,  no  property  passes  till  the  separation  is  com- 

(J)  Tarling  v.  Baxter,  6  B.  &  C.  360.  Ace.  Martindale  v.  Smith,  1  G.  &  D.  1 ;  1  Q, 
B.  397.  Cum  emtio  et  venditio  contracta  sit,  periculum  rei  venditce  statim  ad  emtorem 
pertinet,  tametsi  adhuc  ea  res  emtori  tradita  non  sit.     Inst.,  1.  3,  c.  24. 

{k)  Mucklow  V.  Mangles,  1  Taunt.  318;  Noy's  Max.  42;  Hob.  442.  Goode  v. 
Langley,  1  B.  &  G.  26.  Atkinson  v.  Bell,  8  B.  &  C.  277.  Laidler  v.  Burlinson,  2  M. 
&  W.  602.     Tripp  v.  Armitage,  4  M.  &  W.  687. 

(/)  Woods  V.  Russell,  5  B.  &  A.  942.  Clark  v.  Spence,  4  Ad.  &  E.  448.  Goss  v. 
Quinuon,  3  M.  &  Gr.  825.      Vide  tamen  Laidler  v.  Burlinson,  ubi  supra. 

('/«)  Elliot  V.  Pybus,  10  Bingh.  512.  See  Tripp  v.  Armitage,  4  M.  &  W.  687,  where 
A.  agreed  to  build  a  house,  make  window  frames,  and  fix  them,  they  having  been 
approved  of  by  a  survej'or.  Held,  that  the  property  in  them  did  not  pass  before 
fixing,  for  that  the  surveyor's  approbation  did  not  amount  to  an  acceptance  of 
them. 

(n)  Lunn  v.  Thornton,  1  C.  B.  379.     Gale  v.  Burnell,  7  Q.  B.  850. 

(o)  "White  V.  Wilkes,  5  Taunt.  176.  Austen  v.  Craven,  4  Taunt.  644.  Shepley  v. 
Davis,  5  Taunt.  617.  Busk  v.  Davis,  2  M.  &  S.  397,  (and  qumre  whether  Whitehouse 
V.  Frost,  12  East,  614,  be  law.)     Bryans  v.  Nix,  4  M.  &  W.  775. 


perty  in  the  cattle  did  not  pass  by  such  delivery.  Ward  v.  Shaw,  7  Wend.  404.  See 
also  Andrew  v.  Dieterich,  14  Wend.  31.  Where  goods  are  sold  by  weight,  :neasure, 
or  a  price  to  be  ascertained  for  the  distinct  pieces  or  parcels,  as  soon  as  any  quan- 
tity is  weighed  or  measured,  or  any  pieces  or  parcels  severed,  and  the  price  for  them 
ascertained,  the  property  in  them  passes,  though  the  title  to  the  other  remains  in 
the  vendor.     Crawford  v.  Smith,  7  Dana,  59.     Rugg  v.  Minnett,  11  East,  210. 

As  to  the  application  of  the  general  rule,  that  while  any  act  is  to  be  done  to 
ascertain  the  vaiue,  v^uantity,  quality,  or  identity,  the  right  of  property  does  not 
pass,  in  relation  to  which  there  is  some  conflict  in  the  cases,  see  Pleasants  v.  Pen- 
dleton, 6  Rand.  473.  Woods  v.  McGee,  7  Ohio,  2  pt.  127.  Downer  v.  Thompson, 
2  Hill,  137  ;  S.  C.  6  Hill,  208.  Outwater  v.  Dodge,  7  Cow.  85.  Davies  v.  Hill,  3  New 
H.  382. 


604  MERCANTILE  CONTRACTS, 

Form  and  Requisites  of  a  Contract  of  Sale. 

plete;  (o)  to  i.se  the  words  of  Bailey,  J.,  in  Rhodes  v.  Thivaites,  {p) 
"  where  a  man  sells  part  of  a  large  parcel  of  goods,  and  it  is  at  his 
option  to  select  part  for  the  vendee,  he  cannot  maintain  any  action 
for  goods  bargained  and  sold  until  he  has  made  that  selection. 
But,  as  soon  as  he  appropriates  part  for  the  benefit  of  the  vendee, 
the  property  of  the  article  sold  passes  to  the  vendee,  {q)  although 
the  vendor  is  not  bound  to  part  Avith  the  possession  until  he  is  paid 
the  price." 

As  soon  as  the  property  has  passed  to  the  vendee,  it  remains, 
as  was  before  stated,  at  his  risk,  a  doctrine  strongly  exemplified  by 
a  late  case  in  which  Irish  butters  were  shipped  for  a  person  in 
London ;  "  payment,  bill  at  two  months  from  the  date  of  landing." 
The  butter  having  been  lost  by  shipwreck,  it  was  held  that  the 
object  of  the  above  stipulation  was  merely  to  fix  the  time  of  pay- 
ment, not  to  make  the  landing  of  the  goods  a  condition  precedent, 
and  that  the  vendor,  having  waited  a  reasonable  time,  might  re- 
cover the  price  from  the  vendee  in  an  action  for  goods  bargained 
and  sold,  (r) 

This  seems  to  have  been  precisely  the  rule  of  the  Roman  law. — 
Vino  miitato  periculum  emptorera  special^  quamvis  ante  diem  preth 
solvendi  vel  conditione  emptionis  impleta  id  evenerit ;  quod  si  mille 
amphoras,  certo  pretio,  corpore  non  demonstrato,  vini  vendidit,  nullum 
emptoris  interea  p)ericulum  erit.  (s) 

Such  was  the  common  law  respecting  sales  of  personal  property ; 
and  such  is  still  the  law  respecting  sales  of  goods  under  tlie  value  of 
10?.,  with  this  addition,  that  no  action  can  be  maintained  on  any 
agreement  for  the  sale  of  them,  that  is  not  to  be  performed  within 
the  space  of  one  year  from  the  making  thereof,  unless  the  agree- 
ment be  in  writing,  and  signed  by  the  party  to  be  charged  therewith, 
or  some  other  person  thereunto  by  him  lawfully  authorized,  [t) 

On  this  provision  it  has  been  decided,  that  an  agreement  is  valid, 
though  not  in  writing,  if  it  possibly  could  be  performed  within  the 

(p)  G  B  &  C.  392. 

{q)  Sparkes  v.  Marshall,  2  Bing.  F.  C.  '761. 

(r)  Alexander  v.  Gardner,  1  Bingli.  N.  C.  671.     See  Fragano  v.  Long,  4  B.  <Sc  C.  219 
Richardson  v.  Dunn,  2  Q  B.  218. 
(s)  Frag.  Vat.  Ex.  Empt.  et  Vend. 
(<)  29  Car.  2,  c.  3,  s.  4. 


CONTEACTS  OF  SALE.  605 


Form  and  Requisites  of  a  Contract  of  Sale. 


year,  {ic)  Thus,  a  contract  to  deliver  goods  at  the  return  of  a  par- 
ticular ship,  would  not  be  within  the  meaning  of  this  section,  for 
the  ship  might  possibly  return  within  a  year,  and  though  it  should, 
in  point  of  fact,  remain  abroad  for  five  years,  that  would  make  no 
difference. 

It  was  hinted  in  two  cases,  (v)  and  has  been  at  last  decided,  that 
this  section  of  the  Statute  of  Frauds  does  not  require  an  agreement 
to  be  in  writing,  one  part  of  which  is  to  be  performed  within  a  year 
and  the  other  not.  {iv)" 

With  respect  to  contracts  for  the  sale  of  goods  of  the  value  of  lOZ. 


(u)  Anon.,  Sal.  280.  Peter  t.  Compton,  Skinn.  353.  Fenton  v.  Emblers,  3  Burr. 
1281.     Wells  V.  Horton,  4  Bingli.  40. 

(y)  Boydell  v.  Drummond,  11  East,  142.     Bracegirdle  v.  Heald,  1  B.  and  A.  722. 

(to)  Donnellan  v.  Read,  3  B.  &  Ad.  899.  Hoby  v.  Roebuck,  T  Taunt.  157  ;  2  Marsh. 
433,  ace.  Yet,  in  some  of  the  older  cases,  ex  gr.,  Peter  v.  Compton,  the  contrary 
Beems  to  have  been  assumed;  and  see  Birch  v.  E.  of  Liverpool,  9  B.  &  C.  392,  which 
■was  not  cited  in  Donnellan  v.  Read.  The  word  agreement,  in  the  same  section,  haa 
been  frequently  construed  to  mean  all  that  is  to  be  done  on  both  sides,  a  meaning 
which  Donnellan  v.  Read  denies  to  it.  See  "Wain  v.  Warlters,  5  East,  10.  Saunders 
V.  Wakefield,  4  B.  <fe  A.  595.  Jenkins  v.  Reynolds,  3  B.  &  B.  14.  See  further  on  this 
section  of  the  statute,  Chapter  on  Guaranties,  ante. 


*  In  order  to  bring  a  parol  agreement  within  this  clause  of  the  Statute,  it  must 
either  have  been  expressly  stipulated  by  the  parties,  or  must  appear  to  have  been  so 
understood  by  them,  that  the  agreement  was  not  to  be  performed  within  a  year. 
And  this  stipulation  or  understanding  is  to  be  absolute  and  certain,  and  not  to  de- 
pend on  any  contingency.  An  agreement  by  pai-ol  is  not  within  the  Statute,  when, 
by  the  happening  of  any  contingency,  it  might  be  performed  within  a  year.  Tims,  a 
parol  contract  to  support  a  person  for  a  certain  number  of  j^ears,  is  not  within  the 
Statute ;  for  if  he  die  within  one  year,  having  been  supported  under  the  contract 
until  his  death,  the  contract  will  have  been  fully  performed.  Peters  v.  Westborough, 
19  Pick.  364.  Moore  v.  Fox,  10  John.  244.  Blake  v.  Cole,  22  Pick.  97.  Lockwood  v. 
Barnes,  3  Hill,  128,  note  (a).  But  there  is  no  reported  case  which  decides  that  a  con- 
tract which  cannot  be  performed  within  a  year,  except  upon  a  contingency  which 
neither  party,  nor  both  together,  can  hasten  or  retard,  such  as  the  death  of  one  of 
them  or  a  third  person,  is  not  within  the  Statute.  The  possibility  of  perlbrmance 
in  the  adjudications  rests  upon  human  effort  or  volition,  not  upon  providential  in- 
terference. Tolley  V.  Green,  2  Sand.  C.  R.  91.  Although  the  performance  is  to  begin, 
and  does,  in  fact,  commence  within  the  year,  yet  if  the  contract  is  not  to  be  com- 
pletely executed  within  that  period,  the  case  is  within  the  Statute.  Part  per 
formance  within  the  year  will  not  render  the  contract  valid.  Lockwood  v.  Barnes^ 
3  Hill,  128.    And  see  note  (&)  to  that  case,  and  Herrin  v.  Butters,  20  Maine,  119. 


t)0(>  MERCANTILE  CONTRACTS 

Form  and  Requisites  of  a  Contract  of  Sale. 

and  upivards^  they,  besides  being  within  the  section  of  the  Statute 
of  Frauds  just  commented  upon,  are  also  governed  by  the  seven- 
teenth section,  which  enacts  that  "  no  contftict  for  the  sale  of  any 
goods,  wares,  and  merchandises,  for  the  price  of  101.  or  upwards, 
shall  be  allowed  to  be  good,  except  the  buyer  shall  accept  part  of 
the  goods  so  sold,  and  actually  receive  the  same,  or  give  something 
in  earnest  to  bind  the  bargain,  or  in  part  of  payment,  or  that  some 
note  or  memorandum  in  writing  of  the  said  bargain  fee  made  and 
signed  by  the  parties  to  be  charged  by  such  contract,  or  their  agents 
thereunto  lawfully  authorized." 

We  will  detain  the  reader  for  a  short  time  to  consider,  one  by 
one,  the  parts  of  this  important  section;  which,  as  has  been  re- 
marked by  Mr.  J.  Bosanquet,  (x)  is  stronger  than  the  fourth,  for  the 
fourth  section  does  not  avoid  contracts  not  signed  as  the  Statute 
directs,  but  only  enacts  that  7io  action  shall  be  brought  upon  them. 
{See  ante,  Chapter  on  Guaranties,  sect.  1.)  The  seventeenth  section 
is  stronger,  and  avoids  contracts  not  made  as  the  Statute  pre- 
scribes. 

No  contract  for  the  sale  of  any  goods,  wares,  and  merchandises. — ■ 
A  distinction  was  formerly  taken  between  cases  in  which  the  thing 
contracted  for  was  in  existence  and  capable  of  delivery  at  the  time 
of  the  contract,  and  cases  in  which  it  was  necessary  that  something 
should  be  done  in  order  to  render  it  capable  of  delivery :  the  for- 
mer cases  were  universally  allowed  to  be  within  the  act ;  but  the 
decisions  on  the  question  whether  the  latter  were  so,  were  not  very 
consistent,  (j)*    However,  by  stat.  9  Geo.  4,  c,  14,  s.  7,  (a)  it  is 

{x)  2  Bingh.  N.  C.  74Y. 

(y)  See  Rondeau  j;."Wyatt,  2  H.  Bl.  63.  Garbutt  v.  Watson,  5  B.  <fe  A.  613.  Smith 
V.  Surman,  9  B.  &  C.  561.  Cooper  v.  Elston,  7  T.  R.  14.  Alexander  v.  Comber,  1  H. 
Bl,  20.  Clayton  v.  Andrews,  4  Burr.  2101.  Groves  v.  Buck,  3  M.  &  S.  178.  Watts 
V.  Friend,  10  B.  &  C.  446.     Pinner  v.  Arnold,  2  C.  M.  <fe  R.  613. 

(a)  See  Elliott  v.  Pybus,  10  Bingh.  512,  remarks  of  Tindal,  C.  J.,  on  this  stat. 

*  In  this  country,  a  number  of  the  states  have  never  adopted  the  seventeenth 
section  of  the  English  Statute  of  Frauds     ar.d  none,  it  is  believed,  the  supplemental  j^ 
act  of  Geo.  4,  cited  by  the  author. 

In  the  case  of  Bennet  v.  Hull,  10  John.  364,  it  was  decided  that  the  Statute  ap- 
plied to  executory,  as  well  as  other  contracts,  and  the  cases  of  Rondeau  v.  Wyatt,  2 


CONTRACTS  OF  SALE.  607 


Form  and  Requisites  of  a  Contract  of  Sale. 


enacted,  that  the  seventeenth  section  of  the  Statute  of  Frauds  shall 
extend  to  all  contracts  for  the  sale  of  goods  to  the  value  of  lOZ. 
sterling  and  upwards,  notwithstanding  the  goods  may  be  intended 
to  be  delivered  at  some  future  time,  or  may  not,  at  the  time  of  such 
contract,  be  actually  made,  procured  or  provided,  or  fit  or  ready  for 
delivery,  or  some  act  may  be  requisite  for  the  making  or  completing 
thereof,  or  rendering  the  same  fit  for  delivery.  It  has  been  doubted 
whether  a  sale  of  stock  be  within  this  section  of  the  Statute  of 


H.  Bl.  63,  and  Cooper  v.  Elston,  7  T.  R.  14,  were  recognized  as  containing  a  just  and 
Bound  construction  of  the  Statute.  See  Crookshank  v.  Burrell,  18  John.  58.  In  this 
case  it  is  said  that  "the  distinction  taken  by  Lord  Loughborough,  in  Rondeau  v. 
Wyatt,  and  by  the  judges  who  gave  opinions  seriatim,  in  Cooper  v.  Elston,  vas  be- 
tween a  contract  for  a  thing  existing  in  solido,  and  an  agreement  for  a  thing  not  yet 
made,  to  be  delivered  at  a  future  day.  The  contract,  in  the  latter  case,  they  con- 
sidered not  to  be  a  contract  for  the  sale  and  purchase  of  goods,  but  a  contract  for 
work  and  labor  merely.  However  refined  this  distinction  may  be,  it  is  well  settled, 
and  it  is  now  too  late  to  question  it."  Sewall  v.  Fitch,  8  Cow.  215.  Spencer  v.  Cone, 
1  Mete.  283.  "When  the  contract  is  a  contract  of  sale,  either  of  an  article  then  ex- 
isting, or  of  articles  which  the  vendor  usually  has  for  sale  in  the  course  of  his  busi- 
ness, the  Statute  applies  to  the  contract,  as  well  where  it  is  to  be  executed  at  a  future 
time,  as  where  it  is  to  be  executed  immediately.  But  where  it  is  an  agreement  with 
a  workman,  to  put  materials  together  and  construct  an  article  for  the  employer, 
whether  at  an  agreed  price  or  not — though  in  common  parlance  it  maj'  be  called  a 
purchase  and  sale  of  the' article,  to  be  completed  in  futaro,  it  is  not  a  sale  until  au 
actual  or  constructive  delivery  and  acceptance ;  and  the  remedy  for  not  accepting  is 
on  the  agreement."     Mixer  v.  Ilowarth,  21  Pick.  207. 

In  the  case  of  Clayton  v.  Andrews,  4  Burr.  2101,  it  was  held  that  a  contract  for 
the  sale  of  unthreshed  wheat,  to  be  delivered  at  a  future  day,  was  not  within  the 
Statute ;  but  this  case  is  considered  to  be  overruled  by  the  cases  of  Garbutt  v.  Watson, 
6  B.  and  Aid.  613,  7  E.  C.  R.  209,  and  Smith  v.  Surman,  9  B.  <fe  C.  549,  17  E.  C.  R.  443. 
And  in  the  case  of  Downes  v.  Ross,  23  Wend.  270,  it  was  decided,  in  accordance  with 
the  doctrine  of  those  cases,  that  a  contract  for  the  sale  of  seven  hundred  bushels  of 
wheat,  two  hundred  and  fifty  of  the  quantity  being  then  in  a  granary,  and  the  residue 
unthreshed,  but  which  the  vendor  agreed  to  get  ready  and  deliver,  together  with  the 
wheat  in  the  granary,  after  giving  it  a  second  cleaning,  in  six  days  at  a  specified 
place,  payment  to  be  made  on  delivery,  was  within  the  Statute  of  Frauds.  But  see 
Eichleberger  v.  McCailey,  5  Har.  &.  J.  213. 

In  the  case  of  Gai  diner  v.  Joy,  9  Mete.  177,  it  was  held  that,  where  A.  asked  B. 

y^what  he  would  take  £jr  candles,  B.  said  he  would  take  twenty-one  cents  per  pound ; 

'^L  said  he  would  take  one  hundred  boxes ;  B.  said  the  candles  were  not  manufactured, 
but  he  would  manufacture  and  deliver  them  in  the  course  of  the  summer;  it  was  a 


contract  for  the  sale  of  goods  within  the  Statute  of  Frauds. 


608  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

Frauds,  {h)  A  contract  for  sliares  in  a  canal  navigation,  or  similar 
public  undertaking,  is  not  so ;  (c)  nor  is  a  contract  to  procure  goods 
and  carry  them,  {d)  It  appears  certain  that  sales  by  auction  are, 
though  that  was  once  doubted,  (e) 

Except  the  buyer  shall  accept  part  of  the  goods  so  sold,  and  actually 
receive  the  same. — In  consequence  of  these  words,  there  has,  ever 
since  the  act,  been  a  great  struggle  to  determine  what  is  a  part- 
performance,  a  delivery,  an  acceptance,  or  a  part-payment.  Upon 
these  points,  the  inclination  of  the  courts  is,  to  give  the  words  of 
the  Statute  full  effect,  and  not  to  allow  unnecessarily  of  construc- 
tive deliveries  and.  acceptances.  Indeed,  "if  goods  be  ponderous 
and  incapable  of  being  handed  over  from  one  to  another,  there 
need  not  be  an  actual  delivery,  but  it  may  be  done  by  that  which. 
is  tantamount ;  (/)  for  instance,  by  the  delivery  of  the  key  of  the 
warehouse  in  which  goods  are  lodged,  or  of  some  other  indicia  of 
property,"  such  as  the  bill  of  lading;  {g)  or  there  may  be  a  delivery 
by  the  vendee's  dealing,  and  the  vendor's  suffering  him  to  deal, 
with  goods  as  with  his  own  property.  (A) 

A  few  examples  may  assist  the  reader  in  determining  what  will, 
and  what  will  not,  amount  to  a  delivery  and  acceptance  within  the 
meaning  of  this  section.* 

(b)  Pickering  v.  Appleby,  2  P.  Wms.  301 ;  Free.  Cha.  533 ;  Ca.  temp.  King,  41. 
Scmble,  not.     Pawle  v.  Gunn,  4  Bingh.  N.  C.  445. 

(c)  Latham  v.  Barber,  6  T.  R.  67.  Bancroft  v.  Albrecht,  12  Sim.  1S9.  Bowlby  v. 
Bell,  3  C.  B.  284.     See  also  Knight  v.  Barber,  16  M.  &  W.  66. 

(d)  Cobbold  V.  Caston,  1  Bingh.  399. 

(e)  Simon  j;.  Motives,  Bl.  599.  Hinde  v.  "Whitehouse,  7  East,  558.  Heymau  v. 
Neale,  2  Camp.  33  ;  12  Ves.  jun.  466.  Kenworthy  v.  Scholfield,  2  B.  &  C.  945.  Shelton 
V.  Livius,  2  Tj-rwh.  420 ;  2  C.  «fe  J.  411.     Bird  v.  Boulter,  4  B.  A  Ad.  443. 

(/)  Per  Lord  EUenborough,  Chaplain  v.  Rogers.  See  Searle  v.  Keeves,  2  Esp.  598 ; 
1  Atk.  171.  Peckerly  v.  Appleby,  Com.  354.  Colt  v.  Nethersoll,  2  P.  Wms.  308. 
Zwinger  v.  Samuda,  7  Taunt.  265.     Lucas  v.  Dorien,  7  Taunt.  278. 

{g)  Mitchell  v.  Ede,  11  Ad.  &  E.  888. 

(/t)  Chaplin  v.  Rodgers,  1  East,  192.  Simon  v.  Motivos,  3  Burr.  1921.  Anderson 
V.  Scott,  and  Hodgson  v.  Le  Bret,  1  Camp.  233,  et  notas. 


*  The  recent  cases  tend  to  establish  a  more  stringent  rule  as  to  the  circumstances 
Bufficient  to  establish  such  a  delivery  and  acceptance  as  will  dispense  -with  the  re 
quisitions  of  the  Statute.  They  -were  reviewed  in  Shindler  v.  Houston,  1  Comst.  Rep. 
261.    The  judges,  in  that  case,  expressed  the  opinion  that  words  alone  coidd  not 


CONTRACTS  OF  SALK  600 


Form  and  Requisites  of  a  Contract  of  Sale. 


Where  a  hogshead  of  wine  in  the  warehouse  of  the  London 
Dock  Company  was  verbally  sold,  and  a  delivery  order  given  to  the 
vendee,  the  acceptance  of  the  delivery  order  by  the  vendee  was 
held  to  be  no  acceptance  of  the  wine :  {%)  "  there  could  not,"  said  the 
Court,  "be  any  actual  acceptance  by  the  vendee,  until  the  Dock 
Company  accepted  the  order  for  delivery,  and  thereby  assented  to 
hold  the  wine  as  the  agents  of  the  vendee."  (/)  A  transfer  of  a 
horse,  by  order  of  the  vendee,  from  the  vendor's  sale  stable  into 
another  of  his  stables,  has  been  held  sufficient.  (Z;)  But  where  a 
horse  was  sold  by  verbal  contract,  no  time  fixed  for  the  payment 
of  the  price,  and  the  horse  was  to  remain  with  the  vendor's  for 
twenty  days  without  any  charge  to  the  vendee,  at  the  expiration 
of  which  time  it  was  sent  to  grass  by  the  direction  of  the  vendee, 
and,  at  his  desire,  entered  as  the  horse  of  one  of  the  vendors ;  it 
was  held  that  there  was  no  acceptance  (Z)  of  the  horse  by  the 
vendee.  Acceptance  of  a  sample  which  is  to  be  accounted  part  of 
the  commodity  sold  is  sufficient,  (?n)  though  accejotance  of  one  which 
is  to  be  no  part  thereof  is  not  so.  (?i)  There  cannot,  it  has  been 
laid  down,  be  such  an  actual  acceptance  as  the  Statute  contemplates, 

(i)  Bentall  v.  Burn,  3  B.  <fe  0.  423.  Farina  v.  Home,  16  M.  tfe  W.  119.  See  Howe 
I'.  Palmer,  3  B.  &  A.  321.  Baldey  v.  Parker,  2  B.  &  C.  37.  Talver  v.  "West,  Holt,  N. 
P.  C.  1*78.  Thompson  v.  Maceroni,  3  B.  &  C.  1 ;  but  qumre,  if  this  case  were  decided 
with  any  view  to  the  Statute  of  Frauds. 

(.j)  See  Gosling  v.  Birnie,  V  Bingh.  339.  Bryans  v.  Nix,  4  M.  &  "W.  ^lo.  Gillett 
V.  Hill,  4  Tyrwh.  290,  2  C.  <fe  M.  530,  where  the  acceptance  of  the  delivery  order  by 
the  agent  was  held  such  an  attornment  by  him  to  the  vendee,  as  to  preclude  him 
from  afterwards  saying  that  he  had  not  so  much  property  in  his  hands  as  was  com- 
prised in  the  order,  or  that  he  had  not  appropriated  so  much  to  the  vendee.  See 
HoU  V.  Griffin,  10  Bingh.  246. 

(Jc)  Elmore  v.  Stone,  1  Taunt.  458. 

{I)  Carter  v.  Toussaint,  5  B.  <fe  A.  855.  See  Tempest  v.  Fitzgerald,  3  B.  &  A.  680. 
Howe  V.  Palmer,  3  B.  <fe  A.  321.  Hanson  «.  Armitage,  5  B.  &  A.  557.  Phillips  v.  Bis- 
tolli,  2  B.  &  C.  511.  Price  i^.Lee,  1  B.  <fe  C.  .156.  Maberley  v.  Sheppard,  10  Bingh. 
99.     Bill  V.  Bament,  9  M.  &  W.  37. 

{m)  Hinde  v.  Whitehouse,  7  East,  558.     Klinitz  v.  Surry,  5  Esp.  267. 

(w)  Talver  v.  "West,  Holt,  K  P.  C.  178. 

produce  tliis  effect;  but  that,  superadded  to  the  language  of  the  contract,  there  must 
be  some  act  of  the  parties,  amounting  to  a  transfer  of  possession,  and  an  acceptance 
thereof  by  the  buyer ;  and  that  the  case  of  cumbrous  articles  furnished  no  exception 
to  the  rule. 
S9 


510  IklERCANTILE  CONTRACTS. 


Form  and  Requisites  of  a  Contract  of  Sale. 


SO  long  as  the  buyer  continues  to  have  a  right  to  object  to  the 
quantum  or  quality  of  the  goods,  (o)*  or  the  seller  retains  his  lien 
for  the  price  upon  the  property  accepted,  (p)     Delivery  to  an  agent 


(o)  Acebal  v.  Levy,  10  Bingh.  S76.  Howe  v.  Psimer,  ubi  supra.  Hanson  v.  Ar- 
mitage,  5  B.  «&  A.  55Y.  Kent  v.  Huskisson,  3  B.  &  P.  233.  Astey  v.  Emery,  4  M.  & 
S.  262.  See  Coleman  v.  Gibson,  1  M.  &  Rob.  1 69.  From  -which  case  it  appears  that 
thouo-h,  if  the  bulk  do  not  correspond  with  the  order,  the  mere  delivery  does  not 
satisfy  the  Statute,  provided  the  vendee  within  a  reasonable  time  signifies  his  disap- 
proval, vet  that  if  he  delay  for  an  unreasonable  time  it  does  so.  The  expressions  of 
Baron  Alderson  regarding  the  acceptance  necessary  to  support  a  plea  of  accord  and 
satisfaction  apply  to  this  point  also.  "  Every  receipt  is  not  an  acceptance,  but  if  the 
party  accept  the  thing,  though  but  for  a  moment,  for  that  for  which  the  other  pays 
it,  he  cannot  by  his  subsequent  dissatisfaction  get  rid  of  the  effect  of  it."  Hardman 
V.  Bellhouse,  9  M.  &  W.  600.  See  also  Xorman  v.  Phillips,  14  M.  &  W.  277.  Curtis 
y.  Pugh,  16  L.  J,  Q.  B.  199. 

(p)  Baldey  v.  Parker,  2  B.  <fe  C.  37.  Carter  v.  Toussaint,  5  B.  «fe  A.  855.  Tempest 
V.  Fitzgerald,  3  B.  &  A.  680.  Smith  v.  Surnam,  9  B.  <&  C.  561.  See  Maberley  v 
Sheppard,  10  Bingh.  99. 

*  The  law  has  been  ruled  differently  bj'  the  Court  of  Queen's  Bench  in  Morton  v. 
Tibbett,  15  Ad.  &  E.  N".  S.  428,  where  all  the  previous  cases  are  elaborately  reviewed 
by  Lord  Campbell.  He  says:  "  The  difference  between  the  cases  on  this  subject  may 
be  accounted  for  by  the  exact  words  of  the  I7th  section  of  the  Statute  of  Frauds  not 
having  been  always  had  in  recollection.  Judges,  as  well  as  counsel,  have  supposed 
that  to  dispense  with  a  written  memorandum  of  the  bargain,  there  must  first  have 
been  a  receipt  of  the  goods  by  the  buyer,  and  after  that,  an  actual  acceptance  of  the 
same.  Hence,  perhaps,  has  arisen  the  notion  that  there  must  have  been  such  an  ac- 
ceptance as  would  preclude  the  buyer  from  questioning  the  quantity  or  qualit}'  of 
the  goods,  or  in  any  way  disputing  that  the  contract  has  been  fully  performed  b}' 
the  vendor."  He  then  quotes  the  act  to  show  that  it  does  not  warrant  this  con- 
struction, and  proceeds :  "  It  is  remarkable  that,  notwithstanding  the  importance  of 
having  a  written  memorandum  of  the  bargain,  the  legislature  appears  to  have  been 
willing  that  this  might  be  dispensed  with,  where  by  mutual  consent  there  has  been 
part  performance.  Hence  the  payment  of  any  sum  in  earnest  to  bind  the  bargain, 
or  in  part  payment,  is  sufficient.  This  act  on  the  part  of  the  buyer,  if  acceded  to  by 
the  vendor,  is  sufficient.  The  same  effect  is  given  to  the  corresponding  act  by  the 
vendor,  of  delivering  part  of  the  goods  sold  to  the  buyer,  if  the  buyer  shall  accept 
such  part  and  actually  receive  the  same.  As  part  payment,  however  minute  the  sum 
may  be,  is  sufficient,  so  part  deliver}^,  however  minute  the  portion  may  be,  is  suffi- 
cient. This  shows  conclusively  that  the  condition  imposed  was  not  the  complete  ful- 
filment of  the  contract  to  the  satisfaction  of  the  buyer.  In  truth,  the  effect  of 
fulfilling  the  condition  is  merely  to  waive  written  evidence  of  the  contract,  and  allow 
it  to  be  established  by  parol,  as  before  the  Statute  was  passed.  The  question  may 
then  arise  whether  it  has  been  performed  either  on  the  one  side  or  the  other.     The 


CONTLACTS  OF  SALE.  Gil 


Form  and  Requisites  of  a  Contract  of  Sale. 


or  carrier,  appointed  by  tlie  vendee,  or  by  wliom  he  has  been  in  the 
habit  of  receiving  goods  from  the  vendor,  is  sufficient ;  {(j)  but  not 
to  a  carrier  selected  by  the  vendors,  (r)  Where  two  classes  of 
goods  are  jointly  ordered,  acceptance  of  one  is  an  acceptance  of 
both.  (5) 

It  is  decided  that  one  person  in  possession  of  another's  goods 
may  become  the  purchaser  of  them  by  parol,  and  may  do  subse- 
quent acts  without  any  Avriting  between  the  parties  which  may  , 
amount  to  an  acceptance,  and  the  effect  of  such  acts  necessarily  to 
be  proved  by  parol  evidence  must  be  submitted  to  a  jury,  {t) 

It  appears  to  have  been  thought  by  some  of  the  judges  of  the 
Court  of  Exchequer,  in  the  case  of  Boulter  v.  Arnott,  that  the  accejjt- 
ance  necessary  to  satisfy  the  17th  section  of  the  Statute  of  Frauds, 
is  different  from  such  a  one  as  will  enable  the  vendor  to  maintain  * 
an  action  for  goods  sold  and  delivered,  (u)  This  proposition  seems, 
however,  to  be  doubtful,  {v)  and  scarcely  consistent  with  the  opinion 

(j)  Hart  V.  Sattley,  3  Camp.  528.  See  Dutton  v.  Solomonson,  3  B.  &  P.  588. 
Dawes  v.  Peck,  8  T.  R.  330.  But  see  also  Norman  v.  Phillips,  ^lhi  supra.  The  vendor 
himself  may  be  the  vendee's  agent  for  this  purpose.  Elmore  v.  Stone,  1  Taunt.  458. 
See  Mitchell  v.  Ede,  11  Ad.  &  E.  889,  which  turned  not  on  the  Statute  of  Frauds,  but 
on  the  conflicting  claims  of  two  vendees. 

(r)  Coats  V.  Chaplin,  3  Q.  B.  483. 

(s)  Elliott  V.  Thomas,  3  M.  &  W.  170.  Vide  tamen  Lord  Ellenborough's  ruling  ie 
Hodgson  V.  Le  Bret,  1  Camp.  233. 

{t)  Edan  v.  Dudfield,  1  Q.  B  302.  And  see  as  to  the  acts  necessary  to  evidence 
such  an  acceptance,  Lillj-white  v.  Devenmx,  15  M.  &  W.  285. 

(m)  Boulter  v.  Arnott,  3  Tyrwh.  269  •  1  C.  <t  M.  333 ;  and  see,  per  Patteson,  J., 
Curtis  V.  Pugh,  16  L.  J.  Q.  B.  200. 

(y)  In  reason,  it  is  very  hard  to  see  the  difference  between  a  delitiery  and  the  sort 
of  transfer  required  by  the  Statute  of  Frauds.  If  the  Statute  had  used  merely  the 
word  accept,  it  would  have  been  easy  to  understand  how  there  might  be  au  acceptance 


acceptance  is  to  be  something  which  is  to  precede,  or  at  any  rate  to  be  contempora- 
neous with,  the  actual  receipt,  of  the  goods,  and  is  not  to  be  a  subsequent  act  after 
the  goods  have  been  actuall}^  received,  weighed,  measured,  and  examined.  As  the 
act  of  parliament  expressly  makes  the  acceptance  and  actual  receipt  of  any  part  of 
tlie  goods  sold  sufficient,  it  must  be  open  to  the  buyer  to  object,  at  all  events,  to  the 
quantity  and  quality  of  the  residue  ;  and,  even  where  there  is  a  sale  by  sample,  that 
the  residue  offered  does  not  correspond  with  the  sample."  This  decision  shows  that 
the-views  expressed  by  Mr.  Smith,  in  note  (n)  on  this  page,  must  be  received  with 
great  qualification. 


612  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

tbat  there  can  be  no  acceptance  witliiu  the  Statute  till  the  vendor's 

of  the  property  in  goods  without  any  delivery  of  tlie  possession  ;  but  the  Statute  goes 
on  to  require  that  the  vendee  should  not  onl}'  accept  but  actually  receive.  And  it  is 
submitted  that  it  is  scarce  possible  to  conceive  a  delivery  without  an  actual  receipt,  or 
an  actual  receipt  without  a  delivery. 

If  the  matter  were  res  Integra,  it  might  be  said  that  the  delivery  required  to  sus- 
tain an  action  for  goods  sold  and  delivered,  meant  a  delivery  of  the  property,  not  of 
the  possession ;  or  that  the  acceptance  and  actual  receipt  required  by  the  Statute  was 
of  the  property,  not  of  the  possession.  But  the  former  proposition  cannot  be  main- 
tained consistently  with  Boulter  v.  Arnott,  or  Goodall  v.  Skelton,  nor  can  the  latter 
consistently  with  Baldey  v.  Parker,  2  B.  <fe  C.  37.  Carter  v.  Toussaint,  5  B.  <fe  A.  855. 
Tempest  v.  Fitzgerald,  3  B.  <Sr  A.  680. 

In  Boulter  v.  Arnott,  3  Tyrwh.  269,  1  C.  &  M.  333,  the  goods  had  been  packed  up 
by  the  vendor  in  boxes  furnished  by  the  purchaser,  who  requested  the  seller  to  keep 
them  for  him.  But,  as  tliere  had  not  been  a  complete  delivery  of  the  possession,  the 
Court  held  that  the  action  for  goods  sold  and  delivered  did  not  lie.  Goodall  v.  Skelton, 
2  H.  Bl.  316,  is  still  a  stronger  case,  for  there  the  Court  asserted  the  necessity  of  an 
actual  delivery  of  the  possession,  in  order  to  the  action  for  goods  sold  and  delivered. 
Yet  the  property  in  that  case  had  passed,  for  earnest  had  been  paid. 

In  Baldey  v.  Parker,  2  B.  <fe  C.  37,  it  is  distinctly  laid  down  by  the  Court,  that  the 
Statute  of  Frauds  requires  a  transfer  of  the  possession.  The  L.  C.  J.  Abbott,  having 
read  the  exception  in  the  Statute  of  Frauds,  says,  "  It  would  be  difficult  to  find  words 
more  distinctly  denoting  an  actual  transfer  of  the  article  from  the  seller,  and  an 
actual  taking  possession  of  it  by  the  buyer."  This  opinion  is  fully  supported  by  the 
judgments  of  the  rest  of  that  Court,  one  of  the  very  strongest  Westminster  Hall  has 
ever  seen,  and  it  is  borne  out  by  Carter  v.  Toussaint,  and  Tempest  v.  Fitzgerald ;  to 
which  last  case  Mr.  Justice  Coleridge,  in  one  of  those  learned  and  judicious  notes  by 
which  he  has  illustrated  without  incumbering  the  text  of  Blackstone,  refers  in  sup- 
port of  his  proposition,  that  "  the  tenor  of  modern  decisions  is  to  give  the  words  of 
the  Statute  their  fullest  effect,  and  not  to  allow  (so  far  as  is  possible)  of  any  construc- 
tive deliveries  or  acceptances." 

It  may,  therefore,  be  safely  laid  down,  that,  on  one  hand,  there  must  be  a  delivery 
of  the  possession,  in  order  to  sustain  a  count  for  goods  sold  and  delivered ;  and,  on 
the  other  hand,  that  there  must  be  an  acceptance  of  the  possession  in  order  to  satisfy 
the  Statute  of  Frauds. 

This  being  so,  it  would  seem  to  follow,  almost  as  a  matter  of  course,  that,  where 
a  transfer  of  all  the  goods  sold  is  relied  on  to  satisfy  the  Statute,  it  must  be  a  transfer 
of  precisely  the  same  sort  as  would  be  required  in  order  to  maintain  a  count  for 
goods  sold  and  delivered.  Opposed  to  this,  however,  is  tlie  opinion — not,  as  shall  be 
presently  shown,  the  decision — of  the  Court  of  Exchequer  in  Boulter  v.  Arnott 
That  case  was  decided  on  the  ground  that  there  had  been  no  actual  delivery,  and 
therefore  that  the  count  for  goods  sold  and  delivered  must  fail.  But  Lord  Lyndhurst 
expressly  said,  "Had  there  been  a  count  for  goods  bargained  and  sold,  the  plaintiff 
might  have  recovered."  And  Baron  Baj-ley,  after  expressing  his  opinion  that  the 
possession  had  not  passed,  added,  "  Whether  the  acts  of  marking  or  packing  for  the 
vendee  in  his  presence  amount  to  an  acceptance  by  him  under  sect.  17  of  the  Statute 
ff  Frauds,  is  quite  another  question." 


CONTRACTS  OF  SALE.  QU 


Form  and  Requisites  of  a  Contract  of  Sale. 


lien  is  determined.     An  acceptance  after  action  brought  will  not 

If  these  dicta  can  be  supported,  the  doctrine  above  contended  for,  viz.,  of  the  iden- 
tity of  the  species  of  transfer  necessary  to  maintain  the  count  with  that  required  to 
satisfy  the  Statute,  falls  to  the  ground.  It  is  respectfully  submitted  that  they  cannot 
be  so. 

In  the  first  place,  they  were  altogether  unnecessary  to  tlie  decision  in  Boulter  v. 
Arnott,  which  was,  that  assumpsit  for  goods  sold  and  delivered  would  not  lie,  not 
that  assumpsit  for  goods  bargained  and  sold  would.  For  the  same  reason  they  are 
not  supported  by  anything  in  Goodall  v.  Skelton,  where,  indeed,  the  point  could  by 
no  possibility  have  arisen,  the  property  having  passed  by  the  earnest. 

In  the  second  place,  they  are  inconsistent  witli  the  doctrine,  resulting,  as  it  is  sub- 
mitted, from  Tempest  v.  Fitzgerald,  Carter  v.  Toussaint,  and  Baldey  v.  Parker,  namely, 
that  there  can  be  no  acceptance  within  the  Statute  of  goods  over  which  the  vendor's 
lien  for  the  price  continues  to  exist. 

Tliirdl}',  they  are  inconsistent  with  the  expressions  of  the  Court  in  several  cases 
in  which  the  species  of  transfer  necessary  to  satisfy  the  Statute  and  that  necessary 
to  maintain  the  count  have  been  spoken  of  as  identical.  See  in  Thompson  v.  Mace- 
roni,  3  B.  <fe  C.  1,  and  the  judgment  in  Maberley  v.  Sheppard,  10  Bingli.  99.  It  is 
true  that  in  Anderson  v.  Scott,  1  Camp.  2.35,  Lord  Ellenborough  ruled  that  there  had 
been  an  acceptance  of  goods  to  satisfy  the  Statute  of  Frauds,  yet  not  such  a  delivery  of 
them  as  to  satisfy  the  vendor's  contract  to  deliver ;  but  it  is  obvious,  on  a  minute's  re- 
flection, that  this  has  no  bearing  on  the  present  question,  for  it  is  quite  consistent 
with  the  vendee's  having  had  a  right  to  bring  trover  for  the  goods,  which  presup- 
poses him  in  legal  possession  of  them. 

It  is  submitted,  therefore,  that  the  dicta  in  Boulter  v.  Arnott  cannot  be  sustained, 
and  that,  where  the  Statute  of  Frauds  is  to  be  satisfied  by  a  delivery  of  all  the  goods, 
that  delivery  must  be  such  as  would  enable  the  vendor  to  sue  for  goods  sold  and  de- 
livered. It  is,  however,  necessary  to  mention  that  there  is  a  very  late  decision  of  the 
Coui"t  of  Queen's  Bench,  which  appears  at  first  sight  difficult  to  reconcile  with  this 
proposition,  but  which,  upon  consideration,  will  appear  perfectly  consistent  with  it 
The  decision  referred  to  is  Dodsley  v.  Varle}',  12  Ad.  &  E.  632. 

It  was  an  action  of  assumpsit  for  goods  bargained  and  sold :  the  goods  were  wools 
bought  of  the  plaintiff  by  the  defendant  through  his  agent  Burford.  The  facts  were, 
that  the  wool  was  bought  while  at  the  plaintiff's;  tlie  price  was  agreed  upon,  but  it 
would  have  to  be  weighed;  it  was  then  removed  to  the  warehouse  of  a  third  person, 
where  Burford  collected  the  wools  he  had  purchased  for  the  defendant  from  various 
persons,  and  to  which  place  the  defendant  sent  sheeting  for  the  packing  up  of  the  wools. 
There  it  was  weighed,  together  with  the  other  wools,  and  packed,  but  not  paid  for. 
It  was  the  usual  course  for  the  wool  to  remain  at  this  place  till  paid  for.  The  question 
was,  whether  these  facts  were  sufficient  to  satisfy  the  Statute  of  Frauds,  and  tlie 
Court  held  that  they  were  so. 

"  It  was  argued,"  says  the  L.  C.  J.,  "  that,  because  by  the  coiirse  of  dealing  he  was 
not  to  remove  the  wool  to  a  distance  before  paj'raent  of  the  price,  the  property  had 
not  passed  to  him,  or  that  the  plaintiff  retained  such  a  lien  as  was  inconsistent  with 
the  notion  of  an  actual  delivery.  AVe  think  that,  upon  this  evidence,  the  place  to 
which  the  wools  were  removed  maybe  considered  as  the  defendant's  warehouse,  and 


614  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

satisfy  the  Statute,  so  as  to  enable  the  vendor  to  recover  in  thai 
action,  {lu) 

that  he  was  in  achtal  possession  of  it  as  soon  as  it  was  weighed  and  packed ;  that  it 
was  thenceforward  at  his  risk,  and,  if  burnt,  must  have  been  paid  for  by  him.  Con- 
sistently with  this,  however,  the  plaintiff  had  not  what  is  commonly  called  a  lien 
determinable  on  the  loss  of  possession,  but  a  special  interest,  sometimes,  but  impro- 
perly, called  a  lien,  growing  out  of  his  original  ownership  independent  of  the  actual 
possession,  and  consistent  with  the  property  being  in  the  defendant.  This  he  re- 
tained in  respect  of  the  term  agreed  on,  that  the  goods  should  not  be  removed  to 
their  ultimate  place  of  destination  before  payment.  But  this  lien  is  consistent,  as  we 
have  said,  with  the  possession  having  passed  to  the  buyer,  so  that  there  may  have 
been  a  delivery  to  and  an  actual  receipt  by  him." 

It  would  appear  clear  that  this  case  was  decided  on  the  ground,  that,  Burford 
being  the  defendant's  agent,  a  delivery  to  him  was  a  delivery  to  the  defendant,  but 
that  he  was  the  defendant's  agent  for  the  transmission  of  the  goods,  and  that  they 
remained  subject,  while  in  his  hands,  to  a  liability  to  which  it  was  competent  to  the 
parties  to  subject  them  by  agreement,  that;  namely,  of  being  stopped  in  transitu  if 
the  price  should  not  be  fortlicoming  at  the  stipulated  time,  viz.,  the  moment  of  their 
leaving  Burford's  warehouse  for  the  purpose  of  prosecuting  their  journey  to  the 
defendant.  See  Wilmshurst  v.  Bowker,  2  M.  &  Gr.  792.  Assuming  this  to  have  been 
the  ground,  Dodsley  v.  Yarley  is  in  no  wise  opposed  to  the  doctrine  here  contended 
for,  but,  on  the  contrary,  supports  it  by  assuming,  as  the  judgment  does  throughout, 
that  a  transfer  of  the  actual  possession  was  necessary. 

{w)  In  Fricker  v.  Thomlinson,  1  M.  <fe  Gr.  773,  Mr.  Justice  Maule,  speaking  of 
Elliott  V.  Thomas,  3  M.  &  W.  170,  says:  "The  case  in  the  Exchequer  decided  that  the 
Statute  of  Frauds  only  altered  the  evidence  of  the  contract,  and  did  not,  like  the 
statute  of  Anne,  make  the  contract  itself  void;  and,  if  that  be  so,  a  memorandum 
of  the  contract  after  action  brought  would  be  sufficient ;  and  why  then  should  not  an 
acceptance  of  the  goods  after  action  brought  be  admissible  in  evidence  ?"  Bill  v. 
Bament,  9  M.  &.  W.  37,  has,  however,  decided  that  a  memorandum  after  action 
brought  is  insufficient,  and  it  is  conceived  that  an  acceptance  of  part  of  the  goods 
would  be  so  also.  With  regard  to  Elliott  v.  Thomas,  it  would  be  difficult  to  find  any 
thing  there  in  support  of  the  contrary  opinion;  in  that  case,  the  objection  that  the 
17th  section  of  the  Statute  of  Frauds  ought  to  have  been  pleaded  was  given  up  by 
consent.  Eastwood  v.  Kenyon,  11  Ad.  &  E.  438,  turned  on  the  fourth  section,  as  did 
Buttermere  v.  Hayes,  5  M.  &  W.  456,  on  the  authority  of  which  it  was  decided.  In 
the  latter  case,  however,  the  Court  intimated  their  opinion  that  under  the  17th 
section  the  absence  of  a  writing  would  be  a  defence  under  the  general  issue,  and 
referred  to  Johnson  v.  Dodgson,  2  M.  &  "W.  657,  where  an  opinion  to  that  effect  is 
expressed.  Baron  Parke  saying,  "Suppose  it  were  a  declaration  for  an  estate  bar- 
gained and  sold,  would  it  not  be  competent  to  the  defendant  under  the  general  issue 
to  show  that  there  had  been  no  convej'ance »"  to  which  the  L.  C.  B.  adds,  "  When 
by  law  you  cannot  make  a  particular  contract  except  in  writing,  to  deny  the  writing 
is  to  deny  the  contract."  This  seems  as  if  the  Court  relied  upon  the  invalidity  of 
the  contract  rather  than  on  the  deficiency  of  evidence.  And  in  Leafe  v.  Tuton,  10 
M.  it  W.  3 :3,  which  has  finally  decided  that  non  assumpsit  is  the  proper  plea  in  cases 


CONTRACTS  OF  SALE.  Glo 


Form  and  Requisites  of  a  Contract  of  Sale. 


Or  give  something,  in  earnest  to  hind  the  bargain,  or  in  j^art  pay- 
ment.— If  a  purchaser  of  goods  draw  the  edge  of  a  shilling  over 
the  hand  of  the  vendor,  and  return  the  money  into  his  own  pocket, 
which  in  the  North  of  England  is  callfd  striking  a  bargain,  that 
will  not  be  sufficient,  ix) 

Or  that  some  note  or  memorandum  in  loriting  of  the  bargain  be 
made.^ — A  mere  offer  in  writing  made  by  one  side,  and  not  as- 
under the  I7tli  section,  it  is  expressly  laid  down  that  the  plea  of  the  Statute  of 
Frauds  is  nothing  but  an  argumentative  denial  of  the  contract,  or  of  the  facts  from 
which  it  is  implied  b}^  law. 

The  truth  is,  that  there  is  a  marked  difference,  as  poiirted  out  by  Mr.  J.  Bosan- 
quet  in  Laythoarp  v.  Br^-ant,  2  Bing.  N.  C.  744,  between  the  effect  of  the  4th  and 
that  of  the  17th  section.  The  former  enacts,  that  no  action  shall  be  brought,  etc.;  the 
latter,  that  no  contract  shall  be  good.  It  seems  clear  that  under  the  former  section, 
the  writing  is  required  to  evidence  the  contract,  not  to  constitute  it,  and  equally 
clear  from  the  express  enactment  that  the  writing  must  exist  before  the  action 
brought.  It  is  clear  that  under  the  latter  section,  unless  the  statutable  requisites  be 
observed,  there  is  no  available  contract  at  all,  and  of  course  nothing  iq^on  which  an 
action  can  be  brought.  In  neither  case,  therefore,  can  a  writing  after  action  brouo-ht 
be  made  available  in  that  action  for  the  purpose  of  satisfying  the  Statute. 

(x)  Blenkinsop  v.  Clayton,  7  Taunt.  597.  So  a  contemporaneous  agreement  that 
a  smaller  debt  due  from  the  vendor  shall  go  in  part  ^Jayraent  of  the  goods  when 
delivered,  is  not  within  this  provision.     Walker  v.  Kusse}-,  IG  M.  &  "W.  302. 

*  What  memorandum  will  be  sufficient  under,  this  clause  of  the  Statute,  was  dis- 
cussed by  the  Supreme  Court  of  the  United  States  in  the  late  case  of  Salmon  Falls 
Manufacturing  Company  v.  Goddard,  14  How.  S.  C.  R.  446.  The  question  arose 
under  the  Statute  of  Massachusetts,  which  pursues  in  this  clause  the  exact  lano-uace 
of  the  Statute  of  29  Charles  2d.     The  paper  was  in  the  following  form: 

"Sept.  19th.— W.  W.  Goddard,  12  mos. 

300  bales  S.  F.  drills, 7^ 

100  cases  blue       "         8f 

'  Credit  to  commence  when  ship  sails:  not  after  Dec.  1st:  delivered  free  of  charge 
for  truckage. 

R.  M.  M. 
W.  W.  G. 
"The  blues,  if  color  is  satisfactory  to  purchaser." 
The  majority  of  the  Court  held  that  this  memorandum  was  a  sufficient  compliance 
with  the  Statute  to  enable  the  Salmon  Falls  Manufacturing  Company  to  recover  the 
price  of  the  goods  described  from  Goddard,  although  they  had  never  been  accepted 
by  him.    The  word  "bargain,"  it  was  said  in  the  Statute,  meant  the  terms  uj^on 
which  the  respective  parties  have  contracted;  these  terms  must  be  stated  in  the  note 


616  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

sented  to  by  the  other,  is  not  enough  to  satisfy  these  words,  as 
where  A.  wrote  to  B.  that  he  woald  buy  his  mare  for  twenty 
guineas  if  warranted  sound  and  quiet  in  harness^  to  which  B.  writes 
that  he  will  send  her,  and  warrant  her  sovmd  and  quiet  in  double 
harness,  this  is  no  contract,  the  proposal  of  A.  never  having  been 
completely  accepted.  "The  parties,"  said  Parke,  B.,  "never  have 
contracted  in  writing  ad  idem,  {y)  It  is  sufficient  if  the  contract 
can  be  collected  from  several  different  documents,  provided  they 
be  sufiiciently  connected  in  sense.  (2)  But  this  connection  must 
appear  from  the  documents  themselves,  and  not  be  introduced  by 
*■-'  p^^\  evidence,  (a)  The  wo'fd  hargain,  used  in  this  section,  does 
not  render  so  strict  a  statement  of  the  transaction  necessary  as  the 
word  agreement,  used  in  the  fourth,  of  ni.;tters  within  that  sec- 
tion. (J))    But  the  note  must  express  the  names  of  hath  the  contracting 


(y)  Jordan  v.  Norton,  4  M.  &,  W.  155.     Accord.  Ilutcliinson  v.  Bowker,  5  M.  &  "W. 

535. 

{£)  riuUiraore  v.  Bari-y,  1  Camp.  513.  Jackson  v.  Lowe,  1  Bingli.  9.  Saunderson 
V.  Jackson,  2  B.  &  P.  238.  Allen  v.  Bennet,  3  Taunt.  1C9.  Vide  Cooper  v.  Smith,  15 
East,  103.     Richards  v.  Porter,  6  B.  &  C.  437.     See  ante,  Guaranties. 

(a)  Boj-dell  v.  Drummond,  11  East,  142. 

(6)  Per  Lord  Ellenborough,  Egerton  v.  Mathews,  6  East,  307. 


or  memorandum  with  reasonable  certainty,  so  that  they  can  be  understood  by  the 
writing  itself,  without  having  recourse  to  parol  proof.  The  memorandum,  however, 
like  other  mercantile  contracts,  is  subject  to  explanation  by  reference  to  the  usage 
and  custom  of  trade.  It  was,  therefore,  competent  to  show  by  parol  proof,  that  "VV. 
M.  M.  signed  for  the  firm  of  Jlason  and  Lawrence;  that  the  latter  were  the  agents 
of  the  plaintiffs,  a  manufacturing  company ;  and  that  the  figures  7i  and  8|  meant  so 
many  cents  per  yard.  It  was  further  held  that  the  bill  of  parcels  might  be  referred 
to  for  the  purpose  of  explaining  any  obscurity  in  the  written  memorandum,  inas- 
much as  it  had  been  received  and  acquiesced  in  by  the  buyer.  Mr.  Justice  Curtis 
(with  whom  concurred  Cati'on,  Justice)  delivered  a  dissenting  opinion,  in  which  he 
maintained  that  the  instrument  in  question  did  not  show  who  was  tlie  vendor,  and 
who  the  purchaser  of  the  goods,  and  that  as  tliese  facts  lay  at  the  basis  of  the  con- 
tract, extraneous  evidence  was  not  admissible  to  supjjly  the  deficienc3\  He  cited 
Champion  v.  Plumer,  1  B.  &  P.  N.  R.  252.  Sherburn  v.  Shaw,  1  N.  H.  R.  157. 
Bailey  v.  Ogden,  3  Johns  R.  348.  He  further  contended  that  under  the  laAV  of  Eng- 
land and  Massachusetts,  unless  the  memorandum  signed  contains  a  reference  to  some 
other  paper,  no  paper  not  signed  by  the  party  to  be  charged  can  be  connected  with 
the  memorandum  or  used  to  supply  any  defect  therein:  in  support  of  which  he 
eited  Morton  et  ah.  v.  Dean,  13  Met  R.  385. 


CONTEACTS  OF  SALE.  61? 


Form  and  Requisites  of  a  Contract  of  Sale. 


'parties^  and,  as  it  seems,  the  'price^  (c)  if  any  specific  price  Avas 
agreed  on,  for,  if  no  price  be  named,  the  parties  must,  it  seems,  be 
understood  to  have  agreed  that  such  a  sum  shall  be  paid  as  the 
article  is  reasonably  worth,  {d )  The  contract,  though  it  must  be 
evidenced  in  writing,  may  be  rescinded  by  parol,  and  it  was  even 
once  held  that  a  substitution  of  other  days  for  those  on  which  the 
goods  were  to  be  delivered,  might  be  made  and  evidenced  by  pa- 
rol, (e)  a  notion  which,  however,  after  having  been  much  reflected  ^f 
on,  has  at  length  been  altogether  overturned ;  and  the  rule  now  is 
that  though  the  contract  may  be  altogether  rescinded  by  parol,  yet 
it  cannot  be  altered  in  that  manner,  for  the  alteration  creates  a  new 
contract,  which  it  would  be  necessary  to  prove  partly  by  parol 
evidence.  (/) 

And  signed  by  the  parties  to  be  charged. — The  appearance  of  the 
vendor's  name  printed  in  a  bill  of  parcels  is,  it  seems,  a  suf&cient 
signature  to  bind  him.  (g)     If  the  note  commences  with  "/,  A.  B., 

(c)  Elmore  v.  Kingseote,  5  B.  &  C.  583.  Kain  v.  Old,  2  B.  ik  C.  627.  Champion 
V.  Plunimer,  1  N.  &  R.  252.  See  Laythoarp  v.  Bryant,  2  Bingh.  N.  C,  decided  on  the 
4th  section.  Acebal  v.  Levy,  10  Bingh.  383.  Ashcroft  v.  Morrin,  4  M.  &  Gr.  450, 
■where  order  for  goods,  on  moderate  terms,  was  held  sufficient. 

(c?)  Hoadley  v.  M'Laine,  10  Bingh.  482. 

(e)  Cuff  V.  Penn,  1  M.  &  B.  21.  See  "Warren  v.  Stagg,  cited  in  Litler  v.  Hollands, 
8  T.  R.  591.  Thresh  v.  Rake,  1  Esp.  53.  Alexander  v.  Gardner,  1  Bingh.  K  C.  672 ; 
but  see  the  remarks  of  the  Court  in  Goss  v.  Lord  Nugent,  5  B.  &  Ad.  67,  and  see 
Snowball  v.  Verain,  Bunb.  175.  In  Stowell  v.  Robinson,  3  Bingh.  N.  C.  928,  the  C. 
P.  decided  that  the  time  in  a  contract  to  convey  lands  cannot  be  altered  by  parol ; 
nor  can  any  other  provision.  Harvey  v.  Grabham,  5  Ad.  &  E.  61.  See  Marshall  v. 
Lynn,  6  M.  &  W.  109,  and  Stead  v.  Dawber,  2  P.  &  D.  447,  10  Ad.  &  E.  57,  where 
Cuff  i;.  .Penn  was  finally  overruled. 

(/)  Goss  V.  Lord  Nugent,  5  B.  <fe  Ad.  67.  Stowell  v.  Robinson,  3  Bingh,  N.  C. 
928.  Harvey  v.  Grabham,  5  Ad.  <fe  E.  61.  Stead  v.  Dawber,  10  Ad.  &  E.  57.  Mar- 
ehall  V.  Lynn,  6  M.  <fe  W.  109. 

(g)  Saunderson  «.  Jackson,  2  B.  <fe  P.  238.  Schneider?;.  Norris,  2  M.  &  S.  286, 
per  Lord  Eldon,  C.  J.,  2  B.  A  P.  239.  In  Johnson  v.  Dodgson,  2  M.  &  W.  653,  the 
following  note  was  held  sufficient: 

Leeds,  19  October,  1836, 

Sold  John  Dodgson  [the  defendant) 

27  pockets  Playsted,  1836,  Sussex  at  103s. 

The  bulk  to  answer  the  sample. 
4  pockets  Seline  Beckley's  at  95s. 
Samples  and  Invoice  to  be  sent  per  Roclcingham  Coach. 
Payment  in  Banker's  at  2  months. 
Signed  for  Johnson,  Johnson  &  Co.  (the  plaintiffs)  D.  Morse. 


(518  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  of  Sale. 

agree  io  sell,'^  that  is  a  sufficient  signature  by  A.  B.,  (A)  thougli  it  ia 
otherwise  where  a  signature  at  the  end  of  the  instrument  was 
manifestly  intended,  in  order  to  its  completion,  as  where  it  con- 
cluded, "  As  witness  our  hands."  {i)  And,  as  the  Statute  only 
requires  the  signature  of  the  parties  to  he  charged^  a  memorandum 
signed  by  the  vendor  has  been  held  sufficient  to  bind  him,  thougli 
it  was  not  signed  by  the  vendee;  against  vrhom,  therefore,  the 
contract  could  not  have  been  enforced,  {j) 

It  has  been  said  by  Lord  Eldon,  (/c)  that  "  where  a  party  prin- 
cipal, or  person  to  be  bound,  signs  as,  what  he  cannot  be,  a  wit 
ness,  he  cannot  be  understood  to  sign  otherwise  than  as  principal :" 
in  that  case  the  signature  was  as  follows — 

Witness,  Evan  Phillij)s,  for  Mr.  Smith,  agent  for  the  Seller. 

But,  where  the  purchaser  affixed  his  signature  to  an  agreement 
for  the  sale  of  lands,  and  underneath  was  written.  Witness,  Joseph 
Newman,  in  the  usual  place  for  a  witness's  signature,  Joseph  New- 
man being  the  clerk  of  the  auctioneer  employed  to  sell  the  pre- 
mises, it  was  urged  that  Newman  must  be  taken  to  have  signed  as 
agent  for  the  vendor,  and  it  was  attempted  to  show  a  ratification 
of  his  agency ;  but  the  Court  were  of  opinion  that  he  signed  simply 
as  a  witness,  and  Lord  Denman,  C.  J.,  said  he  thought  Lord  Eldon's 
remark  open  to  much  observation.  (Z) 

Or   their   agents   thereunto   laufulhj  authorized. — The   authority 

need  not  be  in  writing ;  (to)  and  a  subsequent  recognition  by  the 

principal  is  sufficient  evidence  of  its  having  been  given.  (?i)     But 

"~^     it  has  been  held,  that  one  of  the  contracting  parties  cannot  be  the 

agent  of  the  other  for  this  purpose,  (o)     This  decision  seems  to  be 

{h)  Knight  v.  Crockford,  1  Esp.  190,  Eyre,  C.  J. 

(j)  Hubert  v.  Treherne,  3  M.  &  Gr.  Y43. 

{j)  Allen  V.  Bennet,  3  Taunt.  169.  See  Rowe  v.  Osborne,  1  Stark.  140,  and  see 
Laytlioarp  v.  Bryant,  2  Bing.  N.  C.  735,  decided  on  the  4th  section. 

{Ic)  In  Coles  V.  Trecothick,  9  Yes.  251. 

{I)  Gosbell  V.  Archer,  2  Ad.  &  E.  500.     See  Bult  v.  Morrell,  12  Ad.  &  E.  745. 

(m)  Rucker  v.  Cammeyer,  1  Esp.  105.     Chapman  v.  Pai'tridge,  5  Esp.  256. 

(ji)  Maclean  v.  Dunn,  4  Bingh.  722.  Kinnitz  v.  Surry,  Paley,  5th  ed.  Soarues  v 
Spencer,  1  D.  &  R.  32. 

(o)  "Wright  V  Dannah,  2  Camp.  203.  Farebrother  v.  Simmons,  5  B.  <fe  A.  333 
Cooper  -v.  Smith,  15  East,  103.  Rayner  v.  Linthoi-n,  1  R.  <&  M.  323.  See  ante.  Book 
1,  c.  5  s.  1. 


CONTRACTS  OF  SALE  G19 


Form  and  Requisites  of  a  Contract  of  Sale. 


somewhat  regretted  ;  and  though,  it  has  been  held  that  an  auction- 
eer's signature  of  the  defendant's  name,  by  his  authority  is  insuffi- 
cient to  entitle  the  auctioneer  to  sue  upon  the  contract  in  his  own 
name,  yet  it  is  settled,  that  a  signature  by  the  auctioneer's  clerk  i? 
sufficient  for  that  purpose,  {p) 

But,  though  the  auctioneer,  suing  in  his  own  name  on  the  con- 
tract of  sale,  cannot  avail  himself  of  his  character  of  agent  for 
the  defendant,  yet,  in  other  cases,  he  is  looked  on  as  the  lawfully 
authorized  agent  of  both  parties,  (q)  the  seller  communicating  his 
authority  by  giving  him  directions  to  sell ;  and  the  buyer,  to  whom 
the  conditions  of  sale,  pasted  on  the  auctioneer's  box,  are  sufficient 
notice  of  the  terms  thereof,  (?■)  by  bidding  aloud.  And,  if  the 
auctioneer  or  auctioneer's  clerk  (5)  write  down  the  purchaser's  name 
in  the  sale  book  opposite  the  lot  for  which  he  is  the  highest  bidder, 
that  is  a  sufficient  signature  within  the  Statute,  and  binds  the  pur- 
chaser, (t)  who  perhaps  may,  at  any  time  before  such  entry,  retract 
his  authority,  as  he  certainly  may  before  the  fall  of  the  hammer,  (u) 
But,  if  the  signature  be  on  a  mere  catalogue  of  the  articles,  neither 
connected  with,  nor  referring  to,  the  conditions  of  the  sale,  it  will 
not  be  a  memorandum  of  a  sale  on  those  conditions,  unless  it  can 
be  connected  with  them  by  some  other  written  document,  (v) 

Though,  prima  facie,  the  auctioneer  is  the  agent  of  both  parties, 
yet  he  is  not  necessarily  and  ex  vi  termini ;  thus,  where  P.  bought 
goods  at  an  auction,  having  previously  agreed  with  their  owner 

(jo)  Bird  v.  Boulter,  4  B.  &  Ad.  443. 

{q)  See  Bird  v.  Boulter,  ubi  supra.  Hinde  v.  Whitehouse,  T  East,  558.  Emerson 
V.  Heelis,  2  Taunt.  38.  Shelton  v.  Livius,  2  Tyrwli.  436,  437  ;  2  C.  &  J.  411.  Simon  v. 
Motivos,  Bl.  599. 

(r)  Mesnard  v.  Aldridge,  3  Esp.  271. 

(«)  Bird  V.  Boulter,  supra.  Where  this  is  done  by  the  clerk,  he  does  not,  it  would 
seem,  act  as  a  mere  automaton  in  the  auctioneer's  hand,  but  as  a  distinct  agent 
authorized  by  the  parties  to  make  entries.  In  that  case  the  signature  by  the  clerk 
takes  place  contemporaneously  with  the  sale,  when  it  could  not  conveniently  be  per- 
formed by  the  auctioneer,  who  is  otherwise  engaged.  Generally  speaking,  the  clerk 
of  an  agent  has  no  authority  to  sign  for  the  principal.  See  Gosbell  v.  Archer,  2  Ad. 
&,  E.  500. 

{t)  Emerson  v.  Heelis,  2  Taunt.  38.  Hinde  v.  Whitehouse,  7  East,  558.  Bird  v. 
Boulter,  4  B.  <fe  Ad.  443.     Shelton  v.  Livius,  2  Tyrwh.  436 ,  2  C.  &  J.  411. 

{u)  Payne  v.  Cave,  3  T.  R.  148. 

(y)  Phillimore  v.  Barrj-,  1  Camp.  513. 


320  MERCANTILE  CONTRACTS. 

Form  and  Requisites  of  a  Contract  cf  Sale. 

that  he  was  not  to  pay  cash,  but  to  set  off  a  debt  due  to  himself 
against  the  price,  he  was  held  to  have  a  right  to  do  so,  though  the 
conditions  of  the  sale  required  payment  in  cash,  for  the  previous 
agreement  between  himself  and  the  seller  rebutted  the  presumption 
of  the  auctioneer's  authority  to  bind  him  to  those  conditions,  {w) 

A  broke)'  also  is  the  agent  of  both  parties  within  this  section,  (cc) 
The  mode  in  which  he  binds  his  principals,  inter  se,  is  by  the  de- 
livery of  bought  and  sold  notes,  which  notes  constitute  the  bargain, 
and  are  the  proper  evidence  thereof,  (y)  provided  always,  that  they 
correspond,  (z)  It  was  once  held  that  the  entry  which  the  broker 
makes  in  his  book  was  the  original  contract,  and  the  bought  and 
sold  notes  merely  copies  of  it.  (a)  But  that  doctrine  seems  to  be 
overruled  ;  {h)  and  it  seems  settled  that  the  bought  and  sold  notes, 
though  generally  copied  from  the  entry,  are  the  contract ;  though 
if  there  were  no  bought  and  sold  notes,  the  entry,  if  signed,  would 
perhaps  be  suf&cient  (c)  to  bind  the  parties.    And  it  has  been  made 

(w)  Bartlett  v.  Purnell,  4  Ad.  &  E.  792. 

{x)  See  a7ite,  B.  1,  c.  3,  p.  141,  et  seq.  Simon  v.  Motivos,  1  Bl.  599.  Rueker  v. 
Cammeyer,  1  Esp.  105.  Hinde  v.  "Whitehouse,  7  East,  588.  But  in  general  the 
broker  is  such  agent,  with  a  limited  special  authority  only  to  sign  a  contract  con- 
taining the  terms  verbally  agreed  upon ;  and  if  he  omit  a  material  term  in  drawing 
it  up,  a  party,  who  has  not  recognized  or  adopted  the  contract  as  drawn  up,  will  not 
be  bouni.     Pitts  v.  Beckett,  13  M.  A  W.  743. 

(?/)  Thornton  v.  Meux,  1  M.  &,  M.  43.  Cumming  v.  Roebuck,  1  Holt,  172.  Goom 
V.  Afflalo,  6  B.  &  C.  117.  Short  v.  Spackman,  2  B.  <fe  Ad.  962.  Hinde  v.  Whitehouse, 
7  East,  558.  Blagden  v.  Bradbear,  12  Ves.  466,  472.  Buckmaster  v.  Harrop,  13  Ves. 
456.     Dickenson  v.  Lilwall,  1  Stark.  128. 

{£)  Thornton  v.  Meux,  uhi  supra.  Grant  v.  Fletcher,  5  B.  &  C.  436.  Thornton  v. 
Kempster,  1  Marsh.  55.     Cumming  v.  Roebuck,  ubi  supra. 

(a)  Heyman  v.  Geale,  2  Camp.  337. 

(6)  Thornton  v.  Meux,  ubi  supra.  Cumming  v.  Roebuck,  1  Holt,  172.  Goom  v. 
Afflalo,  6  B.  &  C.  117.  See  Short  v.  Spackman,  2  B.  <fe  Ad.  962.  Hawes  v.  Foster 
and  another,  1  M.  &  Rob.  368.  At  the  first  trial  of  this  cause,  it  was  ruled  that  the 
bought  and  sold  notes  were  the  contract,  and  it  was  held  sufficient  for  the  vendee  to 
produce  the  bought  note,  leaving  it  to  the  vendor  to  produce  the  sold  note,  if  he  relied 
on  a  variance  between  the  two.  At  the  second  trial  it  was  left  to  the  jury  as  a 
question  of  fact,  whether,  according  to  the  usage  of  trade  in  the  city,  the  bought 
and  sold  notes  or  the  broker's  book  constituted  the  contract,  the  Chief  Justice  still 
retaining  his  opinion  as  expressed  at  the  former  trial  upon  the  point  of  law.  The 
jury  found  the  bought  and  sold  notes  to  be  the  contract. 

(c)  Grant  v.  Fletcher,  5  B.  &  C.  436.  See  per  Parke,  B.,  in  Pitts  v.  Beckett,  13  M 
t  W.  746. 


CONTRACTS  OF  SALE.  621 


Form  and  Requisites  of  a  Contract  of  Sale. 


a  question  whether  if  the  bought  and  sold  notes  vary  in  a  materia] 
point,  the  broker's  book  may  not  be  had  recourse  to.  (cl) 

The  bought  and  sold  notes  being  the  contract,  it  has  been  con- 
sidered to  follow,  that,  if  they  do  not  correspond,  the  intended 
contract  will  not  be  effected ;  (e)  and  that,  if  they  be  altered  in  any 
material  point,  without  the  consent  of  the  party  sought  to  be 
charged,  it  will,  as  against  him,  be  avoided.  (/)  But  a  mistake  in 
both  notes  as  to  the  seller's  name,  was  considered  not  to  vitiate  the 
contract,  if  it  were  not  shown  that  any  one  was  prejudiced  there- 
by; (g)  and  it  has  been  held  that  a  vendee  was  bouna  by  a  note, 
signed  by  him,  and  delivered  to  the  vendor  by  the  broker,  though 
containing  a  provision  not  to  be  found  in  the  note  sent  to  the  ven- 
dee, (h) 

Where  the  vendee  desired  the  vendor's  agent  to  enter  a  note  of 
the  contract  in  the  vendor's  book,  it  was  held,  that  this  did  not 
authorize  him  to  bind  the  vendee  by  his  signature  to  such  entry,  so 
as  to  satisfy  the  Statute.  (^) 

"We  have  now  discussed  the  form  and  requisites  of  a  contract  of 
sale.  Next  in  order  is  the  consideration  of  the  duties  it  imposes, 
first,  on  the  vendor,  and  secondly,  on  the  vendee,  on  which  we  now 
enter,  premising,  generally,  that  neither  the  vendor  nor  vendee  can 
excuse  himself  from  performing  his  side  of  the  contract,  by  break- 
ing a  condition,  which  it  is  incumbent  on  himself  to  fulfil,  although 
it  may  have  been  stipulated,  or  even  enacted,  that  the  sale  on  breach 
of  such  condition  shall  be  null  and  void,  for  that  means  void  at  the 
election  of  the  other  -party,  {j) 

(d)  Thornton  v.  Charles,  9  M.  &  AV.  802. 

(e)  Thornton  v.  Kempster,  1  Marsh.  355.  Thornton  v.  Meux,  1  M.  &  M.  43.  Grant 
V.  Fletcher,  5  B.  &  C.  436.  Gregson  v.  Ruck,  4  Q.  B.  1^1.  Gumming  v.  Roebuck,  Holt» 
172,  per  Gibbs,  C.  J.     Cowie  v.  Remfry,  10  Jur.  789. 

(/)  Powell  V.  Divett,  15  East,  29. 

{g)  Mitchell  v.  Lapage,  Holt,  253. 

(A)  Rowe  V.  Osborne,  1  Stark.  140.     See  Allen  v.  Bennett,  3  Taunt.  169. 

(j)  Graham  v.  Musson,  6  Bingh.  N.  C.  603.     Graham  v.  Fretwell,  3  M.  &,  Gr.  368. 

ij)  Malins  V.  Freeman,  4  Bingh.  K  C.  395.     Holme  v.  Guppy,  3  M.  &,  "W.  387. 


622  MERCANTILE  COa'TRACTS. 

Duties  of  Vendor. 


Section  III. — Duties  of  Vendor. 

The  duties  of  the  vendor  are,  to  deliver  the  goods  at  the  time 
and  in  the  manner  stipulated  for  in  the  contract,  and  to  comply 
with  any  warranty,  expressed  or  implied  therein,  on  his  i3art. 

Delivery  of  Goods.* — The  vendor  must  deliver  the  goods  as  soon 
as  the  vendee  has  performed  all  conditions  precedent  on  his  part,  {k) 
and  may,  if  he  refuse  to  do  so,  be  sued  either  specially  for  non-per- 
formance of  his  contract,  or  in  trover  for  the  goods  themselves. 


(k)  See  Wilmsliurst  t^.  Bowker,  5  Bingh.  X.  C.  541 ;  2  M.  &  Gr.  V92;  3  S.  C.  N.  E. 
272. 


*  The  mere  handing  over  goods  under  the  expectation  of  immediate  paj-menl^ 
does  not  constitute  absolute  delivery.  The  vendee  after  such  delivery  holds  the 
goods  in  trust  for  the  vendor  until  payment  is  made  or  waived.  Tiius  upon  a  sale 
of  merchandise  for  cash  to  be  paid  on  delivery,  the  defendant  offered  the  plaintiffs 
servant  who  made  the  delivery,  a  note  of  the  plaintiff  which  had  become  payable 
for  nearly  the  amount,  and  cash  for  the  residue,  which  the  plaintiff  declining  to  re- 
ceive, the  defendant  refused  to  give  up  the  goods  or  pay  the  money,  and  it  was  held 
that  no  title  passed,  and  that  the  plaintiff  could  maintain  replevin  for  the  goods. 
Levin  v.  Smith,  1  Denio,  571. 

"Where,  under  a  contract  for  the  sale  of  chattels,  a  delivery  of  a  portion  of  the 
property  sold  was  made  to  the  purchaser,  under  an  agreement  that  a  note  should  be 
given  for  the  tvhole  quantity  upon  the  delivery  of  the  residue  at  a  future  day,  the  de- 
livery of  the  first  parcel  was  held  to  be  conditional,  and  that  on  the  delivery  of  the 
residue  and  the  refusal  of  the  purchaser  to  give  the  note  and  to  deliver  up  the  first 
parcel  on  demand,  an  action  of  replevin  for  the  wrongful  detention  might  be  sus- 
tained. Russell  V.  Minor,  22  Wend.  659.  See  also  Acker  v.  Campbell,  23  Wend.  872. 
Haggerty  v.  Palmer,  6  John.  Ch.  R.  437. 

Where  an  order  is  given  for  a  certain  quantity  of  goods  and  a  larger  quantity  is 
delivered  to  the  carrier,  and  is  intended  as  a  mere  compliance  with  the  order,  and 
not  sent  for  the  purpose  of  charging  the  defendant  with  the  excess,  the  vendee  can- 
not refuse  to  receive  the  goods  on  that  account,  and  in  case  of  refusal  is  liable. 
Downer  v.  Thompson,  6  HilL,  208.  "An  over  performance  of  the  contract  could  only 
be  beneficial  to  the  defendant.  If  the  rule  is  to  be  a  rigid  one  that  no  more  shall  le 
delivei-ed  than  is  contracted  for,  then  the  least  overplus  must  vitiate  the  delivery. 
But  if  some  latitude  is  to  be  allowed  for  the  sake  of  abundant  caution,  as  I  think 
there  should  be,  who  is  to  decide  how  much  excess  there  may  be  without  vitiating 
the  delivery?  It  seems  to  me  that  this  is  a  question  for  the  jury  to  decide,  under  all 
.he  varying  circumstances  of  each  case."     Ilopkins,  Sen.,  6  Hill,  211. 


CONTRACTS  OF  SALE.  023 


Duties  of  Vendor. 


Goods  are  delivered  when  they  are  placed  in  the  vendee's  power, 
so  that  he  may  immediately  remove  them,  and  cannot  be  rightfully 
prevented  from  so  doing ;  (J)  thus,  if  the  goods  be  in  a  stranger's 
close,  and  that  stranger  have  licensed  the  vendee  to  take  them,  that 
is  a  delivery^  for  the  license  is  irrevocable,  (m) 

If  it  be  generally  mentioned,  that  the  vendor  shall  send  the 
goods,  that  means  loithin  a  reasonable  time  ;  and  what  time  is  under 
the  circumstances  reasonable,  is  a  question  of  evidence,  {n)  And  if 
the  goods  be  beyond  sea,  he  ought  to  send  the  bill  of  lading  in  a 
reasonable  time,  in  order  that  the  vendee  may  have  it  in  his  power 
to  go  to  market,  (o)  It  was  once  considered  that  whether  time  of 
delivery  be  specified,  or  left  at  large,  the  delivery  should  be  made 
at  a  reasonable  hour  in  order  to  discharge  the  vendor's  duty ;  but  it 
has  since  been  held,  that  an  actual  tender  of  the  goods  to  the  pur- 
chaser, if  he  be  at  his  warehouse,  at  any  hour  of  the  last  day  which 
will  allow  him  time  before  midnight  to  examine,  weigh,  and  receive 
them,  in  the  absence  of  any  special  custom,  Avill  be  good ;  but  that 
the  purchaser  is  not  bound  to  remain  at  his  warehouse  after  a  rea- 
sonable time  before  sunset  to  allow  of  the  examination,  (p) 

In  the  absence  of  special  stipulation,  the  condition  precedent 
upon  the  vendee's  part,  is  readiness  to  pay  the  price,  (q)  And  of  this 
readiness  to  pay,  a  demand  of  the  goods,  even  though  made  by  a 
servant,  is,  prima  faciei  evidence,  (r)     If  the  e"oods  were  to  be  paid 


(l)  Wood  V.  Tassel,  6  Q.  B.  234. 

(?«)  Salter  v.  AVollams,  2  M.  &  Gr.  650.  "Wood  v.  Manley,  11  Ad.  <fe  E.  34.  And 
.Bee  Wood  v.  Leadbitter,  13  M.  &  W.  838. 

(»i)  Ellis  V.  Thompson,  3  M.  &  W.  445. 

(o)  Barber  v.  Ta3-lor,  5  M.  &  W.  533,  where  a  refusal  to  deliver  it  was  held  to  en- 
title the  vendee  to  rescind. 

(p)  Startup  V.  M'Donald,  2  M.  &  Gr.  395,  but  reversed  in  Cam.  Scacc,  6  M.  &  Gr. 
593. 

(q)  Rawson  v.  Johnson,  1  East,  203.  See  Peeters  v.  Opie,  2  Wms.  Saund.  352,  a. 
in  notis,  and  Jackson  v.  Jacob,  3  Bingh.  K  C.  869.  And  see  Bordenave  v.  Gregory, 
5  East,  107,  as  to  a  transfer  of  stock.  In  one  case  the  bankruptcy  and  insolvency  of 
the  vendee  and  the  insufficiency  of  his  assets  were  considered  circumstances  from 
which  the  jury  had  a  right  to  infer  that  the  vendee  and  his  assigns  had  not  teen 
ready  and  willinrj.     Lawrence  v.  Knowles,  5  Bingh.  IST.  C.  399. 

(r)  Squier  v.  Hunt,  3  Pr'ce,  68.  Wilkes  v.  Atkinson,  1  Marsh.  412.  See  Peetera 
V.  Opie,  in  notis.     Levy  v.  L  Herbert,  7  Taunt.  314;  1  Moore,  51. 


624  MERCANTILE  CONTRACTS. 

Duties  of  Vendor. 

for  by  a  bill,  the  vendee  ought  to  tender  one ;  (5)  but  tlie  word  hil^ 
will  not  be  lield  to  mean  ci'pp'oved  hill,  {t) 

If  an  cq-fproved  hill  be  stipulated  for,  that  means  a  bill  to  which 
no  reasonable  objection  can  be  made,  (w) 

There  are  some  cases,  indeed,  in  which  the  vendor  may  be 
obliged  to  deliver  up  the  goods,  without  payment,  or  tender  of  the 
price :  these  are, 

First^  where,  by  special  agreement  between  the  parties,  the  day 
of  payment  is  to  be  subsequent  to  that  of  delivery ;  in  other  words, 
where  the  goods  are  sold  on  credit.  Yet,  even  in  such  case,  though 
the  vendee  has  a  right  to  possession  {v)  without  payment  or  tender 
of  the  price,  yet  that  right  is  not  indefeasible,  and  will  be  defeated, 
if  he  become  insolvent  before  he  has  actually  taken  possession,  {lo) 

(s)  Hodgson  V.  Davies,  2  Camp.  530.  On  the  effect  of  paj'ment  by  bill,  vide  post, 
Chap.  XIII.,  on  Contracts  of  Debt,  and  see  Bunney  v.  Poyntz,  4  B.  <&  Ad.  568.  Miles 
V.  Gorton,  4  Tyrwh.  295  ;  2  C.  <fe  M.  504.     See  Horncastle  v.  Farren,  3  B.  <fe  A.  497. 

(0  Ibid. 

(m)  Ibid.  See  Adam  v.  Richards,  2  H.  Bl.  573.  Thursby  v.  Helbot,  3  Mod.  273. 
See  as  to  the  mode  of  pleading  where  the  bill  has  been  rejected,  Hardman  v.  Bell- 
house,  9  M.  (fe  "W.  596.  The  refusal  to  give  the  bill  does  not  entitle  the  vendor  to  sue 
at  once  for  goods  sold  and  delivered ;  but  he  must  proceed  on  the  special  contract, 
Paul  V.  Dod,  2  C.  B.  800. 

[v)  Shepp.  Touchstone,  224.  Vide  Kew  v.  Swain,  1  Dans.  &  Lloj'd,  193.  Craw- 
shay  V.  Homfra}',  4  B.  &  A.  50.  In  the  judgment  of  the  Court  in  Martindale  v.  Smith, 
is  a  passage  which  at  first  seems  at  variance  with  this ;  biit  I  think  it  refers  to  the 
vendor's  right  to  retain  possession  after  the  expiration  of  the  time  of  credit,  if  the 
goods  be  in  his  hands  and  the  price  still  un^^aid,  a  right  which  seems  to  have  been 
doubted  in  Bloxam  v.  Sanders. 

{lo)  Bloxam  v.  Sanders,  4  B.  <fe  C.  941.  Dixon  v.  Yates,  5  B.  <fe  Ad.  313.  Miles  v. 
Gorton,  4  Tyrwh.  295  ;  2  C.  &  M.  504.  Townley  v.  Crump,  4  Ad.  &  E.  58,  and  Book 
4,  cap.  1,  in  Stoppage  in  Transitu.  The  doctrine  that  a  vendor  of  goods  who  has  not 
let  them  out  of  his  possession,  may  retain  them  on  the  vendee's  bankruptcy,  which 
is  so  reasonable  in  itself,  and  which  seemed  so  fully  established  by  Dixon  v.  Yates, 
has  been  supposed  to  be  reflected  on  in  Gibson  v.  Carruthers,  8  M.  &  W.  321.  That 
was  an  action  brought  by  the  assignees  of  Harris  against  Carruthers,  upon  a  contract 
with  Harris  to  sell  him  2000  quarters  of  Odessa  linseed,  to  be  shipped  on  board  the 
vendee's  vessels  at  Odessa ;  the  declaration  stated  that  the  vendee,  before  his  bank- 
ruptcy, sent  a  vessel  to  Odessa,  which  arrived  there  in  a  reasonable  time,  and  after 
the  bankruptcy,  but  that  the  defendant  would  not  ship  the  linseed  or  hand  the  plain- 
tiffs (of  whose  title  they  had  notice)  bills  of  lading. 

The  plea  stated  that  the  plaintiffs  did  not,  within  a  reasonable  time,  adopt  the 
bankrujjt's  contract. 

The  plea  was  held  insufficient  by  three  Barons,  Lord  Abinger,  C.  B.,  dissentiente. 


CONTRACTS  OF  SALE.  025 


Duties  of  Vendor. 


And,  in  one  case,  where  goods  were  to  be  paid  for  hy  a  hanker''s  draft 
at  two  months  (which  is  a  sale  at  two  months'  credit),  but  hy  the  ex- 
press terms  of  the  contract,  the  draft  was  to  be  remitted,  on  receipt  of 

The  judgment  of  the  majority  of  the  Court  appears  to  have  proceeded  mainly  on 
the  ground  that  the  bankruptcy  transferred  to  the  assignees  the  right  to  insist  oa 
the  performance  of  the  contract  by  the  defendant,  without  themselves  doing  moi-e 
than  the  bankrupt  whom  they  represented  must  have  done;  and  that,  therefore, 
tlie  plea,  which  was  framed  on  the  supposition  that  they  were  bound  to  give  express 
notice,  within  a  reasonable  time  after  the  bankruptcy,  of  their  adoption  of  the  con- 
tract, was  bad. 

If  this  be  so,  no  doubt  the  plea  was  bad.  It  may,  perhaps,  hereafter  be  made  a 
question  whether  it  be  consistent  with  reason  or  justice,  or  with  the  law  as  laid  down 
in  Lawrence  v.  Knowles,  to  hold  that  the  vendor  shall  be  bound  to  send  the  goods  at 
his  own  expense  beyond  seas  to  await  the  exercise  of  the  assignees'  option  whether 
they  will  accept  the  contract  or  not.  It  may,  perhaps,  be  doubted  whether  the  as- 
signees do  take  the  contract  in  the  same  plight  as  the  bankrupt  had  it,  inasmuch  as 
they  have  an  option  which  he  had  not;  and  whether  it  is  quite  just  that  they  should 
have  the  benefit  of  this  option,  without  the  corresponding  obligation  of  signifying 
how  they  have  exercised  it. 

This  question,  however,  though  important  to  the  soundness  of  the  decision,  does 
not  affect  the  doctrine  of  stoppage  in  transitu.  The  observations  bearing  upon  that 
were  elicited  by  an  argument  used  by  the  defendant's  counsel,  who  contended  that 
the  declaration  itself  showed  a  sufficient  defence,  since  it  showed  bankruptcy  of  the 
vendee  and  notice  thereof  to  the  vendor,  which,  by  analogy  to  the  doctrine  of  stop- 
page in  transitu,  would  entitle  him  to  decline  to  ship  the  goods. 

It  is  readily  admitted  that  this  argument  ought  not  to  have  pi-evailed,  because  it 
did  not  appear  on  the  record  that  the  vendor  intended  to  exercise  the  right  of  stop 
page  in  transitu,  or  any  right  of  lien  analogous  to  it :  nor,  indeed,  that  there  was 
any  subject  matter  on  which  he  could  have  exercised  such  i-ight. 

But  this  argument  it  was  which  elicited  the  observations  which  have  been  thought 
not  quite  consistent  with  Dixon  v.  Yates,  or  with  the  doctrine  of  a  vendor's  lien  as 
established  by  that  case. 

"  The  doctrine  of  stoppage  in  transitu,"  said  Baron  Parke,  "  applies  only  to  the 
case  of  goods  sold  and  delivered,  for  the  delivery  to  a  carrier  or  middle  man  is  a  de- 
livery to  the  party.  And,  in  cases  of  bankruptcy  or  insolvency,  the  law,  founded  on 
an  equitable  principle,  permits  the  unpaid  vendor,  at  any  time  before  the  arrival  of 
the  goods  at  their  place  of  destination  or  the  vendee's  actual  possession,  to  resume 
possession,  and  put  himself  in  the  same  position  as  if  he  had  not  parted  with  it; 
whether  it  enables  him  also  to  rescind  the  contract,  is  a  point  yet  unsettled,  and 
which  I  need  not  now  discuss." 

"But  this  privilege  in  cases  of  bankruptcy  or  insolvency,  for  it  belongs  to  both 
alike,  has  never  yet  been  extended  further  than  to  allow  the  resumption  of  possession  after 
the  contract  was  complete  by  delivery,  and  to  undo,  as  it  were,  the  delivery.  There 
is  no  trace  of  any  authority  for  saying,  that  bankruptcy  or  insolvency  excuses  the  party 
contracting  with  the  bankrupt  from  performing  any  other  unexecuted  part  of  his  con- 
tract." 
40 


626  MERCANTILE  CONTRACTS. 


Duties  of  Vendor. 


tlte  invoice  and  hill  of  lading^  the  vendee  having  failed  to  remit  a 
banker's  draft  accordingly,  was  held  not  to  be  entitled  to  the  pos- 
session of  the  goods,  and  consequently  to  have  no  right  to  maintain 
trover,  {x)     In  this  case,  it  will  be  observed,  that,  though  the  sale 

In  Dixon  v.  Yates,  5  B.  <fe  Ad.  313,  the  plaintiffs  bought  of  Yates  certain  rums, 
■which  were  in  his  own  bonded  vaults,  and  paid  for  them;  they  then  resold  a  part  to 
Collard  for  two  acceptances,  one  of  which  CoUard  dishonored,  and  the  other  was 
taken  up  by  the  plaintiffs.  They  afterwards,  on  the  81st  of  August,  bought  other 
rums  from  Yates,  at  two  months,  and  resold  part  to  Collard  for  acceptance  at  three 
and  four  months.  These  were  likewise  dishonored,  the  first  on  the  16th  of  Novem- 
ber, tlie  second  at  its  maturity.  On  the  18th  of  November,  the  plaintiffs  gave  no- 
tice to  Yates  to  deliver  the  rums  to  no  one  but  themselves.  On  the  19th,  they  de- 
manded them  verbally,  and  on  the  21st,  in  writing. 

There  were  other  circumstances  relied  upon  to  show  an  actual  delivery  to  Col- 
lard, but  which  the  Court  held  not  to  have  amounted  to  one,  and  which,  appearing 
unimportant  to  the  present  question,  are  omitted. 

The  Court  held  that  the  plaintiffs  were  entitled  to  judgment. 
The  following  passage  occurs  in  the  judgment  of  Mr.  J.  Parke. 
"The  plaintiffs  parted  with  the  property  in  the  goods  they  sold  to  Collard,  but 
he  did  not  take  actual  possession.  There  was  no  delivery  order,  nor  was  the  rum  de- 
livered to  him.  The  whole  quantity  sold  to  him  in  June  and  August  was  paid  for 
by  bills,  three  of  which  were  dishonored  before  the  plaintiffs  demanded  the  posses 
sion,  and  one  bill  afterwards,  and  Collard  had  become  generally  insolvent  before  the 
demand  was  made.  It  is  said  that  Collard  is  entitled  to  the  property  in  the  goods, 
but  the  plaintiffs  were  vendors  retaining  the  possession,  and  every  vendor  has  a  lien 
till  he  is  paid.  It  is  true  that  tlieir  lien  was  suspended  as  long  as  the  bills  were  run- 
ning, but  it  revived  as  soon  as  they  were  dishonored.  On  the  18th  of  November, 
Collard  had  dishonored  these  bills,  and  had  become  insolvent,  and  was  known  to  be 
so.  The  lien  of  the  vendors  then  revived.  If  they  had  parted  with  the  actual  posses- 
sion, and  the  goods  had  remained  in  the  hands  of  a  carrier,  they  would  have  been  entitlea 
to  Stop  the^n  in  ira?isitn,  U7d€ss  the  sub-purchasers  from  Collard  had  taken  actual  possession, 
and  not  having  parted  with  the  possession  at  all,  they  have  a  right  to  retain  it  under  the 
same  circumstances." 

It  is  inferred  from  these  observations  in  Dixon  v.  Yates,  that  it  could  not  have 
been  the  intention  of  Baron  Parke,  in  Gibson  v.  Carruthers,  to  shake  the  doctrine 
which  has  been  generally  considered  as  settled  by  the  former  case,  viz.,  that  where 
the  circumstances  are  such  that  the  vendor  might  stop  goods,  if  in  the  hands  of  a 
carrier,  there  he  may  retain  them  if  in  his  own  hands.  And  this  is  submitted  with 
the  greater  confidence,  because,  if  the  observations  of  the  learned  Baron  in  Gibson 
V.  Carruthers  should  be  understood  as  not  impugning  the  above  proposition,  they 
will  still  have  a  very  distinct  bearing  upon  the  case  then  before  the  Court,  inasmuch 
as  in  Gibson  v.  Carrutliers  the  linseed  had  never  been  specifically  ascertained,  and 
there  was,  therefore,  in  truth,  notiiing  either  to  be  detained  or  stopped  in  transitu. 
The  contract  was  wholly  unexecuted  upon  both  sides,  and  the  only  real  question  waa 
that  raised  by  the  plea. 

(x)  Wilmshurst  v.  Bowker,  5  Bingh.  N.  C.  5il.     But  see  this  case  on  writ  of 


C0XTRACT3  OF  SALE.  G27 


Duties  of  Vendor. 


was  upon  credit,  the  -vendee's  right  to  the  possession  of  the  goods 
was  hindered  from  accruing  by  the  express  stipulation  of  the  par- 
ties, who  made  the  delivery  of  the  goods  dependent  upon  that  of 
the  draft. 

Secondly^  where  the  vendor  has  done  that  which  amounts  to  a 
delivery  of  the  goods,  {y)  ex.  gr.,  has  made  a  symbolical  transfer  of 
property,  which  is,  by  its  nature,  (z)  unfit  to  be  delivered  other- 
wise, as,  for  instance,  by  giving  up  to  the  vendee  the  key  of  the 
warehouse  where  it  is  deposited,  (a)  or  giving  a  delivery  order  to 
the  wharfinger  in  whose  possession  it  is,  to  which  order  the  wharf- 
inger has  signified  his  assent,  {h)  or  where  he  has  done  any  act 
which  would  determine  his  right  to  stop  in  transitu,  (c)  But  it 
must  be  observed,  that  the  converse  of  this  last  proposition  is  not 

error,  *?  M.  &  Gv.  882,  where  the  Court  held  that  from  these  circumstances  tbf  jury 
miglit  have  inferred  that  the  delivery  of  the  banker's  draft  was  a  condition  /rece- 
dent  to  the  vesting  of  the  propertj',  but  that  the  Court  could  not  draw  such  an  infer- 
ence; and  on  the  bare  statement  of  these  facts,  the  plaintiff  was  entitled  to  the  pos- 
session. And  see  Barber  v.  Taylor,  5  M.  &,  W.  52Y.  Dodsley  v.  Varlej^,  12  Ad.  & 
E.  632. 

{y)  Slubey  v.  He3'ward,  2  II.  Bl.  504.  Hammond  v.  Anderson,  1  X.  R.  69.  Green 
V.  Ilaythorne,  1  Stark,  447.  See  Swanwick  v.  Sothern,  9  Ad.  <fe  E.  895,  ubi  per  cur., 
"The  cases  establish  that  whenever  any  thing  remains  to  be  done  that  is  essential 
to  the  completion  of  the  contract,  a  s_ymbolical  deliver}^  by  transfer  in  the  wharf- 
inger's books  will  not  defeat  the  right  of  stoppage  in  transitu  as  between  buyer  and 
seller.  Hanson  v.  Meyer,  Shepley  v.  Davis,  Busk  v.  Davis,  abundantly  show  this. 
Therefore,  if  part  of  a  bulk  be  sold,  so  that  weighing  or  separation  is  necessary  to 
ascertain  the  identity  or  individuality  of  the  article,  or,  if  the  whole  of  a  commodity  be 
sold,  but  weighing  is  necessary  to  ascertain  the  price  because  the  qicality  is  unknown,  the 
weighing  or  measuring  must  precede  tiie  delivery,  and  the  symbolical  deliverv,  with- 
out such  weighing  or  measuring,  will  not  be  sufficient.  Bat  zvhere  the  identity  of  the 
goods  arid  the  quantity  are  known,  tJie  tcei ghiiig  or  measuring  can  only  be  for  the  satisfac- 
tion of  the  buyer,  as  was  held  in  Hammond  v.  Anderson,  and  in  such  case  the  transfer 
in  the  books  of  the  wharfinger  is  sufficients^ 

{z)  Mauton  v.  Moore,  7  T.  R.  67.  See  Hibbert  v.  Carter,  1  T.  R.  745.  Lempriere 
V.  Pasley,  2  T.  R.  485.  Zwinger  v.  Samuda,  7  Taunt.  265.  Lucas  v.  Dorien,  7  Taunt 
278. 

(a)  Ellis  V.  Hunt,  3  T.  R.  464.  Copland  v.  Stein,  8  T.  R.  199.  See  Spears  v.  Tra- 
vers,  4  Camp.  251.     Greave  v.  Hepke,  2  B.  &  A.  131. 

(b)  Lucas  V.  Dorien,  7  Taunt.  278.  Hawes  v.  Watson,  2  B.  &  C.  540.  Ilarman  v. 
Anderson,  2  Camp.  243.  See  Stoveld  v.  Hughes,  14  East^  308.  Stonard  v  Duukin,  2 
Camp.  344.  Gumming  v.  Brown,  9  East,  506.  And  see  Swanwick  v.  Sothern,  nbi 
supra.     Also  Lackington  v.  Atherton,  7  M.  &  Gr.  360. 

(c)  See  post,  Book  4,  cap.  1. 


628  MERCANTILE  COKTRACTS. 

Duties  of  Vendor. 

true,  for  many  acts  will  be  sufficient  to  devest  the  vendor's  lien  for 
Lis  price,  wliicli  will  not  be  sufficient  to  binder  birn  from  stopping 
the  goods  in  transitu^  if  tbe  vendee  should  become  insolvent.  For 
instance,  delivery  of  goods  to  an  agent  of  the  vendee  appointed  to 
convey  them  to  him,  deprives  the  vendor  of  his  lien  for  the  price, 
but  not  of  his  right  to  stop  the  goods  in  transitu^  in  case  of  the  ven- 
dee's failure  before  they  have  reached  him.  {d)  A  delivery  of  part 
of  the  goods,  where  there  is  no  intention  of  separating  that  part 
from  the  whole,  devests  both  the  lien  and  the  right  to  stop  in  tran- 
situ :{e)  but  it  is  otherwise  where  there  is  such  an  intention,  (/) 
though  it  has  been  said,  ihoX,  irrima  facie ^  a  delivery  of  part  imports" 
an  intention  to  deliver  the  whole,  {g)  The  vendor's  lien  cannot  be 
determined  by  a  second  sale  of  the  same  goods,  for  the  ordinary 
rule  of  law  is  that  the  second  vendee  of  a  chattel  cannot  stand  in  a 
better  situation  than  his  own  immediate  vendor,  (A)  Where  the 
goods  are  in  the  vendor's  own  warehouse,  he  does  not  lose  his  lien 
by  giving  a  delivery  order;  (z)  nay,  even  a  charge  made  by  the  ven- 
dor against  the  vendee  for  warehouse  rent  does  not  destroy  his  lien, 
at  all  events  not  where  the  charge  is  pursuant  to  the  terms  of  the 
original  contract  of  sale,  for  then  the  rent  is  only,  as  it  were,  an 
additional  price,  (y)  But  it  would,  perhaps,  be  otherwise  if  the 
charge  for  warehouse  rent  were  founded  on  a  subsequent  distinct 
contract,  for  that  might  have  the  effisct  of  making  the  seller's  ware- 
house that  of  the  buyer.  (^•) 

{(1)  See  a  learned  note  by  Mr.  Starkie,  Law  of  Evidence,  2d  ed.  p.  892. 

(e)  Slubey  v.  Heyward,  2  H.  Bl.  504. 

(/)  Bunney  v.  Poj-ntz,  4  B.  &  Ad.  570.  Simmons  v.  Swift,  5  B.  ck  C.  857.  Dixon 
V.  Yates,  5  B.  &  Ad.  313.  Miles  v.  Gorton,  4  Tyrwh.  295;  2  C.  &  M.  504.  Tanner 
V.  Scovell,  14  M.  &  W.  28. 

{g)  Per  Taunton,  J.,  in  Betts  and  another  v.  Gibbins,  4  N.  <fe  M.  77  ;  2  Ad.  <fe  E. 
73.  Sed  qucere.  Pollock,  C.  B.,  in  Tanner  v.  Scovell,  uhi  sup.,  with  reference  to  this 
dictum  says,  "  I  may  observe,  that  Taunton,  J.,  in  the  case  of  Betts  v.  Gibbins,  made 
an  observation  which  is  very  justly  questioned  by  Mr.  Smith  in  his  book  on  Mercan- 
tile Law,  viz.: — 'That  partial  delivery  is  a  delivery  of  the  whole,  unless  circum- 
stances show  that  it  is  not  so  meant.'  Mr.  Smith  appends  a  qucere  to  that  dictum, 
with  very  great  reason." — G.  M.  D. 

(//)  Dixon  V.  Yates,  5  B.  &  Ad.  313.     See  Small  v.  Moates,  9  Bingh.  574. 

{%)  Townley  v.  Crump,  4  Ad.  <fe  E.  58 ;  2  C.  &  M.  504. 

{j)  Miles  V.  Gorton,  4  Tyrwh.  295  ;  2  C.  &  M.  504. 

(^-)  Hurry  v.  Mangles,  1  Camp.  452.     See  Winks  v.  Hassall,  9  B.  <fe  C.  372. 


CONTRACTS  OF  SALE.  029 


Duties  of  Vendor 


The  vendor  may,  of  course,  avoid  the  sale,  by  showing  fraud 
m  the  vendee,  ex.  gr.^  that  he  deterred  others  from  bidding  by  his 
representations.  (0* 

{l)  Fuller  V.  Abraham,  3  B.  &  B.  116.     See  Noble  v.  Adams,  7  Taunt.  59.     Earl 
of  Bristol  V.  Welmore,  1  B.  &  C.  514.     Gladstone  v.  Hadwen,  1  M.  &  S.  617. 


*  Wlien  a  sale  is  procured  by  fraud,  no  title  passes  to  the  vendee.  Root  v.  French, 
13  "Wend.  570.  The  vendor  still  retains  his  legal  right  in  the  goods,  unless,  after  dis- 
covering the  fraud,  he  assent  to  and  ratify  the  act  of  sale,  positively,  or  by  such 
delay  in  reclaiming  the  goods  as  would  authorize  a  jury  to  infer  assent.  Either  will, 
m  connection  with  the  original  transaction,  be  deemed  equivalent  to  a  subsequent 
independent  act  of  sale.  Ash  v.  Putnam,  1  Hill,  302.  Gary  v.  Hotailing,  1  Hill,  311. 
Buflington  v.  Gerrish,  15  Mass.  156. 

A  purchase  of  goods  with  a  preconceived  design  not  to  pay  for  them,  is  such  a 
fraud  as  will  avoid  the  sale.  Bigelow  v.  Heaton,  6  Hill,  44.  Ash  v.  Putnam,  1  Hill, 
302.     Bristol  v.  AVilsmore,  1  B.  &  C.  514;  8  E.  C.  R.  146. 

A  sale  and  delivery  of  goods,  procured  through  a  false  representation  of  the  ven- 
dee in  regard  to  his  solvency  and  credit,  passes  no  title  as  between  the  parties ;  and 
the  vendor  may  maintain  either  trover  or  replevin  in  the  deti.net,  or  trespass  or  re- 
plevin in  the  cejyit,  at  his  election.  The  general  and  absolute  ownership  still  remains 
in  the  vendor;  and  not  only  the  original  interference  with  the  property  on  the  part 
of  the  vendee,  but  any  subsequent  acts  of  ownership  on  his  part,  may  be  considered 
as  an  unlawful  or  tortious  taking.  Gary  v.  Hotailing,  1  Hill,  311.  Olmstead  v.  Ho- 
tailing, 1  Hill,  317. 

But  a  third  person  may  acquire  a  good  title  from  a  fraudulent  vendee,  by  giving 
him  value  for  the  propertj^,  or  incurring  some  responsibility  upon  the  ci-edlt  of  it, 
without  notice  of  the  fraud.  Mowrey  v.  Walsh,  8  Cow.  238.  Root  v.  French,  13 
"Wend.  570.  Rowley  v.  Bigelow,  12  Pick.  307.  In  the  last  case  the  rule  and  the  rea- 
son for  it  is  thus  stated.  "  We  take  the  rule  to  be  well  settled,  that  where  there  is 
a  contract  of  sale,  and  an  actual  delivery  pursuant  to  it,  a  title  to  the  property  passes, 
but  voidable  and  defeasible  as  between  the  vendor  and  vendee,  if  obtained  by  false 
and  fraudulent  representation.  The  vendor  therefore  can  reclaim  his  property  as 
against  the  vendee,  or  any  other  person  claiming  under  him  and  standing  upon  his 
title,  but  not  against  a  bona  fide  purchaser,  without  notice  of  the  fraud.  The  ground 
of  the  exception  in  favor  of  the  latter  is,  that  he  purchased  of  one  having  possession 
under  a  contract  of  sale,  and  with  a  title  to  the  propertj',  though  defeasible  and 
voidable  on  the  ground  of  fraud ;  but  as  the  second  purchaser  takes  witliout  fraud 
and  without  notice  of  the  fraud  of  the  first  purchaser,  lie  takes  a  title  free  from  the 
taint  of  fraud."  This  principle  is  commented  on  very  freely  in  the  case  of  Ash  Vt 
Putnam,  1  Hill,  306,  307.  It  is  stated  to  be  an  exception  to  the  general  rule,  "that 
a  person  who  has  no  title  to  property,  can  convey  none."  It  is  admitted  to  liava 
been  establihed  in  Mowrey  v.  Walsh,  but  it  is  said,  that  if  the  matter  were  rex  nova, 
how  it  would  now  be  treated,  might  perhaps  admit  of  doubt.  And  in  that  case  it  was 
decided,  that  the  sheriff,  who,  in  virtue  of  an  execution  against  a  fraudulent  vendee 
of  goods   and  without  notice  of  the  fraud,  seizes  and  sells  them  to  bona  fide  pur- 


630  MERCANTILE  CONTRACTS. 

Duties  of  Vendor. 

2dly.  Compliance  loith  Warranties. — The  vendor  must  strictly 
comply  with  any  ivarranty  he  may  have  given.  Sach  warranty 
may  be  either  implied  or  expressed. 

Implied  Warranties. — "Where  the  dealing  is  in  a  particular 
branch  of  trade,  the  parties  are  presumed  to  contract  according  to 
its  custom ;  and,  therefore,  if  the  custom  be,  to  declare  at  the  time 
of  sale,  whether  the  goods  be  sea-damaged,  in  the  absence  of  such 
declaration,  a  warranty  will  be  implied,  that  they  are  not  so.  (m) 
If  the  article  were  bespoke  to  answer  a  particular  purpose,  a  war- 
ranty is  implied  that  it  will  answer  such  purpose,  (n)  and  in  every 
contract  to  furnish  manufactured  goods,  a  warranty  is  implied  that 
they  shall  be  of  a  merchantable  quality,  (o)*     But  though  the  sale 

{m)  Jones  v.  Bowden,  4  Taunt.  847. 

(n)  Jones  v.  Bright,  5  Bingh.  633.  Brown  v.  Edgington,  2  M.  &  Gr.  2*79.  Shep- 
herd V.  Pybus,  3  M.  &  Gr.  8G8.  Okell  v.  Smith,  1  Stark.  107.  See  Gray  v.  Cox,  4  B. 
&.  C.  108. 

(o)  Laing  v.  Fidgeon,  6  Taunt.  108.  Ilelcome  v.  Hewson,  2  Camp.  391.  Cooper  v, 
Twibell,  3  Camp.  226.    Gardner  v.  Gray,  4  Camp.  144.    Bridge  v.  "Wain,  1  Stark.  504 

chasers,  is  not  within  the  exception  established  by  Mowrey  v.  "Walsh,  but  is  liable  in 
trespass  at  the  suit  of  the  vendor.  No  opinion  was  given  on  the  question  whether 
the  purchasers  from  the  sheriff  would  be  protected,  as  to  which  see  BufBngton  v. 
Gerrish,  15  Mass.  156. 

See  also  as  to  the  above  exception,  George  v.  Kimball,  24  Pick.  241.  Hoffman  v. 
Noble,  6  Mete.  68,  74.  The  general  doctrine  has  been  recognized  in  the  cases  of  "Wil- 
liams V.  Given,  6  Gratt.  208.  Thompson  v.  Lee,  3  "Watts  <fe  Serg.  479.  Robinson  v. 
Dauchey,  3  Barb.  Sup.  Ct.  Rept.  20 ;  1  Sumn.  309. 

The  principle  was  fully  discussed  by  the  Court  of  Common  Pleas  in  "White  v.  Gar- 
den, 10  C.  B.  R. ;  70  E.  C.  L.  R.  919.  It  was  there  lield  that  a  contract  for  the  sale 
of  goods  obtained  by  fraud  of  the  purchaser,  was  void  only  at  the  election  of  the 
vendor,  and  ^lat  it  was  too  late  to  declare  such  election  after  the  goods  had  passed 
into  the  hands  of  a  bona  fide  purchaser.  Upon  any  other  rule  a  vendor  who  does 
not  choose  to  avail  himself  of  means  of  inquiry,  would  by  thus  trusting  the  vendee, 
be  giving  him  unlimited  means  of  defrauding  the  rest  of  the  world.  Talfuurd,  J.,  ob- 
served: "There  is  a  very  obvious  distinction  between  the  cases  of  goods  obtained  by 
felony,  and  fraud  and  false  pretences ;  in  the  one  case,  the  owner  of  the  goods  has  no 
intention  to  part  with  his  property;  in  the  other,  he  has.  A  contract  for  the  sale 
of  goods,  though  obtained  by  fraud,  is  perfectly  good  if  the  party  defrauded  thinks 
fit  to  ratify  it."  S.  P.  Stevenson  v.  Newnham,  16  L.  AE.  R.  401.  Load  v.  Green,  15 
M.  &  "W  216. 

*  "It  is  to  be  regretted,"  says  Chancellor  Kent,  after  a  learned  investigation  into 
the  subject,  "that  the  rule  (whatever  it  may  be)  concerning  the  application  of  im- 


CONTRACTS  OF  SALE.  631 

Duties  of  Vendor. 


of  an  existing  chattel^  as  being  of  a  particular  description,  implies  a 
contract  that  it  is  of  that  description,  yet  in  such  case  no  contract 
is,  in  the  absence  of  fraud,  implied  of  the  good  quality  or  condition 


plied  warranties  in  the  sale  of  personal  property,  is  not  more  certain  and  stable."  2 
Kent  Com.  479,  note  (a).  He  evidently  disapproves  of  the  tendency  of  the  recent 
English  cases  on  this  subject,  towards  the  doctrine  of  the  civil  law,  that  on  the  sale 
of  an  article  there  is  an  implied  warranty  that  it  is  merchantable  ov  fit  for  the  purpose 
intended.  In  the  recent  case  of  Moses  v.  Mead,  1  Denio,  378,  in  the  Supreme  Court 
of  New  York,  Bronson,  C.  J.,  comments  very  r'^rongly  on  the  disposition  recently 
shown  by  English  judges  "  to  imply  warranties  wliere  none  were  actually  made." 
"I  feel  no  disposition,"  says  the  Chief  Justice,  "to  follow  them  in  their  new  zeal  for 
the  civil  law,  for  the  reason  that  it  is  not  our  law,  and  the  further  reason,  that  oxir 
law  in  relation  to  sales  is  the  best.  The  civil  law  implies  a  warranty  where  none 
was  in  fact  made.  The  common  law  leaves  men  to  make  their  own  bargains.  If  the 
purchaser  wants  an  undertaking  that  the  goods  are  sound  or  merchantable,  he  asks 
for  it ;  and  then  the  vendor  decides  for  himself  whether  he  will  make  such  a  con- 
tract, or  let  it  alone." — "  When  there  is  neither  fraud  nor  express  warranty  on  the 
sale  of  a  chattel,  the  buyer  takes  the  risk  of  its  qualitj^  and  condition.  No  warranty 
of  any  kind  can  be  implied  fi-om  the  fact  that  a  sound  price  was  paid." 

But  a  distinction  is  recognized  in  the  case  of  Moses  v.  Mead,  which  had  been  de- 
fined in  the  case  of  Howard  v.  Hoey,  23  Wend.  350,  between  an  executed  and  an 
executory  contract  for  the  sale  of  goods.  "Where  the  contract  is  executory,  or,  in 
other  words,  to  deliver  an  article  not  defined  at  the  time,  on  a  future  day,  whether 
the  vendor  have  an  article  of  the  kind  on  hand,  or  it  is  afterwards  to  be  procured  or 
manufactured,  the  promisee  cannot  be  compelled  to  put  up  satisfied  with  an  inferior 
commodity.  The  contract  always  carries  an  obligation  that  it  shall  be  at  least 
merchantable — at  least  of  medium  quality  or  goodness.  If  it  come  short  of  this,  it 
may  be  returned,  after  the  vendee  has  had  a  reasonable  time  to  imspect  it."  23  Wend. 
351.'  In  respect  to  executory  sales,  or,  more  properly  speaking,  agreements  to 
make  sales  of  indeterminate  things,  "there  is  always  a  warranty  or  promise  implied 
that  the  indeterminate  thing  to  be  delivered  should  at  least  not  have  any  remark- 
able defect;  though  the  rule  of  the  common  law  is  clearly  otherwise  in  respect  to 
what  is  properly  denominated  a  sale.  The  Statute  of  Frauds  extends  to  both  classes 
of  contracts;  but  the  reason  of  that  has  no  application  to  the  question  of  warranty." 
23  Wend  353. 

It  appears  also  to  be  settled  that,  on  a  sale  by  sample,  a  warranty  is  implied,  that 
the  bulk  of  the  article  corresponds  in  quality  with  the  sample  exhibited.  Bradford 
V.  Manly,  13  Mass.  139.  Bouekins  v.  Bevan,  3  Eawle,  37.  Moses  n.  Mead,  1  Denio,  386. 
But  the  mere  exhibition  of  samples  at  the  time  of  sale,  is  not  itself  evidence  of  an 
agreement  to  sell  by  sample;  it  is  for  a  jury  to  say,  under  the  circumstances  of  the 
case,  whether  the  sale  was  intended  by  the  parties  as  a  sale  by  sample.  Waring  v. 
Mason,  18  Wend.  425. 

In  the  sale  of  provisions  for  domestic  use,  the  vendor  is  bound  to  know  that  they 
are  sound  and  wholesome,  at  his  peril.  This  is  a  principle  not  only  salutary,  but 
necessary  to  the  preservation  of  health  and  life.     Van  Bracklin  v.  Fonda,  12  John, 


632  MERCANTILE  CONTRACTS. 

Duties  of  Vendor 

of  the  chattel  so  sold,  and  therefore  where  the  chattel  sold  was  a 
ship,  (;))  and  the  vendor  covenanted  that  he  had  power  to  make 
the  sale,  no  contract  was  implied  that  she  was  seaworthy,  and  the 
Court  of  Exchequer  considered  that  the  property  in  her  might  pass 
by  the  sale,  though  she  was  cast  aground  in  such  a  manner  as  to  be 
totally  lost  within  the  meaning  of  a  policy.  ISTor  will  the  law  im- 
ply a  warranty,  where  the  parties  have  expressly  contracted,  as  to 
the  nature  and  quality  of  the  thing  to  be  sold  ;  thus,  though  we 
have  just  seen  that  if  A.  contract  with  B.  for  manufactured  goods, 
^the  law  will  imply  a  warranty  that  they  shall  be  merchantable ; 
yet  no  such  warranty  can  be  implied  if  A.  purchase  the  goods  by 
sample,  {q)  "  I  agree,"  said  Baron  Parke,  in  Chanter  v.  HojjJcms,  (r) 
"with  the  authority  of  Jones  v.  Bright,  that  if  an  order  is  given  for 
an  undescrihed  and  unascertained  thing,  and  stated  to  be  for  a  par- 
ticular purpose,  which  the  manufacturer  supplies,  he  cannot  sue  for 
the  price,  unless  it  do  answer  the  purpose  for  which  it  was  sup- 
plied. Suppose  a  party  offered  to  sell  me  a  horse  of  such  a  descrip- 
tion as  should  suit  my  carriage,  he  could  not  fix  on  me  a  liability 
to  pay  for  it,  unless  it  were  a  horse  fit  for  the  purpose  it  was  wanted 
for ;  but,  if  I  describe  it  as  a  particular  bay  horse,  in  that  case  the 
contract  is  performed  by  his  sending  that  horse."  In  Chanter  v. 
Ho'pkins  the  order  was,  "  send  me  your  patent  hopper  and  appara- 
tus to  fit  up  my  brewing  copper  with  your  smoke-consuming  fur- 
nace." It  was  held  that  the  defendant,  who  had  sent  one  of  his 
patent  machines  in  compliance  with  the  order,  did  not  impliedly 
warrant  that  it  would  suit  the  brewery.     The  notion,  that  a  war- 


{•p)  Barr  v.  Gibson,  3  M.  k  W.  390. 

{q)  Parkinson  v.  Lee,  2  East,  314.     See  Budd  v.  Fairmaner,  8  Bingli.  48. 
\f)  4  M.  <fe  "W.  406.     OUivant  v.  Bayley,  5  Q.  B.  288.     Parsons  v.  Sexton,  16  L.  J. 
C.  P.  181. 


468.  3  Black.  Com.  166.  2  Kent  Com.  479.  Osgood  v.  Lewis,  2  Harr.  and  Gill,  495. 
But  there  is  a  very  plain  distinction  between  selling  provisions  "for  domestic 
use,"  and  selling  them  as  articles  of  merchandise,  which  the  buj-er  does  not  intend  to 
consume,  but  to  sell  again.  "When  provisions  are  not  sold  for  immediate  consump- 
tion, there  is  no  more  reason  of  implying  a  warranty  of  soundness  than  there  is  in 
.•elation  to  sales  of  other  articles  of  merchandise.  Moses  v.  Mead,  1  Denio,  378 
Emerson  v.  Brigham,  10  Mass.  197  ;  3  Monroe,  835. 


CONTRACTS  OF  SALE.  633 


Duties  of  Vendor. 


ranty  might  be  implied  from  the  amount  of  the  price  given  has 
long  been  exploded,  (.s) 

Express  Warranties.^ — Every  affirmation,  at  the  time  of  sale  of 
personal  chattels^  is  a  warranty  provided  it  appear  to  have  heen  so  ^ 
intended,  (t)     But  a  warranty  after  the  sale  is  void  for  want  of  con- 
sideration, (w)     If  the  vendor  affirm  at  the  time  of  sale  that  the 
goods  are  his,  that  amounts  to  a  warranty  of  his  title ;  (i;)f  but  no 


(s)  Baglehole  v.  Walters,  3  Camp.  154.  Where  the  terms  of  the  contract  are  am- 
biguous, th'e  amount  of  the  price  may  sometimes,  perhaps,  furnish  a  clue  to  their 
true  meaning.     Allen  v.  Cameron,  1  C.  <fe  M.  832. 

(i!)  See  3  T.  R.  59,  per  Buller,  J.  See  Helyear  v.  Hawke,  5  Esp.  12.  Richardson 
V.  Brown,  1  Bingh.  344.  Dunlop  v.  Waugh,  Peake,  1 23.  Button  v.  Corder,  7  Taunt. 
405.  Liddard  v.  Kain,  2  Bingh.  183.  Shepherd  v.  Kain,  5  B.  &  A.  240.  Freeman 
V.  Baker,  2  Nev.  &  Mann.  446.  Powell  v.  Horton,  2  Bing.  N.  C.  668.  Power  v.  Bar- 
liam,  4  Ad.  &  E.  473. 

(m)  3  Bl.  Comm.  166 ;  Finch,  L.  189. 

(y)  Medina  v.  Stoughton,  1  Salk.  210 ;  3  T.  R.  57,  58,  per  Buller,  J. ;  2  Bl.  Comm. 
45 ;  Cro.  Jac.  474 ;  1  Roll.  Ab.  90.  It  does  not  seem  quite  clear  whether  the  war- 
ranty of  title  be  express  or  implied. 


*  It  is  well  settled  that  where  there  is  a  particular  exj^ress  warranty  iu  a  con- 
tract for  the  sale  of  goods,  the  law  will  not  extend  that  warranty  by  implication. 
The  maxim  "  expressum  facit  cessare  taciturn"  applies  to  such  cases.  If  this  were  not 
60,  it  would  be  necessary  for  the  parties  to  every  agreement  to  provide  in  terms  that 
they  are  to  be  understood  not  to  be  bound  by  anything  which  is  not  expressly  set 
down,  which  would  be  manifestly  inconvenient.  Dickson  v.  Zisinia,  10  C.  B.  R.  601. 
Owens  V.  Dunbar,  12  Irish  Law  R.  304. 

j-  In  this  country  it  is  generally  stated  in  some  of  the  cases  and  authorities,  that 
in  the  sale  of  personal  property,  the  law  implies  a  warranty  of  title.  Swett  v.  Col- 
gate, 20  John.  196,  202,  note  (a).  Dorsey  v.  Jackman,  1  Serg.  &  Rawle,  42.  Pajme  v. 
Rodden,  4  Bibb,  404.  Russell  v.  Richards,  1  Fairf.  433.  Story  on  Contracts  333,  §  35. 
Thus,  in  the  case  of  Coolidge  i;.  Brigham,  1  Mete.  551,  it  is  said:  "In  contracts  of  sale 
a  warranty  of  title  is  implied.  The  vendor  is  always  undei'stood  to  affirm  that  the 
property  he  sells  is  his  own.  And  this  implied  affirmation  renders  him  responsible 
if  the  title  proves  defective.  This  responsibility  the  vendor  incurs,  although  the  sale 
may  be  made  in  good  faith,  and  in  ignorance  of  the  defect  of  his  title.  This  rule  of 
law  is  well  established,  and  does  not  trench  unreasonably  upon  the  rule  of  the  com- 
mon law,  caveat  emptor."  But  it  would  seem  from  other  cases  and  authorities,  that 
this  principle  only  applies  to  sales  of  goods  or  chattels,  in  the  possession  of  the 
vendor.  Thus,  it  is  laid  down  by  Ciianeellor  Kent,  2  Kent  Com.  478,  tliat,  "in  every 
sale  of  a  chattel,  if  the  possession  be  at  the  time  in  another,  and  there  be  no  covenant 
or  warranty  of  title,  the  rule  of  caveat  emptor  applies,  and  the  party  buys  at  his  peril. 


634  MERCANTILE  CONTRACTS. 

Duties  of  Vendor. 

oral  allegation  previously  to  a  sale  bj  written  contract  can  possibly 
operate  as  a  warranty,  for  the  writing  is  the  only  evidence  of  the 
contract,  {w) 

Where  the  vendor  has  bound  himself  by  a  warranty,  either  ex- 
press or  implied,  the  vendee  may,  as  shall  presently  be  explained 
more  at  length,  use  the  breach  of  that  warranty  as  evidence,  in  re- 
duction of  the  vendor's  claim  for  compensation,  or  may  bring  an 
action  thereon  against  him.  {x)  But  he  cannot,  if  he  have  received 
the  article,  return  it,  and  recover  the  price  as  money  paid  on  a  con- 
sideration which  has  failed,  unless  there  have  been  a  condition  in 
the  contract  authorizing  such  return,  or  the  vendor  have  received 
back  the  chattel,  and  thereby  consented  to  rescind  the  contract,  or 
been  guilty  of  a  fraud,  which  destroys  the  contract  altogether. 
The  vendee  cannot,  by  his  own  act  alone,  unless  in  the  excepted 
cases  above  mentioned,  revest  the  property  in  the  seller,  and  recover 
the  price  when  paid,  on  the  ground  of  total  failure  of  consideration  ; 
and  it  follows,  that  he  cannot,  by  the  same  means,  protect  himself 
from  payment  of  the  price,  on  the  same  ground,  {y) 

{w)  Pickering  v.  Dowsing,  4  Taunt.  ^t1^.  Meyer  v.  Everth,  4  Camp.  22.  Kain  v. 
Old,  2  B.  <fe  C.  627.  See  Allen  v.  Pink,  4  M.  &  "W,  140,  "where  a  paper  was  signed  by 
the  vendor  and  given  to  the  vendee,  containing,  "Bought  of  G.  Pink,  a  horse  for  the 
sum  of  7/.  2.S.  6(/."  Held,  that  this  was  an  informal  receipt,  and  that  evidence  might, 
nevertheless,  be  given  of  a  contemporaneous  warranty. 

(a;)  Street  v.  Bla}-^,  2  B.  &  Ad.  456.  Accord.  Gompertz  v.  Denton,  1  C.  <fe  M.  207 ; 
3  Tyrwh.  232.  See  Weston  v.  Downes,  1  Dougl.  23.  Towers  v.  Barratt,  1  T.  R.  133. 
Payne  v.  Whale,  7  East,  274.  Power  v.  Wells,  Dough  24,  n.  Emanuel  v.  Dane,  3 
Camp.  299.     Parsons  v.  Sexton,  16  L.  J.  C.  P.  181. 

(y)  Street ;;.  Blay,  ubi  supra.  In  the  case  of  a  horse,  the  keep  of  which  would 
create  additional  expense,  between  the  breach  of  warranty  and  the  trial,  the  vendee 


But  if  the  seller  has  possession  of  the  article,  and  he  sells  it  as  his  own,  and  not  aa 
agent  for  another,  and  for  a  fair  price,  he  is  understood  to  warrant  the  title.  A  fair 
price  implies  a  warranty  of  title."  And  in  Gookin  v.  Graham,  5  Humph.  484,  it  is 
said,  that  "in  a  sale  of  personal  property,  there  is  alwaj^s  an  implied  warranty  of 
title,  unless  it  be  purchased  under  such  circumstances  as  clearly  to  show  that  the 
vendee  intended  to  i-isk  the  title,  as  if  the  vendor  be  not  in  possession,  but  ine  same 
be  adversely  in  another."  See  also  Andres  v.  Lee,  1  Dev.  &  Batt.  318.  Trigg  v. 
Fairs,  5  Humph,  343.  In  this  last  case  it  was  held,  that  the  warranty  of  title 
implied  by  law  in  a  sale  of  a  chattel,  in  the  possession  of  the  vendor,  is  not  excluded 
where  the  sale  is  by  deed  or  bill  of  sale,  containing  no  covenant  whatever,  but 
merely  convej'ing  the  title. 


COXTRACTS  OF  SALE.  635 


Duties  of  Vendor. 


It  must,  however,  be  mentioned,  that  there  is  a  late  decision  in 
the  Court  of  Common  Pleas,  in  which  a  distinction  appears  to  be>/ 
drawn  between  a  hreach  of  warranty  and  a  total  failure  of  consider- 
ation by  the  delivery  of  an  entirely  different  and  worthless  article 
instead  of  that  contracted  for,  in  which  latter  case,  that  Court 
seems  to  have  held  that  the  consideration  money  might  be  re- 
covered back  again.  (2) 

It  is  to  be  observed,  that  though  the  vendee  of  a  specific  chattel, 
delivered  with  a  warranty,  has  no  right  to  return  it,  the  same  reason 
does  not  apply  to  cases  of  executory  contracts,  where  an  article,  for 
instance,  is  ordered  from  a  manufacturer,  who  engages  that  it  shall 
be  of  a  certain  quality,  or  fit  for  a  certain  purpose,  and  the  article 
sent  as  such  is  never  completely  accepted  by  the  party  ordering  it. 
In  this  and  similar  cases,  the  latter  may  return  it  as  soon  as  he 
discovers  the  defect,  provided  he  has  done  nothing  more  in  the 
mean  time  than  was  necessary  to  give  it  a  fair  trial ;  (a)  nor  would 
the  purchaser  of  a  commodity  to  be  afterwards  delivered  according 
to  sample  be  precluded  from  returning  the  bulk,  if  not  in  accord- 
ance with  the  sample,  within  a  reasonable  time  for  examination 
and  comparison.^  But  in  no  case  can  a  purchaser  return  a 
chattel  where  he  has  done  more  than  is  consistent  with  the  purpose 
of  trial,  ex.  gr.,  where  he  has  resold  it  at  a  profit,  and  delayed  his 
offer  to  return  it  till  it  has  come  for  a  second  time  into  his  pos- 
session. (i)f 

ought,  as  sooa  as  the  unsoundness  is  discovered,  to  tender  him  back  to  the  vendor^ 
and  if  he  refuses  to  take  him  back,  sell  him  as  soon  after  as  possible  for  the  best 
price  that  can  be  procured.  Chesterman  v.  Lamp,  2  Ad.  &  E.  129,  and  see  the  au 
thorities  there  cited. 

(z)  Young  V.  Cole,  3  Bingh.  K  C.  724. 

(a)  Okell  V.  Smith,  1  Stark.  lOY.  See  Oxendale  v.  Wethe^all,  9  B.  &  C.  386.  Curtis 
V.  Pugh,  16  L.  J.  Q.  B.  199.     Jordan  v.  Norton,  case  of  a  horse,  4  M.  tfe  W.  155. 

(6)  Street  v.  B\a.j,  ubi  supra.    See  Shipton  v.  Casson,  5  B.  &  C.  878.     Coleman  v. 

*  The  principle  of  Street  v.  Blay  was  extended  in  Da-wson  v.  Collis,  10  C.  B.  R. 
523,  so  far  as  to  overrule  the  proposition  in  the  text.  The  judges  all  expressed  the 
opinion,  that  on  the  sale  of  a  specific  article,  the  buyer  has  no  right  to  repudiate  the 
article  if  it  does  not  correspond  with  the  sample,  but  that  his  proper  remedy  is  to 
bring  a  cross  action  on  the  warranty,  or  to  set  up  the  breach  in  reduction  of 
damages.  The  doctrine  of  this  case  is  inconsistent  with  Magee  v.  Billingsbj-,  3  Alah 
679;  Waring  v.  JJason,  18  Wend.  425;  Shields  v.  Pettee,  2  Sand.  Sup.  Ct.  R.  262. 

+  The  principles  decided  in  the  case  of  Sti'eet  v.  Blay,  2  B.  it  Adol.  456,  22  E.  C 


636  MERCANTILE  CONTRACTS. 

Duties  of  Vendor. 

It  has  been  laid  down  by  some  writers  of  authority,  that  a  future 
event  cannot  be  warranted,  as,  that  a  horse  shall  be  sound  two 
years  hence ;  (c)  this  doctrine  is,  however,  overruled,  (d)  It  is  also 
laid  down  by  the  older  books,  that  defects  apparent  at  the  time  of 
a  bargain  are  not  included  in  a  warranty,  however  general,  because 
they  can  form  no  subject  of  deceit  and  fraud,  hand  enira  decipiiur 
qui  scit  se  decipi^  and,  originall}^,  the  mode  of  proceeding  on  a  breach 
of  w^arranty  was  by  an  action  of  deceit  grounded  on  a  supposed 
fraud.  A  party,  therefore,  who  should  buy  a  horse,  knowing  it  to 
be  blind  of  both  eyes,  could  not  sue  for  that  defect  on  a  general 
warranty  of  soundness :  thus,  where  the  horse  had  a  splint,  which 
was  known  to  both  parties ;  in  an  action  on  a  warranty  of  sound- 
ness, wind  and  limb,  it  was  held  that  the  proper  direction  to  the 
jury  would  be,  to  consider  whether  the  horse  was  at  the  time  of  the 
bargain  sound,  wind  and  limb,  saving  tJiose  inanifesi  defects  con- 
templated hy  the  parties,  (e)  At  a  new  trial  of  the  same  cause,  it 
appeared,  that  some  splints  cause  lameness,  and  others  not;  and 
the  Court  then  thought,  that,  as  the  consequence  of  a  splint  cannot 
be  apparent  at  the  time  of  sale,  like  the  loss  of  an  eye,  or  any 
visible  blemish  or  defect,  the  vendor  must  have  meant  to  warrant 
that  this  was  not  such  a  splint  as  would  occasion  subsequent  un- 
soundness :  and  the  horse  having  gone  lame  in  consequence  of  it, 
the  vendee  was  held  entitled  to  recover.  (/) 

Gibson,  1  M.  &.  Rob.  169.  Campbell  v.  Flemyng,  1  Ad.  <fe  E.  40.  See  a  distinction 
taken  in  Young  v.  Cole,  3  Bingli.  N.  C.  742,  between  a  breach  of  warranty  and  a  total 
failure  of  consideration  owing  to  the  articles  turning  out  wholly  worthless.  That 
case,  however,  may  be  supported  on  other  grounds. 

(c)  3  Bl.  Comm.  166. 

{d)  See  Liddard  v.  Kain,  2  Bingh.  183.  Eden  v.  Parkinson,  Dougl.  VOS.  And 
see  a  learned  note  by  Mr.  Justice  Coleridge,  in  his  edition  of  the  Commentaries, 
vol.  iii.  166. 

(e)  Margetson  v.  Wright,  Y  Bingh.  603.     See  3  Bl.  Comm.  166.     Bayley  v.  Merrell, 
Cro.  Jac.  387.     Dyer  v.  Hargrave,  10  Ves.  507. 
.    (/)  Margetson  v.  Wright,  8  Bingh.  454. 


R.  122,  to  which  frequent  reference  is  made  above  by  the  author,  appear  to  have 
been  recognized  and  adopted  in  this  country.  See  Voorhees  v.  Earl,  2  Hill,  288,  ?91. 
Thornton  v.  Wynn,  12  Wheat.  183 ;  6  C.  R.  508.  Allen  v.  Anderson,  S  Humph.  581. 
Lightburn  v.  Cooper,  1  Dana,  273.  Kimball  v.  Cunninghum,  4  Mass.  502.  As  to  return 
of  goods,  in  case  of  fraud,  see  Mason  v.  Bovett,  1  Denio,  69. 


CONTRACTS  OF  SALE.  637 


Duties  of  Vendor. 


A  warranty,  like  any  otlier  contract,  may,  of  course,  be  limited 
and  moulded  according  to  tlie  intention  of  the  jDarties ;  thus,  it  may 
be  confined  in  any  point  of  duration,  as,  where  a  board  was  fixed 
upon  the  wall  of  a  repository,  containing  certain  rules,  one  of  which 
was,  that  warranties  given  with  horses  sold  by  auction  there  should 
remain  in  force  only  till  twelve  the  next  day,  and  then  terminate, 
unless  a  surgeon's  certificate  of  the  horse's  unsoundness  were  in  the 
mean  time  given,  it  was  held  that  this  regulation  was  binding 
upon  purchasers,  {g) 

We  have  seen  that  every  affirmation  at  the  time  of  sale  of  a 
personal  chattel  is  a  warranty,  provided  it  opjoear  to  have  been  so  in- 
tended, and  provided  the  contract  be  not  written  and  the  affirmation 
merely  oral.*    Where,  however,  the  article  is  sold  by  description 

{g)  Bywater  v.  Richardson,  1  Ad.  &  E.  508. 


*  In  this  country  there  appears  to  be  a  conflict  in  the  authorities  in  determining 
when  an  affirmation  at  the  time  of  sale  is  a  warranty,  and  whether  and  when  words 
of  description  in  a  bill  of  sale,  bill  of  parcels,  invoice  or  receipt  are  to  be  considered 
a  warranty. 

In  relation  to  the  first  point,  some  of  the  cases  appear  to  rely  on  the  strength  of 
the  affirmation  or  representation,  without  reference  to  the  intention  of  the  parties. 
Thus  in  the  case  of  Morrill  v.  Wallace,  9  New  H.  Ill,  the  Court,  after  stating,  as  the 
result  of  some  of  the  cases,  that  even  if  the  party  might  not  have  supposed  that  he 
was  making  himself  liable  upon  a  warranty,  but  intended  to  make  an  affirmation  or 
assertion,  which  the  other  should  receive  as  fact,  or  intended  to  utter  what  was 
equivalent  to  a  promise,  and  not  express  an  opinion  or  belief  about  the  matter,  such 
assertion,  affirmation,  or  promise,  amounts  to  a  warranty  as  to  that  fact;  and  citings 
Whitney  v.  Sutton,  10  Wend.  411;  Oneida  Man.  So.  v.  Lawrence,  4  Cow.  440; 
Roberts  v.  Morgan,  2  Cow.  438,  say,  "We  think  this  latter  the  better  opinion,  and 
that  the  matter  does  not  depend  upon  the  question  whether  it  was  a  representation 
or  not,  or  whether  the  vendor  intended  to  be  bound  by  a  warranty  or  not,  nor  upon 
any  particular  words,  but  upon  the  question  whether  the  vendor  made  any  assertion 
or  affirmation  respecting  the  kind,  quality,  or  condition  of  the  article,  or  whether 
there  was  merely  an  expression  of  judgment,  opinion,  or  belief.  If  the  vendor  made 
an  assertion  of  that  nature,  upon  which  he  intended  the  vendee  should  rely,  and 
upon  which  he  did  rely,  that  is  sufficient." 

Other  cases  proceed  on  the  intention  of  the  parties.  In  the  case  of  McFarland  v. 
Newman,  9  Watts,  55,  Gibson,  C.  J.,  comments  on  and  disapproves  the  tendency  of 
modern  English  decisions  to  change  the  old  rule  of  the  common  law  in  relation  to 
warranty  of  soundness,  and  particularly  the  case  of  Wood  v.  Smith.  4  Carr.  <fe  Payne, 
45, 19  E.  C.  R.  267,  and  saj's,  "Though  to  constitute  a  warranty  requires  no  particolar 
form  of  words,  the  naked  averment  of  a  fact  is  neither  a  warranty  itself,  nor  evi* 


638  MERCAXTILE  CONTRACTS. 

Duties  of  Vendor. 

merely^  and  the  allegations  of  the  vendor,  whether  oral  or  contained 
in  a  written  document,  {h)  do  not  amount  to  a  warranty,  but  merely 
to  representations,  which  afterwards  turn  out  not  to  be  consistent 

{h)  As  in  Budd  v.  Fairmaner,  8  Bingli.  48,  where  a  receipt  -was  produced  contain 
ing  as  follows : 

"Received  from  Mr.  Budd,  10/.  for  a  gray  four-year  old  colt,  warranted  sound  in 
every  respect." 

Held  that  the  warranty  was  confined  to  soundness,  and  the  age  mere  matter  of 
description.  See  Dickinson  v.  Gap.  cited  Budd  v.  Fairmaner,  8  Bingh.  50.  Freemaa 
V.  Baker,  2  Nev.  <fe  Mann.  446  ;  5  B.  &  Ad.  797.  Power  v.  Barliara,  4  Ad.  &,  E.  473. 
In  Power  v.  Barham,  the  vendor  of  pictures  gave  the  following  bill  of  parcels : 

"Mr.  N.  Power, 

"  Bought  of  J.  Barham, 
J  Four  pictures.  Views  in  Venice,  Canaletti,  160/. 

Settled.  J.  Baeh.\m." 

This  document  was  held  to  justify  the  jury  in  finding  that  the  pictures  were  war- 
ranted to  be  by  Canaletti.  In  Gwillim  v.  Daniel,  2  C.  M.  <fe  R.  61,  agreement  that 
A.  should  sell  and  B.  buy  "all  the  naphtha  that  A.  might  make  from  the  1st  of  June 
for  two  years,  say  from  1000  to  1200  gallons  a  month."  The  words  in  italics  were 
held  only  a  representation. 

"I  should  consider  it  a  matter  of  favor  if  your  brothers  will  join,  and  I  will  see 
that  they  cotiie  to  no  harm."  Held  a  guaranty-,  not  a  representation.  Jones  v.  "Wil- 
liams, 7  M.  &.  W.  493. 


dence  of  it  In  connection  with  other  circumstances,  it  certainly  may  be  taken  into 
consideration,  but  the  jury  must  be  satisfied  from  the  whole  that  the  vendor  actu- 
ally, and  not  constructively,  consented  to  be  bound  for  the  truth  of  his  representa- 
tion. Should  he  have  used  expressions  fairly  importing  a  willingness  to  be  thus 
bound,  it  would  furnish  a  reason  to  infer  that  he  had  intentionally  induced  the  ven- 
dee to  treat  on  that  basis ;  but  a  naked  affirmation  is  not  to  be  dealt  with  as  a  war- 
ranty, merely  because  the  vendee  had  gratuitously  relied  on  it ;  for  not  to  have 
exacted  a  direct  engagement,  had  he  desired  to  buy  on  the  vendor's  judgment,  must 
be  accounted  an  instance  of  folly."  In  the  case  of  House  v.  Fort,  4  Blackf  293,  the 
Court  below  had  instructed  the  jury  "that  any  positive  affirmation  of  soundness 
maiie  at  the  time  of  the  contract,  and  before  the  exchange,  amounts  to  a  warranty." 
But  the  S'lnreme  Court  say:  "This  instruction  is  not  correct.  An  oral  aflSrmation 
of  the  soundne'^s  of  a  horse,  which  was  exposed  to  the  purchaser's  inspection,  cannot 
be  considered  as  a  warranty,  unless  where  it  is  so  intended  at  the  time  by  the  par- 
ties; and  that  intention  must  be  shown  to  the  satisfaction  of  the  jury.  The  mere 
affirmation  of  soundness,  in  a  case  like  this,  is  not  per  se  a  warranty.  To  give  it  the 
eff'ect  of  a  warranty,  there  must  be  evidence  to  show  that  the  parties  intended  it  to 
have  that  eff'ect."  Citing,  20  John.  196;  8  Cow.  25;  2  Har.  &  Gill.  49.5.  And  the 
Court  further  said,  that  it  is  not  sufficient  that  the  vendee  understood  the  affirmation 
to  be  a  warranty,  it  must  have  been  so  understood  by  both  parties.  See  also  Baird 
V.  Matthews,  6  Dana,  129.     Foggart  v.  Blackweller,  4  Ired.  L.  238. 


CONTRACTS  OF  SALE.  63S 


Duties  of  Vendor. 


with  fact,  yet  if  such  representations  were  made  honestly,  according 
to  his  belief  at  the  time,  no  action  lies  against  him ;  [i)  but  it  is 
otherwise  if  he  knew  that  he  was  representing  a  falsehood :  (J)  in 

(i)  Ormrod  v.  Huth,  14  M.  &  W.  651. 

(_;■)  Dunlop  v.  Waugh,  Peake,  123.  Jeudwine  v.  Slade,  2  Esp.  572.  Pickering  v. 
Dowson,  8  Taunt.  779.  Kain  v.  Old,  2  B.  &  C.  627.  Dobell  v.  Stevens,  3  B.  &  C.  623. 
Fletcher  v.  Bowsher,  2  Stark.  561. 


In  the  case  of  Winsor  v.  Lombard,  18  Pick.  60,  it  is  stated  as  a  rule  of  law,  "that 
iSj)on  a  sale  of  goods  by  a  written  memorandum  or  bill  of  parcels,  the  vendor  under- 
takes, in  the  nature  of  warranting,  that  the  thing  sold  and  delivered  is  that  which 
is  described  ;  this  rule  applies  whether  the  description  be  more  or  less  particular  and 
exact  in  enumerating  the  qualities  of  the  goods  sold."  Hogins  v.  Plympton,  11  Pick. 
99.  Hastings  v.  Lovering,  2  Pick.  214.  Li  this  case,  the  words  in  a  sale  note,  '  Sold 
A.  2000  gallons  prime  quality  winter  oil,"  were  held  to  amount  to  a  warranty  that 
the  article  sold  agreed  with  the  description.  See  also  Osgood  v.  Lewis,  2  Har.  <k 
Gill.  495.     Borrekins  v.  Bevan,  3  Rawle,  23.     Morrill  v.  Wallace,  9  Now  H.  114. 

But  in  the  case  of  Baird  v.  Matthews,  6  Dana,  129,  where  on  a  sale  a  receipt  was 
given  in  the  usual  form,  of  $2926  in  full  for  616  bbls.  superfine  flour,  it  was  held  to 
be  no  warranty  that  the  flour  was  superfine.  "It  proves,"  say  the  Court,  "that  the 
article  was  sold  as  superfine  flour,  and  authorizes  the  inference  that  it  was  repre- 
sented or  affirmed  to  be  such,  before  and  at  the  time  of  sale,  but  for  a  misrepresen- 
tation of  the  quality  of  the  thing  sold,  the  vendor  cannot  be  made  responsible, 
unless  he  knew  the  representation  to  be  false. '  And  in  the  cases  of  Seixas  v.  Wood, 
2  Caines,  48,  and  Swett  v.  Colgate,  20  Johns.  196,  where  there  was  a  description  in 
the  advertisement,  invoice,  and  bill  of  parcels,  in  the  one  case  of  an  article  as  brazi- 
letto,  which  was  in  fact  peachumwood,  in  the  other  of  an  article  as  barilla,  which  was 
in  fact  kelp,  it  was  held  that  there  was  no  warranty.  "  The  principle  established 
was,  that,  to  maintain  an  action  for  selling  one  article  for  another,  there  must  be 
either  a  warranty  or  fraud."     20  John.  203. 

In  the  case  of  Borrekins  v.  Bevan,  3  Rawle,  23,  Rodgers,  J.,  in  delivering  the 
opinion  of  the  Court,  says,  that  Chandelor  v.  Lopus,  Cro.  Jae.  4,  (the  case  of  the 
Bezoar  stone,)  must  be  abandoned,  and  that  the  same  may  be  said  of  Seixas  v.  Wood, 
and  Swett  v.  Colgate,  and  that  "in  all  sales,  there  is  an  implied  warranty  tliat  the 
article  corresponds  in  specie  with  the  commodity  sold,  unless  there  are  some  facts 
and  circumstances  existing  in  the  cases,  of  which  the  jury,  under  the  direction  of 
the  Court,  are  to  judge,  which  clearly  show  that  the  purchaser  took  upon  himself 
the  risk  of  determining  not  only  the  quality  of  goods,  but  the  kind  he  purchased,  or 
where  he  may  waive  his  right."  And  in  the  case  of  McFarland  v.  Newman,  9  Watts, 
55,  58,  the  Court  sa}'  they  do  not  touch  the  case  of  Borrekins  v.  Bevan,  in  which  it 
was  held  "thaJt  a  warranty  arises,  that  the  article  is  specifically  that  as  which  it  is 
sold." 

In  the  recent  case  of  Henshaw  v.  Robins,  9  Mete.  83,  where  an  article  was  sold 
and  described  in  a  bill  of  parcels  as  indigo,  which  was  in  fact  not  indigo,  but  a  sub- 
stance composed  of  Prussian  blue,  chromate  of  iron,  and  potash,  and  worthless  for 


640  MERCAIsTILE  CONTRACTS. 

Duties  of  Vendee. 

sucli  case  the  vendee  may  maintain  an  action  for  the  deceit,  in  which 
he  must  allege  a  scienter,  and  show  that  the  description  was  false 
within  the  knowledge  of  the  seller.  Qc) 


Section  IV. — Duties  of  Vendee. 

The  duties  incumbent  on  the  vendee,  are  Ji^-st,  to  accept  the 
goods ;  and  secondly,  to  pay  for  them. 

If  he  refuse  to  accept  them,  the  vendor,  having  performed  all 
conditions  precedent  on  his  part,  {I)  may  sue  him,  either  specially 
upon  his  contract,  (m)  or  (if  the  property  have  passed  to  the  ven- 
dee) for  goods  bargained  and  sold ;  in  which  latter  form  of  action 
he  will  recover  his  entire  price,  while,  in  the  special  form,  he  will 
recover  but  the  amount  of  damage  actually  sustained  by  him.  {n) 

If  the  goods  are  to  be  delivered  at  a  stipulated  price,  the  ven- 

ih)  See  judgment  of  Tindal,  C.  J.,  in  Budd  v.  Fairmaner,  8  Bingh.  53,  and  Free- 
man V.  Baker,  2  Nev.  &  Mann.  446,  5  B.  <fe  Ad.  797  ;  but  see  Ormrod  v.  Huth,  vhi 
sup.,  and  under  some  circumstances  the  vendor  may  be  proceeded  against  criminally 
for  obtaining  money  under  false  pretences.     Regina  v.  Kenrick,  6  Q.  B.  49. 

{I)  See  the  question,  what  amounts  to  a  condition  precedent,  discussed  Alexander 
V.  Gardner,  1  Bing.  K  C.  671.  Fragano  v.  Long,  4  B.  &  C.  219,  ante,  sect.  2.  Gower 
V.  Von  Dedalzen,  3  Bingh.  K  C.  7 17. 

(>»)  See  Boorman  v.  Nash,  9  B.  &  C.  145.  Greaves  v.  Ashlin,  3  Camp.  426.  Boyce 
V.  Warburton,  2  Camp.  480.     Spaeth  v.  Hare,  9  M.  «fe  W.  326. 

(m)  Hankey  v.  Smith,  Peake,  42,  et  notas ;  but  see  Dunlop  v.  Grote,  2  Car.  &,  K. 
153.  The  measure  of  this  damage  is  the  difference  between  the  market  price  and 
the  contract  price,  on  the  day  of  tendering  the  goods  for  acceptance.  Philpotts  v. 
Evans,  5  M.  &  "W.  475.  As  to  the  measure  of  damages  for  not  accepting  stock,  see 
Hecksher  v.  Gregory,  4  East,  607.  Bordenave  v.  Gregory,  5  East,  107 ;  for  not 
replacing  it.  Shepherd  v.  Johnson,  2  East,  211.  M'Arthur  v.  Lord  Seaforth,  2  Taunt 
257  ;  and  see  7  G.  2,  c.  8,  s.  11.    Tate  v.  "Wellings,  3  T.  R.  531. 


any  purpose,  but  no  fraud  was  imputable  to  the  vendor,  who  was  ignorant  of  the 
ti'ue  character  of  the  article  sold ;  it  was  held,  that  the  description  in  the  bill  of 
parcels  was  a  warranty  that  the  article  was  that  which  it  was  thus  described  to  be. 
And  that  this  rule  applies,  though  the  goods  are  examined  by  the  purchaser,  at  or 
before  the  sale,  if  they  are  so  prepared,  and  present  such  an  appearance  as  to  deceive 
skilful  dealers.  This  decision  was  made  on  the  general  principle,  "  that  the  descrip- 
tion contained  in  a  bill  of  parcels  of  goods  sold  is  evidence  of  the  terms  of  the  con- 
tract of  sale,  and  so  imports  a  warranty  that  the  goods  are  the  goods  described,  and 
that  they  substantially  agree  with  the  terms  of  the  description." 


CONTRACTS  OF  SALE.  (-,4  ] 


Duties  of  Vendee. 


dor,  before  suing  for  the  price,  must  tender  them  there,  unless,  in- 
deed, the  vendee  have  refused,  or  put  it  out  of  his  own  power,  to 
complete  his  contract.  If  there  be  no  stipulated  place,  it  is  the 
vendee's  business  to  fetch  them.  (0)  Where  the  goods  are  to  be 
forwarded  by  a  carrier,  the  vendor  must  enter  them  so  that  the 
carrier  may  be  responsible  for  their  value  if  lost,  (p) 

If  the  goods  were  to  be  of  a  particular  description,  they  must 
be  such  as  correspond  with  that  description,  (q)  ex.  gr.,  with  the 
sample,  if  they  were  sold  by  sample,  (r)  in  which  case  the  vendee 
has  a  right  to  inspect  and  compare  before  accepting  them,  and  may, 
if  prevented  from  doing  so,  rescind  the  contract.  (5)  But  he  must 
exercise  the  right  within  a  reasonable  time,  and  without  dealing 
with  the  property  as  his  own,  which  would  amount  to  an  accept- 
ance, {t)  In  order  to  prevent  the  danger  arising  from  variance  be- 
tween the  article  and  the  description  given  of  it  in  the  conditions 
of  sale,  it  is  usual  in  sales  by  auction  of  important  matters,  such  as 
real  property,  to  insert  a  clause,  that  mistakes  in  description  shall 
nor  vitiate  the  sale,  but  only  entitle  the  vendee  to  a  compensation. 
But  even  this  clause  will  not  help  if  there  be  variance  in  any  essen- 
tial particular,  (u)     It  is  said,   that  if  a  purchaser  order  several 

(o)  Glazebrook  v.  Woodrow,  8  T.  R.  366.     Jones  v.  Berkely,  Dougl.  687.     See 
Rawson  v.  Jolinson,  1  East,  203.     Callonel  v.  Briggs,  3  Sal.  112. 

(p)  Clark  V.  Hutchins,  14  East,  475. 

(g)  Tye  v.  Finmore,  3  Camp.  462,  where  it  was  held  that  in  a  case  of  written 
contract,  it  is  not  enough  that  there  be  a  correspondence  with  the  sample,  if  there 
be  a  variance  from  the  written  description.  Hay  don  v.  Hay  ward,  1  Camp.  180. 
Ellis  V.  Hamlin,  3  Taunt.  52.  See  Flight  v.  Booth,  I  Bingh.  N.  C.  370 ;  Robinson  v. 
Musgrove,  2  M.  &  Rob.  92 ;  Dykes  v.  Blake,  4  Bingh.  K  C.  463,  and  Dobell  v.  Hutch- 
inson, 3  Ad.  &  E.  355,  for  an  exposition  of  this  doctrine  as  applied  to  sales  of  real 
property ;  the  question  in  such  cases  is,  Was  the  part  of  the  contract  which  the  ven 
dor  has  broken  a  condition  precedent  ? 

(r)  Hibbert  v.  Shee,  1  Camp.  113. 

(s)  Lorymer  v.  Smith,  1  B.  &  C.  1.  Isherwood  v.  Whitmore,  10  M.  <$r  "W".  757; 
11  M.  k  W.  347.  Toulmin  v.  Hedley,  2  Car.  k  K.  157.  Every  receipt  is  not  an 
acceptance.  Alderson,  B.,  in  Hardman  v.  Bellhouse,  9  M.  &  W.  600.  See,  however 
as  to  goods  not  sold  by  sample,  Petit  v.  Mitchell,  4  M.  &  Gr.  819,  where  the  defend- 
ant was  held  not  entitled  to  measure  goods  sold  by  auction,  before  payment  of  the 
price. 

(0  Chapman  v.  Morton,  II  M.  &  W.  534.  See  also  Curtis  v.  Pugh,  16  L.  J.  Q.  B. 
199. 

(m)  Dobell  V.  Hutchinson,  3  Ad.  &  E.  355.     Flight  v.  Booth,  1  Bingh.  N.  C.  370. 
41 


642  MERCANTILE  CONTRACTS. 

Duties  of  Vendee. 

things  at  the  same  time,  he  may  consider  the  contract  as  entire,  and 
object  to  receive  some  of  them  without  the  rest ;  {v)  but  that,  if  he 
accept  one  singly,  he  severs  the  contract,  and  cannot  object  to  re- 
ceiving another  singly,  (tf)  "Where  different  lots  are  bought  by 
the  same  person  at  the  same  auction,  the  purchase  of  each  is  a  dis- 
tinct contract,  (a;)* 

As  fraud  vitiates  every  contract,  it  will  be  a  sufficient  excuse 
for  the  vendee's  non-performance  of  his,  that  the  vendor  was  guilty 
of  fraud,  as,  by  employing  puffers  at  an  auction  to  enhance  the 
price,  without  giving  notice  of  his  intention  to  do  so ;  {y)  though 
possibly  there  might  be  a  difference,  if  the  intent  were  not  to  en- 
hance the  price  generally,  but  only  to  prevent  the  goods  from  going 
off  at  an  undervalue.  (2)     And  it  is  clear  that  the  employment  of 

{v)  Champion  v.  Short,  1  Camp.  53.  Neal  v.  Viney,  1  Camp.  411.  See  Chambers 
V.  Griffith,  1  Esp.  150  ;  but  quccre  if  that  case  be  law  ;  and  see  James  v.  Shire,  1  Stark. 
426.  Poole  V.  Shergold,  2  Bro.  C.  C.  118  ;  1  Cox,  2*73.  See  on  this  subject  Symonds 
V.  Carr,  1  Camp.  361.  Hort  v.  Dixon,  Selw.  N.  P.  8th  ed.  109.  It  is  clear  that  where 
there  is  a  joint  order  of  several  things,  acceptance  of  one  is  an  acceptance  of  all 
within  the  Statute  of  Frauds.     Elliott  v.  Thomas,  3  M.  &  W.  170. 

(w)  Gilb.  Ev.  191.  4.  Bragg  v.  Cole,  6  Moore,  114.  See  Walker  v.  Dixon,  2  Stark. 
281 ;  but  said  to  have  been  reversed  in  bank,  in  note  to  Stark,  on  Evidence,  vol.  ii. 
p.  872.     Boon  v.  Eyre,  1  H.  Bl.  254. 

(a;)  Roots  v.  Lord  Dormer,  4  B.  <fe  Ad.  77.  Poole  v.  Shergold,  and  James  v.  Shire, 
uhi  supra, 

(y)  Howard  v.  Castle,  6  T.  R.  642.  Bexwell  v.  Christie,  Cowp.  695 ;  3  Ves.  jun. 
625.  Wheeler  v.  Collyer,  1  M.  &  M.  123.  Crowder  v.  Austen,  8  Bingh.  368.  Thor- 
nett  V.  Haines,  15  M.  &  W.  367. 

{z)  Smith  V.  Clark,  12  Ves.  477.     See  Woodward  v.  Miller,  2  Coll.  279. 


*  In  the  case  of  Mills  v.  Hunt,  17  Wend.  333,  it  was  held,  that  when  the  purchase 
is  made  at  an  auction  sale  of  goods,  at  one  and  the  same  time,  and  from  tiie  same 
vendor,  although  the  articles  purchased  are  numerous,  and  are  struck  off  separately 
at  separate  and  distinct  prices,  the  whole  constitutes  but  one  entire  contract;  and 
the  prices  of  the  different  articles  fixed  on  are  but  part  and  parcel  of  it.  "There 
is,"  say  the  Court,  "  no  legal  or  sensible  distinction  in  this  respect  between  a  public 
and  private  sale,  and  the  same  rule  of  construction  should  be  applied  to  each."  17 
Wend.  336.  This  decision  has  been  followed  in  Pennsylvania,  CofFman  v.  Hampton, 
2  Watts  &  Serg.  377,  390 ;  Tompkins  v.  Haas,  2  Barr,  74.  This  decision,  however, 
though  placed  upon  the  authority  of  the  English  cases,  as  well  as  upon  principle, 
was  made  without  any  reference  to  the  case  of  Roots  v.  Lord  Dormer,  cited  by  the 
author,  and  which  seems  to  sustain  his  position.  As  to  when  a  contract  is  entire, 
sec  Chirke  u  Baker,  5  Mete.  452. 


CONTRACTS  OF  SALE.  C43 


Duties  of  Vendee. 


any  one  to  bid  vitiates  a  sale  advertised  to  be  xvithoid  reserve,  {a) 
So,  if  the  vendor  fraudulently  conceal  what  he  ought  to  communi- 
cate, or  give  a  false  description  of  the  goods,  ex,  gr.^  by  calling 
them  the  property  of  a  gentleman  deceased,  and  sold  by  order  of 
his  executor,  (p)  And,  though  an  article  be  sold  ivith  all  faults, 
yet,  artifice  used  by  the  vendor  to  disguise,  vitiates  the  sale ;  (c) 
but  it  is  not  so  clear,  whether  his  knowledge  of  the  faults  will,  if 
he  use  no  artifice,  have  that  effect,  {d)  It  seems  that  if  the  vendee 
knew  a  misdescription  to  be  such,  he  cannot  avoid  the  sale  on  ac- 
count of  it.  (e)  And,  though  a  vendee  who  has  been  imposed  upon, 
has,  in  every  case,  a  right  to  repudiate  the  contract ;  and  may,  if 
he  have  paid  his  money,  recover  it  back  from  the  seller ;  yet  he 
must  elect  to  avoid  the  contract  as  soon  as  he  discovers  the  fraud : 
if  he  lie  by,  and  treat  the  property  as  his  own,  he  %s'ill  be  consid- 
ered as  having  elected  to  confirm  the  transaction,  and  that  even 
though  he  subsequently  has  discovered  a  new  incident  in  the  fraud, 
for  that  does  not  give  him  a  new  right  to  rescind,  but  merely 
strengthens  the  evidence  of  the  vendor's  dishonesty.  (/)  It  was 
once  said,  {g)  that  the  vendor  cannot  maintain  an  action  on  his  con- 

(a)  Meadows  v.  Tanner,  5  IMadd.  34. 

(6)  Bexwell  v.  Christie,  Cowp.  395.  Early  v.  Garrett,  9  B.  <fe  C.  928.  Ilill  v. 
Gray,  1  Stark.  434.  Duke  of  Norfolk  v.  Wortlij-,  1  Camp.  340.  Schneider  v.  Heath, 
3  Camp.  606.  Baglehole  v.  Walters,  3  Camp.  154.  Pickering  v.  Dowson,  4  Taunt 
'J'ZQ.     Jones  v.  Bowden,  ibid.  847.     Eegina  v.  Kenriek,  5  Q.  B.  49. 

(c)  Baglehole  v.  Walters,  3  Camp.  154. 

{(1)  Ibid.  Mellish  v.  Motteux,  Peake,  115.  By  water  v.  Richardson,  1  Ad.  &  Ell. 
SOS.     Barber  v.  Morris,  1  M.  &  Rob.  62. 

(e)  Dyer  v.  Hargrave,  10  Ves.  jun.  505.     See  Barber  v.  Morris,  1  M.  ct  Rob.  62. 

(/)  Campbell  v.  Fleming,  1  Ad.  &  E.  40. 

{g)  Bryan  v.  Lewis,  R.  &,  M.  38G.  See  Maegregor  v.  Lowe,  R.  &  M.  57  ;  and  the 
remarks  of  Abbott,  C.  J.,  in  Lorymer  v.  Smith,  1  B.  &  C.  3.  The  Court  will,  if  pos- 
sible, construe  a  contract  so  as  to  hinder  it  from  bearing  the  construction  of  a  wager, 
ex.  gr.,  where  the  bought  and  sold  note  was  "Sold  for  J.  S.  to  A.  B.,  about  32  tons, 
more  or  less,  of  Riga  Rhine  Hemp,  on  the  arrival  per  Fanny  and  Almira,  at  82^.  10s. 
per  ton."  This  was  construed  to  mean  that  the  hemp  should  be  sold  if  it  arrived,  not 
to  import  an  engagement  that  it  should  arrive.  Boyd  v.  Siffkin,  2  Camp.  326. 
Hawes  v.  Humble,  cited,  ibid.  Hayward  v.  Scougall,  2  Camp.  56.  But  where  the 
contract  was  for  hemp  "to  be  shipped  on  or  before  the  31st  August,  Old  St^de,"  this 
was  held  to  import  an  undertaking  that  the  hemp  should  be  shipped.  Splidt  v. 
Heath,  2  Camp.  57,  n.  In  Alewyn  v.  Prior,  R.  &  M.  406.  Agreement  for  the  "deJivery 
of  goods  011  arrival  to  be  delivered  with  all  convenient  speed,  but  not  to  exceed  a 
given  day,"  the  arrival  in  time  is  a  condition  precedent,  and  if  they  do  not  arri  co  ia 


C44  MERCANTILE  CONTRACTS. 

Duties  of  Vendee. 

'  •ferret  to  sell  and  deliver,  at  a  future  day,  goods  wliic^  at  the  time 
of,  so  contracting  he  had  not  in  his  possession,  had  not  contracted 
to  buy,  and  had  no  expectation  of  receiving  by  consignment ;  such 
a  transaction  amounting  to  a  wager  on  the  price.  This  doctrine  is, 
however,  overruled.  (A) 

if  the  goods  have  been  delivered,  and  the  vendee,  .after  that, 
neglect  to  pay  the  price,  the  vendor  may  recover  it  in  an  action  for 
goods  sold  and  delivered ;  nay,  there  are  instances  in  which  he  has 
been  allowed  to  waive  the  tort  and  recover  in  this  form  of  action, 
against  one  who  had  wrongfully  and  fraudulently  gained  possession 
of  them,  {i)  But  he  cannot  recover  in  assumpsit,  before  the  time 
of  credit,  if  there  be  one,  has  expired :  although  the  fraud  of  the 
defendant  be  such  as  would  entitle  him  to  rescind  the  contract,  and 
bring  trover  for  the  goods  immediately,  (j) 

It  sometimes  happens  that  there  is  such  a  difference  between 
the  goods  delivered  and  their  description  in  the  bargain,  as  would 
have  justified  the  vendee  in  refusing  to  receive  them;  notwith- 
standing which,  he  has  taken  therri  into  his  possession,  and  made 
use  of  them.  In  such  a  case,  it  has  been  thought  that  his  conduct 
would  be  taken  to  amount  to  a  confession  that  the  vendor  had  per- 
formed his  contract,  and  that  he  would  be  obliged  to  pay  the  whole 


time  •without  default  of  the  vendor  the  contract  is  null.  See  the  cases  cited  in  the 
note,  ibid.  In  Lovatt  v.  Hamilton,  5  M.  &  V-  639,  the  contract  was,  "Respected 
friends,  we  have  this  day  sold  you  50  tons  of  palm  oil  to  arrive  per  Mansfield,  at  32Z. 
per  ton,  casks  to  be  returned  and  paid -for.  In  case  of  non-arrival,  or  the  vessel's  not 
having  so  much  in  after  delivery  of  foi'mer  contracts,  this  contract  to  be  void."  The 
Mansfield  was  loaded  abroad  with  315  tons  of  oil,  but  transhipped  j^art  bona  fide,  and 
arrived  with  235  tons,  of  which  228  were  required  for  former  contracts.  Held,  that 
the  arrival  of  the  oil  in  the  Ilansfield  was  a  condition  precedent^  and  that  the  vendee 
was  not  entitled  to  the  part  transhipped.  2.  That  the  contract  for  50  tons  was 
entire,  and  that  the  vendee  was  not  entitled  to  the  seveu  that  did  arrive  per  Mans- 
field. To  the  same  effect  are  Stockdale  v.  Dunlop,  6  M.  <k  "W.  224,  and  Johnson  v. 
Macdonald,  9  M.  &  W.  600. 

{h)  Hibblewhite  v.  M'Morine,  5  M.  &  W.  462.  M'Callan  v.  Mortimer,  9  M.  & 
W.  62, 

(i)  Hill  V.  Perrott,  3  Taunt.  274,  Biddle  v.  Levy,  1  Stark.  20,  per  Gibbs,  C.  J 
Sed  vide  B.  N.  P.  130.  Lee  v.  Shore,  1  B.  <fe  C.  94.  Lucas  v.  Godwin;  3  Bingh, 
N,  C.  12.1. 

(j)  Ferguson  v.  Carrington,  9  B.  &  C.  59.     Shutt  v.  Smith,  4  Tyrwh.  1019.     Se«~ 
De  Symonds  v.  Minchwick,  1  Esp.  430.    Read  v.  Hutchinson,  3  Camp.  352. 


CONTRACTS  OF  SALE.  ^45 


Duties  of  Vendee. 


price  stipulated,  {k)  And,  indeed,  it  has  been  lield,  that  where  the 
vendee  had  expressly  stipulated  that  they  should  be  returned,  if  y 
not  approved  of,  his  keeping  them  for  an  unreasonable  time  pre-  ^  / 
eluded  him  from  doing  so.  (Z)  But  there  are  some  cases  in  which  v 
it  would  be  impossible,  or  very  diflicult,  to  return  the  goods;  for 
instance,  where  they  consist  of  bricks  and  timbers  put  together  in 
the  shape  of  a  building ;  or  the  breach  of  contract  may  not  have 
been  discovered  till  the  articles  have  been  received  and  used  by  the 
vendee.  In  such  a  case,  it  was  formerly  thought  that  the  vendor 
ought  to  recover  the  whole  price,  and  the  vendee  to  bring  a  cross 
action  for  the  breach  of  contract,  (m)  It  now,  however,  is  agreed, 
that  the  vendee  may,  in  the  action  by  the  vendor,  give  evidence  of 
the  breach  of  contract,  and  that  the  vendor  shall  not  recover  more 
than  the  value  of  the  benefit  which  the  vendee  has  actually  derived: 
and  therefore,  where  there  has  been  no  benefit  derived,  shall  re- 
cover nothing  at  all.  (72)  And  this  rule  holds,  even  when  the 
vendee's  complaint  is,  that  the  vendor  has  not  complied  with  an 
express  warranty,  (0)  as,  for  instance,  that  a  horse  is  sound :  in 
which  case,  it  is  clear,  that  no  acceptance  of  the  goods  can  amount 


(k)  Grimaldi  v.  White,  4  Esp.  95.  Fisher  v.  Samuda,  1  Camp.  190.  Groning  v. 
Mendham,  1  Stark.  257.  Hunt  v.  Silk,  5  East,  449.  Sed  qucere,  for  it  seems  mere 
evidence  by  admission;  et  vide  Allen  v.  Cameron,  1  C.  <fe  M.  832.  See  Campbell  v. 
Fleming,  1  Ad.  &  E.  40,  and  Fachardson  v.  Dunn,  2  Q.  B.  223,  wliere  silence  for  a  week 
was  held  an  assent  to  a  shipment  of  p.  smaller  quantity  tlian  that  mentioned  in  the 
order. 

(l)  Beverley  v.  Lincoln  Gas  Light  Co.,  6. Ad.  &  E.  829.  Bianchi  v.  Nash,  1  M.  & 
W.  545.  See  Chapman  v.  Morton,  11  M.  &  W.  534,  and  Campbell  v.  Fleming,  1  Ad. 
&  E.  40. 

(m)  Broom  v.  Davis,  7  East,  47  9,  in  nota. 

(n)  See  Farnsworth  v.  Garrard,  1  Camp.  38.  Basten  v.  Butter,  7  East,  479.  Okel 
V.  Smith,  ]  Stark.  107.  Allen  v.  Cameron,  1  C.  &  M.  832.  Chappel  v.  Hiokes,  2  C.  A 
M.  214,  4  Tyrwh.  44.  Cousins  v.  Padden,  4  Dowl.  492.  Grounsel  v.  tamb,  1  M.  &  W 
352.  The  action  of  the  vendor  ought  to  be  indtbitatis  assiimpsH  for  the  labor  he  has 
performed,  not  on  the  special  contract,  ibid.  In  Thornton  v.  Place,  1  M.  &  Hob.  218, 
Mr.  J.  Parke  said  that  wliere  work  agreed  to  be  done  according  to  a  speeificatioa 
varied  from  that  specification,  the  plaintiff  could  not  recover  either  the  specified 
price  or  the  actual  value,  but  must  recover  the  specified  price  subject  to  a  deductioa 
of  the  sum  which  it  v/ould  take  to  alter  the  work  so  as  to  make  it  correspond  with 
the  specification.  a 

(o)  Street  v.  Blay,  1B.&  Ad.  456.  Cormae  v.  Gilles,  7  East,  480.  King  v.  Boston, 
*l  East,  481  n.     Poulton  v.  Lattimore,  9  B.  &  C.  259. 


64G  MERCANTILE  CONTRACTS. 

Illegality  of  Contract  an  Excuse  for  Non-performance  by  either  Party. 

to  a  conclusive  recognition  that  the  vendor  has  performed  his  con- 
tract (though  a  presumption  to  that  effect  may  arise  from  long 
silence  on  the  part  of  the  vendee),  {p)  and  that  a  cross  action  may, 
the  vendee  please,  be  brought  upon  the  warranty,  {q) 

A  question  has  sometimes  arisen,  whether  a  vendee,  who  has 
refused  to  accept  goods  on  the  ground  that  they  do  not  correspond 
with  the  order  or  sample,  can  justify  selling  them  as  the  vendor's 
agent  in  order  to  avoid  the  expense  of  export,  (r)  It  is  a  dangerous 
course  to  pursue,  and  never  ought  to  be  resorted  to  without  necessity. 

Where  goods  are  sold  without  an  express  stipulation  as  to 
price,  (s)  the  vendor  has  a  right  to  receive  as  much  as  they  are,  on 
a  reasonable  estimation,  worth  ;  even  although  the  contract  may  be 
one  which  it  was  necessary  to  reduce  to  writing,  in  order  to  satisfy 
the  Statute  of  Frauds ;  (t)  and,  in  the  absence  of  proof  as  to  their 
value,  it  is  presumed  that  they  were  of  the  lowest  price  of  goods 
of  that  description  ;  unless  the  vendee  have  himself  suppressed  the 
means  of  ascertaining  the  truth,  for  then  a  contrary  presumption 
arises,  {u) 

For  information  respecting  the  onode  of  payment,  the  reader  is 
referred  to  the  next  chapter. 


Section  Y. — Illegality  of  Contract  an  Excuse  for  Non-performance 

hy  either  Party. 

Either  party  may,  of  course,   excuse  himself  from  the  per- 
formance of  his  contract,  by  showing  that  it  is  illegal;*  as,  where 

(p)  Fielder  v.  Starkin,  1  11.  Bl.  17.  See  Hopkins  v.  Appleby,  1  Stark.  477.  Prosser 
V.  Hooker,  1  Moore,  106.     Pateshall  v.  Tranter,  3  Ad.  &,  E.  103. 

{q)  Buchanan  v.  Parnshaw,  2  T.  R.  745.  Street  v.  Blay,  2  B.  <fe  Ad.  456.  Pateshall 
V.  Tranter,  3  Ad.  <fe  K  103. 

(r)  Chapman  v.  Morton,  1 1  M.  &  W.  534. 

(s)  But  -where  there  has  been  a  sale  hy  parol,  at  a  fixed  price,  the  plaintiff  cannot, 
by  producing  a  written  agreement,  silent  as  to  price,  recover  on  a  quaiitum  valebat. 
Elmore  v.  Kingscote,  5  B.  &  C.  583.     Acebal  v.  Levy. 

{t)  Hoadley  v.  M'Laine,  10  Bingh.  482.     See  Acebal  v.  Levy,  ibid.  382. 

(^<)  Clunnes  v.  Pezzy,  1  Camp.  8,  et  notas.  Armory  v.  Delamirie,  1  Str.  505  ;  1  Smith 
L.  C.  151,  2d  ed. 

.    *  Craig  V.  The  State  of  Missouri,  4  Pet.  410.     Bartle  v  Coleman,  4  Pet.  184.    Hal« 
V.  Henderson,  4  Humph.  199.    Wherler  v.  Russell,  17  Mass.  257. 


COXTRACTS  OF  SALE.  647 


Illegality  of  Contract  an  Excuse  for  Non-performance  bj'  either  Part}'. 

the  goods  were  drugs,  sold  to  a  brewer  to  be  used  in  his  brewery,  (v) 
or  bricks  under  the  statutable  size,  {lu)  or  libellous  and  obscene 
prints,  {x)  or  dress  furnished  for  the  express  purpose  of  prostitu  -C 
tion ;  (?/)  nor  is  it  an  excuse  that  the  parties  thought  they  were  ac.  ''J^-l 
legally.  (2)  A  distinction  has  lately  been  drawn  between  cases  in  > 
which  the  contract  violates  a  law  designed  for  the  protection  of  the 
public,  and  those  in  which  it  violates  a  law  merely  designed  for  the 
protection  of  the  revenue;  and  it  has  been  said,  that  in  the  former 
cases  only  is  the  contract  void,  (a)  But  this  distinction  seems  to 
be  now  repudiated.  "  It  may  be  safely  laid  down,"  says  Parke,  B., 
delivering  judgment  in  Cojoe  v.  Rovjlands,  {h)  "  notwithstanding- 
some  dicta  apparently  to  the  contrary,  that,  if  i\e  contract  be  ren- 
dered illegal,  it  can  make  no  difference  in  point  of  law  whether 
the  statute  which  makes  it  so  has  in  view  the  protection  of  the 
revenue  or  any  other  object.  The  sole  question  is,  whether  the 
statute  means  to  prohibit  the  contract."  The  true  rule  is  that  laid 
down  by  Lord  Tenterden,  in  Wethend  v.  Jones,  (c)  Ilis  Lordship 
there  says,  "  where  a  contract,  which  a  party  seeks  to  enforce,  is, 
expressly,  or  by  implication,  {d)  forbidden  by  the  statute,  or  com- 
mon law,  no  court  will  lend  its  assistance  to  give  it  effect ;  and 
there  are  numerous  cases  in  the  books,  in  which  an  action  on  the 
contract  has  failed,  because  either  the  consideration  for  the  promise, 
or  the  act  to  be  done,  was  illegal,  as  being  against  the  express  pro- 
visions of  the  law,  or  contrary  to  justice,  morality,  and  sound 
policy,  (e)     But  where  the  consideration  and  the  matter  to  he  performed 

(y)  Langton  v.  Hughes,  1  M.  &  S.  593. 

(w)  Law  V.  Hodgson,  11  East,  300. 

(x)  Fores  v.  Johnes,  4  Esp.  98. 

(y)  Bowry  v.  Bennett,  1  Camp.  348. 

(z)  Wilkinson  v.  Loudonsack,  3  M.  &  S.  117. 

{a)  Brown  v.  Duncan,  10  B.  &  C.  93.  See  Hodgson  v.  Temple,  5  Taunt.  181. 
Johnson  v.  Hudson,  11  East,  180. 

(6)  2  C.  M.  tfe  R.  157. 

(c)  3  B.  &  Ad.  223, 

{d)  Ex.  ^r.,  where  a  statute  without  saj-ing  that  a  contract  shall  be  void,  inflicts  a 
penalty  on  the  maker;  for  a  penalty  implies  a  prohibition.  See  judgment  of  Tiudal, 
C.  J,  in  De  Begnis  v.  Armistead,  10  Bingh.  107. 

(e)  See  most  of  the  cases  collected  in  Selw.  N.  P.  8th  ed.  p.  65.  Starkio  on  Evi- 
dence, 2d  ed.  p.  885.  See  in  addition  to  the  cases  there  cited  De  Begnis  v.  Armistead, 
10  Bingh.  107.     Stephens  v.  Robinson,  2Tyrwh.  2S0;  2  C.  &  J.  209.     Little  v.  Poole, 


648  MERCANTILE  CONTRACTS. 

Illegality  of  Contract  an  Excuse  for  Non-performance  by  either  Party. 

are  both  legal,  we  are  not  aware  that  a  plaintiff  has  ever  been  pre- 
vented from  recovering,  by  an  infringement  of  the  laiv  not  contem- 
.sii^l&c?  hy  the  contract,  in  the  i^erformance  of  something  to  be  done  on 
^f^tlv^wf;"  and  therefore,  in  that  case,  a  rectifier  having,  contrary 
to  Stat.  6  Geo.  4,  c.  8.  ss.  115,  117,  sold  spirits,  without  a  permit 
expressing  their  true  strength,  was  allowed  to  maintain  an  action 
for  the  price.  (/) 

By  stat,  29  Car.  2,  c.  7,  {g)  "  no  tradesman,  workman,  laborer,  or 
other  person  whatever,  shall  do  or  execute  any  worldly  labor,  work, 
or  business  of  their  ordinary  calling,  except  works  of  necessity  and 
charity,  or  publicly  cry,  show  forth,  or  expose  to  sale  any  wares, 
merchandises,  fruit,  herbs,  goods  or  chattels  upon  the  Lord's  day." 
It  has  been  held  since  this  act,  that  the  sale  of  a  horse  on  Sunday, 
not  being  within  the  plaintiff's  ordinary  calling,  is  not  void,  {h) 
contra  where  it  is  so ;  {i)  the  statute  prohibiting  only  work  done  in 
a  man's  ordinary  calling,  {j)  It  has  been  said,  too,  that  a  contract 
of  sale  is  not  void  against  a  person  ignorant  that  the  vendor  was 
exercising  his  ordinary  calling  ;  {k)  but  this  is  questionable,  {l)  And 
where  a  heifer  was  sold  on  Sunday,  and  the  vendee  retained,  and 
on  a  subsequent  day  promised  to  pay  for  it,  he  was  held  liable  upon 
his  subsequent  promise,  (m)     There  is  an  exception  in  the  act,  in 

9  B.  <fe  C.  192,  and  R.  v.  Kilderby,  1  "Wms.  Saund.  309,  a,  in  notis.  Ex  parte  Daniel, 
14  Ves.  192.  Duvergier  v.  Fellowes,  10  B.  <t  C.  826.  Forster  v.  Taj-lor,  5  B.  &  Ad. 
887,  in  which  the  Court  attempts  to  reconcile  the  cases  by  supposing  tliat  in  the  cases 
in  -which  the  contract  was  held  not  to  be  avoided,  the  revenue  regulations  violated 
were  meant  to  attach  to  the  plaintiff  personally,  and  to  affect  him  with  a  penalty  in 
order  to  secure  the  license  duty,  but  in  no  way  to  prohibit  the  contract;  and  see 
Smith  V.  Mawhood,  14  M.  &.  W.  452. 

(/)  See  Pellecat  v.  Angell,  2  C.  M.  &  R.  311. 

Ig)  See  27  Hen.  G,  c.  5;  3  Car.  1,  c.  1. 

(A)  Drury  v.  Defontaine.  1  Taunt.  131.     See  Scarfe  v.  Morgan,  4  M.  &  W.  270. 

(i)  Ibid.  Fennell  v.  Ridler,  5  B.  &  C.  426.  See,  too,  Simpson  v.  Nicholls,  8  M.  <& 
W.  240,  and  the  form  of  plea  there. 

(j)  R.  V.  Whitnash,  7  B.  &  C.  596.  Peate  v.  Dickin,  3  Dowl.  173 ;  5  Tyrwh.  116; 
1  C.  M.  &  R.  422.    Norton  v.  Powell,  4  M.  &  Gr.  42. 

(^•)  Bloxam  v.  Williams,  3  B.  &  C.  232. 

(l)   Vide  Smith  v.  Sparrow,  4  Bingh.  84. 

(wi)  "Williams  v.  Paul,  6  Bingh.  653.  Sed  vide  Simpson  v.  Nicholls,  3  M.  &  "\V.  240. 
In  Scarfe  v.  Morgan,  4  M.  &,  W.  270,  a  distinction  was  pointed  out  between  the  effect 
of  the  act  on  contracts  executed  and  executory.  Vide  tamen  Fergusson  v.  Norman,  6 
Bingh.  N.  C.  76.     And  see  further,  Norton  v.  Powell,  4  M.  <fe  Gr.  42. 


CONTRACTS   OF  SALE.  G40 


Illegality  of  Contract  an  Excuse  for  Non-performance  by  eitlier  Party. 

favor  of  sales  of  meat  in  inns,  cook-shops,  and  victualling-houses, 
for  such  as  cannot  otherwise  be  provided,  and  of  crying  q^viw^Atig.- 
milk,  before  nine  in  the  morning,  and  after  four  in  the  ai  t  d^/^^'-lf'i) 
Mackerel  also  may  be  sold  on  Sundays,  before  and  after  uiTme 
service,  (o)  And  the  act  appears  to  apply  only  to  persons  ejusdem 
generis  with  those  mentioned  in  it,  {p) 

By  Stat.  7  Geo.  2,  c.  8,  entitled  An  act  to  prevent  the  infamous 
practice  of  stock-jobbing,  and  made  perpetual  by  10  Geo.  2,  c.  8,  all 
contracts  upon  which  any  premium  shall  be  given,  for  liberty  to 
put  upon,  deliver,  receive,  accept,  or  refuse  any  public  or  joint 
stock,  or  other  public  securities  whatsoever,  and  all  wagers  and 
contracts  in  the  nature  of  wagers,  and  all  contracts  in  the  nature 
of  putts  and  refusals,  relating  to  the  present  or  future  value  thereof, 
shall  be  null  and  void  to  all  intents  and  purposes :  and  all  premiums 
or  sums  of  money  paid  on  such  contracts  or  wagers  may  be  sued 
for  within  six  months  after  the  making  the  contract  or  wager,  and 
recovered  with  double  costs  of  suit,  (q) 

And  all  contracts  for  the  buying,  selling,  assigning,  or  transfer- 
ring any  such  stock  or  securities,  which  the  person  contracting  is 
not  at  the  time  of  contract  possessed  of  or  entitled  to,  are  void  to 
all  intents  and  purposes.  (?•) 

But  nothing  in  this  act  extends  to  prevent  any  person  from 
lending  money  on  such  stock  or  securities,  or  to  hinder  any  con- 
tract from  being  made,  for  the  re-delivering,  assigning,  or  transfer- 
ring the  same,  upon  repayment  of  the  sum  lent  with  interest,  (s) 

This  act  (breaches  of  the  provisions  of  which  are  punishable 
by  heavy  penalties)  is  considered  remedial  rather  than  penal ;  {t)  it 
applies  only  to  gambling  in  the  British  Funds,  (u)     Time  bargains 

(n)  See  further  on  this  act,  Chitty's  Collection  of  Statutes,  29  Car.  2,  c.  Y,  innotis; 
and  see  also  as  to  the  qualifications  under  which  a  baker's  business  may  be  conducted 
on  Sunday,  stat.  5  &  6  Wm.  4,  c.  37. 

(o)  Stat.  10  &  11  Wm.  3,  c.  24. 

(p)  Per  Parke,  J.,  Peate  v.  Dickin,  3  Dowl.  1*73,  1  C.  M.  &  R.  422.     R.  v.  Whitnash,  . 
7  B.  &  C.  596. 

(q)  Sect.  1. 

(r)  Sect.  8.  '* 

(s)  Sect.  11.  \ 

(0  Billing  V.  Flight,  6  Taunt.  419 ;  2  Marsh.  124. 

tu)  Henderson  v.  Bise,  3  Stark.  158.  Wells  v.  Porter,  2  Bing.  N.  C.  722.  Oakley 
;.  Uiijby.  ibid.  732.     Elsworth  v.  Cole,  2  M.  <t  W.  31.     Morgan  v.  Pcbrer,  3  Bingh, 


G50  MERCANTILE  COXTRACTS. 

Illegality  of  Contract  an  Excuse  for  Non-pt.rformance  by  either  I'aity. 

in  the  foreign  funds  might,  it  was  once  thought,  be  invalid  within 
lie  rainciple  laid  down  in  Bryan  v.  Levjis^{v)  and  above  stated: 
theyW  by  t/.however,  been  held  not  to  be  so  ;  (iv)  and  the  doctrine 
itselp4r*"overruled  by  Hihblewhite  v.  iriforine  {x)  and  Morthner  v. 
J/'  Callan^  (y)  in  which  last  case  the  Court  of  Exchequer  expressed 
its  opinion  that  it  is  not  necessary  that  the  party  selling  even  Bri- 
tish stock  should  be  actually  possessed  of  it  at  the  time  of  contracting 
the  sale,  provided  the  intention  was  that  there  should  be  a  real  lojia 
fide  delivery  of  the  stock  sold,  not  a  mere  wager  on  the  price.  This 
case  was  afterwards  carried  to  the  Exchequer  Chamber,  where  the 
iudges  thouo-ht  that  there  was  a  substantial  distinction  between  an 

JO  O 

executory  contract  to  transfer  stock,  of  which  the  intended  vendor 
was  not  possessed,  and  a  contract  to  j)ay  for  the  same  stock  after  it 
had  been  actually  transferred  in  pursuance  of  such  executory  agree- 
ment ;  the  latter  contract  they  conceived  to  be,  at  all  events,  legal, 
being  supported  by  a  new  consideration,  namely,  the  actual  trans- 
fer, and  being  conformable  to  the  general  policy  of  the  act,  which 
is  studiously  framed  with  the  view  of  securing  an  actual  transfer.  (2) 
Omnium  is  within  the  act.  (a)  The  provisions  do  not  apply  to 
cases  where  the  person  agreeing  to  transfer  is  actually  possessed  of 
the  stock,  and,  therefore,  not  to  a  loan  of  stock,  with  an  undertak- 
ing to  replace  it ;  (h)  a  person  who  has  omnium  potentially  in  pos- 
session may  contract  to  sell  it.  (c)  And  it  would  seem,  from  a  late 
decision  of  the  Exchequer,  that  the  act  does  not  apply  to  any  case 
in  which  the  stock  has  actually  been  transferred,  {d) 

A  sale  may  be  illegal  for  contravening  those  enactments  of  the 

N.  C.  457.  Robson  v.  Fellows,  3  Bingh.  N.  C.  392.  Sed  vide  Rossum  v.  Taylor, 
Cliitty's  Statutes,  1st  ed.  1032,  n.  b.  The  act  does  not  apply  to  railway  shares, 
Hewitt  V.  Price,  4  M.  &  Gr.  355. 

(v)  R.  &  M.  386. 

(m)  Wells  V.  Porter,  2  Bingh.  Is".  C.  22.  Elsworth  v.  Cole,  2  M.  «fe  "W.  31.  Mor- 
gan V.  Pebrer,  3  Bingh.  N.  C.  457. 

(x)  5  M.  &  W.  462. 

(y)  7  M.  &  W.  20.     In  error,  9  M.  &  W.  640 ;  and  on  motion,  6  M.  &  W.  76 

{z)  M'Callan  v.  Mortimer,  9  M.  &  W.  641. 

(a)  Brown  v.  Turner,  2  Esp.  631  ;  7  T.  R.  630. 

(b)  Saunders  v.  Kentish,  8  T.  R.  165.  Child  v.  Marley,  8  T.  R.  610.  Lightfoot  v. 
Creed,  2  B.  Moore,  265.     See  Maddock  v.  Rumball,  8  East,  304. 

(c)  Oliverson  v.  Coles,  1  Stark.  496. 

Id)  Mortimer  v.  M'Callan,  7  M.  &  W.  20. 


CONTRACTS  OF  SALE.  651 


Illegality  of  Contract  an  Excuse  for  Non-performance  by  either  Part}'. 

Legislature  which  aim  at  the  establishment  of  uniformity  of  weights 
and  measures,  (e)  By  stat.  5  Geo.  4,  c.  74,  the  operation  of  v^Iuicd. 
was,  by  6  Geo,  4,  c.  12,  postponed  to  January  1,  1826,  ■  ^  'jlpi??erikl 
standard  yard,  pound,  gallon,  and  bushel  for  heaped  measui*.?,  were 
fixed,  and  the  principle  laid  down  on  which  they  might  be  renewed 
if  lost  or  destroyed.  Models  and  copies  of  these  and  their  parts 
and  multiples  were  to  be  deposited  at  the  Chamberlain's  office, 
Westminster,  and  sent  to  London,  Edinburgh,  Dublin,  and  other 
cities  and  places.  The  magistrates  were  to  procure  them  for  the 
use  of  their  respective  counties,  and  all  contracts  were  to  be  gov- 
erned by  these  standards,  unless  express  agreement  were  made  to 
the  contrary ;  and  if  it  were,  unless  the  proportion  of  the  local  or 
special  measure  to  the  standard  was  specified  in  the  agreement,  such 
agreement  should  be  null  and  void.  (/) 

These  statutes  were  amended  by  4  &  5  Wm.  4,  c.  49,  which, 
after  continuing  in  force  from  13th  August,  1834,  to  9th  Septem- 
ber, 1835,  was  repealed  by  stat.  5  &  6  Wm.  4,  c,  63.  That  act 
recites  5  Geo.  4,  c.  7,  and  6  Geo.  4,  c.  42,  and  in  sect.  3,  repeals  so 
much  of  them  as  requires  weights  and  measures  to  be  copies  in 
shape  of  those  deposited  in  the  Exchequer,  or  allows  the  use  of 
weights  and  measures  not  in  conformity  with  the  imperial  standard, 
or  allows  goods  to  be  bought  or  sold  by  any  weights  or  measures 
established  by  local  custom,  or  founded  on  special  agreement :  the 
doubt  raised  in  Watts  v.  Friend  is  thus  put  an  end  to. 

Sect.  4,  provides  for  stamping  and  verifying  weights  and  meas- 
ures corresponding  in  length,  weight,  and  capacity,  though  differing 
in  shape  from  those  deposited  at  the  Exchequer. 

Sect.  6,  abolishes  all  local  and  customary  measures,  and  inflicts 
a  penalty  on  persons  using  them. 

JSecis.  7  and  8,  abolish  the  heaped  measure,  and  allow  the  use  of 
the  bushel  instead. 


(e)  See  R.  v.  Major,  4  T.  R.  750.  Tyson  v.  Thomas,  1  M'Clel.  &  Y.  119.  Hospital 
of  St.  Cross  V.  Howard  de  Walden,  6  T.  R.  338.  Noble  v.  Durrell,  3  T.  R.  271.  AYatts 
V.  Friend,  10  B.  <fe  C  446. 

(/)  See  Watts  v.  Friend,  10  B.  &  C.  448,  in  which  it  was  contended  that  a  sale,  by 
the  Winchester  measure,  formerly  the  standard  of  the  kingdom  (R.  v.  Major,  4  T.  R. 
750),  was  still  legal,  the  Court  appeared  to  think  otherwise;  but  the  point  was  not 
decided. 


652  MERCANTILE  CONTRACTS. 

Illegality  of  Contract  an  Excuse  for  Non-performance  by  either  Party. 

Sect.  9,  directs  that  coals  be  sold  by  weight,  and  not  by  meas- 

Ac\  •^.'■'/  enacts  that  avoirdupois  weight  shall  alone  be  used,  ex- 
cept m  the  sale  of  gold,  silver,  platina,  and  precious  stones,  which 
may  be  sold  by  troy ;  and  drugs,  which  may  be  sold  retail  by  apo- 
thecaries' weight. 

Sect.  11,  enacts  that  the  stone  shall  contain  fourteen  pounds,  the 
hundred-weight  eight  stones,  and  the  ton  twenty  hundred-weight. 

By  Sect.  12,  the  contents  of  weights  and  measures  are  to  be 
stamped  on  them. 

Sect.  13,  prohibits  weights  made  of  lead  or  pewter,  except 
when  cased  with  brass,  copper,  or  iron,  and  stamped  and  marked 
cased. 

There  are  many  other  sections  which  provide  for  the  ascertain- 
ment of  certain  rents  and  tolls,  the  mode  of  providing  copies  of  the 
standard  weights  and  measures,  the  appointment  of  officers  to  be 
called  inspectors  of  weights  and  measures,  their  powers,  duties,  re- 
muneration, &c. 


CHAPTER  XIII. 

CONTRACTS     OF     DEBT 

Sect.  1.  Definition  of  contract. 

2.  Duty  of  debtor. 

3.  Duty  of  creditor. 


Section  1. — Definition  of  Contract. 

A  CONTRACT  cf  debt  is  defined  by  Sir  TV.  Blackstone,  to  be  that 
■wliereby  a  chose  in  action,  or  right  to  a  certain  sum  of  money,  is 
mutually  acquired  and  lost ;  and  he  remarks,  that  it  may  arise  from 
any  of  the  other  contracts ;  as,  in  case  of  sale,  if  the  price  be  not 
paid  in  ready  money,  the  vendee  becomes  indebted  for  its  amount 
to  the  vendor,  and  the  vendor  has  the  property  in  this  price,  as  a 
chose  in  action,  by  means  of  this  contract  of  debt.  Any  contract, 
in  short,  whereby  a  determinate  sum  of  money  becomes  due  to  any  "^ 
person,  and  is  not  paid,  but  remains  in  action  merely,  is  a  contract 
of  debt;  {of'  and,  as  the  consideration  of  this  contract,  therefore, 

(a)  BI.  Comm.  465.  Sums  whicli  are  paid  to  the  credit  of  a  customer  with  a 
banker,  though  usually  called  deposits,  are  in  truth  loans  by  the  customer  to  the 
banker.  Sims  v.  Bond,  5  B.  &  Ad.  389.  Carr  v.  Carr,  1  Meriv,  548,  n.  Devaynes  v. 
Noble,  ibid.  568.  Foley  v.  Hill,  1  Phill.  899.  Pott  v.  Clegg,  16  M.  &  "W.  321.  A 
common  evidence  of  loan  is  what  is  called  an  I.  0.  TJ.  It  requires  no  stamp,  and  is 
prima  facie  evidence  of  a  loan  from  the  party  who  signs  to  him  who  produces  it. 
Douglas  V.  Holme,  12  Ad.  &  E.  641.     Curtis  v.  Richards,  1  M.  &  Gr.  46. 

*  A  general  depositor  of  money  in  an  insofveat  bank,  is  a  general  creditor,  and 
entitled  to  no  preference  over  bill  holders  and  other  creditors.  In  the  matter  of 
The  Franklin  Bank,  1  Paige,  249.  It  was  decided  in  Pott  v.  Clegg,  cited  by  the  au- 
thor, that  the  relation  between  a  banker  and  a  customer  who  deposits  money  in  hii 
bank,  is  the  ordinary  relation  of  debtor  and  creditor,  with  the  superadded  obligation 
on  the  part  of  the  banker,  arising  out  of  the  custom  of  trade,  to  honor  the  drafts  cf 


354  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

will  illustrate  all  those  of  which  I  have  previously  treated,  it  has 
beent^Hl^rved  for  the  last  chapter. 


Section  II, — Duty  of  Debtor. 

The  parties  to  this  contract  are  called  debtor  and  creditor ;  the 
debtor's  duty  under  it,  is,  to  tender  payment  at  the  proper  time, 
i.  e.,  generally  speaking,  before  demand  made,  (5)  or  action  brought 
against  him;  (c)  but  if,  as  in  the  case  cf  a  bill,  there  be  a  day  spe- 
cially fixed  for  payment,  then  at  that  day ;  (d)  in  the  proper  mode, 
and  to  the  proper  amount :  the  creditor's,  to  receive  it,  and  make 
him  a  proper  acquittance.     AYe  will  consider  these  in  order. 

Mode  of  Payment,  (e)* — Where  the  creditor  has  himself  chalked 

(6)  Tyler  v.  Bland,  9  M.  <fe  "W.  338.     Cotton  v.  Goodwin,  1  M.  &  W.  147. 

(c)  Bi-iggs  V.  Calverle}-,  8  T.  R.  629. 

(d)  Poole  V.  Tumbridge,  2  M.  <k  W.  223.  In  cases  of  sale,  in  calculating  the  time 
of  credit,  the  day  of  sale  is  excluded,  and  semhle,  that  months  mean  calendar  months, 
as  well  in  a  case  of  open  credit  as  in  one  of  close  credit,  i.  e.  credit  by  bill.  Webb  v. 
Fairmaner,  3  M.  &  W.  473.     Hart  v.  Middleton,  2  Car,  &  K.  19. 

(e)  By  the  civil  law  payment  by  whomever  made  liberated  the  debtor — "  Nee  inter- 
est creditori  quis  solvat,  utrum  is  qui  debet  an  alius  pro  eo :  liberatur  enim  et  tdio  sol- 
vente  sine  sciente,  sive  ignoraiUe  debitore,  solutio  vet  invito  eo  fiatP 

Under  the  Roman  law  there  was  a  ceremony  called  Acceptilafio,  bj"  which  the 
creditor  acknowledged  himself  paid,  and  which  operated  between  him  and  his  debtor 
like  what  we  call  an  estoppel. — "  Est  acccptilatio  imaginaria  solutio — Quod  enim  ex  verho- 
rum  obligatione  Titio  debetur,  id,  si  vclit  Tttius  remittere,  poterit  sic  fieri  ut  patietur  hcec 
verba  debitorem  diecere — Quod  ego  tibi  promisi  habcs  ne  acceptum? 

Et  Titius  responderit — 

Habeo. 

Quo  gencre  {ut  d'lximus)  tanfum  ece  solvuntur  obligationes  quce  ex  verbis  consistunt, 
non  etiam  catercc.  Consentaneicm  enim  visum  est  verbis  factam  obligationem  aliis  posse 
verbis  dissolvi."     Inst.  3,  30. 

However,  though  this  sort  of  sham  payment  was  applicable  only  to  the  case  of  a 

his  customer ;  and,  consequentlj',  that  if  money  is  permitted  to  remain  in  the  bank- 
er's hands  for  six  years,  without  any  payment  by  him  of  the  principal  or  allowance 
of  interest,  the  Statute  of  Limitations  will  be  a  bar  to  its  recovery.  There  are  Ameri- 
can decisions  which  go  far  to  sustain  the  doctrine,  that  no  action  can  be  maintained 
for  a  deposit,  without  actual  demand  or  something  equivalent  thereto,  until  which 
time  the  Statute  of  Limitations  does  not  begin  to  run.  Downes  v.  Phoenix  Bank  of 
Zharleston,  6  Hill,  297.     Watson  v.  Phoenix  Bank,  8  Mete.  217. 

*  When  the  parties  have  agreed  on  a  particular  thing  as  a  medium  of  payment, 


CONTRACTS  OF  DEBT.  055 


Duty  of  Debtor. 


out  the  mode  of  payment,  it  will  be  sufficient  to  follow  liis  direc- 
tions ;  thus,  where  he  desires  that  the  bill  or  note  may  be  remitted 
by  the  post,  if  it  be  lost,  the  loss  will  fall  on  him.  (/)     But  delivery 

debt  due  by  express  contract,  an  acute  person,  called  Gallus  Aquilius,  invented  a 
mode  A  turning  all  duties  into  debts  by  express  contract,  and  then  paying  them  ofT 
in  tht  imaginary  mode  above  described.  In  order  to  effect  this,  he  made  the  parties 
first  agree  to  substitute  for  the  duty  an  express  contract  to  pay  money,  and  then 
that  contract  was  itself  got  rid  of  by  the  mock  payment  called  an  Acceptilatio.  The 
agrefiment  which  formed  the  basis  of  this  transaction  was  called,  in  honor  to  its  in- 
ventor, the  Aquiliaiia  Stipulatio : — "per  quam  contingit  ut  omnium  rerum  obligatio  in 
ftipulatum  dediocatur,  et  ea  per  acceptilationem  tollatur." 
(/)  Warwick  v.  Noakes,  Peake,  67. 


whether  it  be  lands,  goods,  or  labor,  and  the  agreement  has  been  carried  into  execu- 
tion, it  is  the  same  thing  in  legal  effect  as  though  the  like  sura  iiad  been  paid  in 
money.     It  is  so  even  as  a  question  of  pleading.     Gregory  v.  Mack,  3  Hill,  384. 

A  payment  in  counterfeit  bank-bills  is  a  nullity,  and  will  not  discharge  tlie  debt, 
though  both  parties  suppose  them  to  be  genuine.  Thomas  v.  Todd,  6  Hill,  340. 
Young  V.  Adams,  6  Mass.  182. 

A  person  giving  a  security  in  payment,  or  procuring  it  to  be  discounted,  vouches 
for  its  genuineness.  But  this  rule  does  not  extend  to  the  case  where  the  party,  when 
receiving  or  discounting  the  paper,  is  presumed,  from  his  relation  to  it,  to  have  the 
means  of  correct  knowledge  as  to  its  genuineness,  or  where  it  has  been  kept  for  an 
unreasonable  time  without  notice  to  the  other  party  of  its  spurious  character.  Bank 
of  St  Albans  v.  Farmers'  and  Mechanics'  Bank,  10  Vermt  141.  In  this  case  it  was 
held  that  the  amount  of  a  forged  check  paid  by  a  bank  to  an  innocent  holder  could 
not  he  recovered  back.  And  so,  in  the  case  of  The  Bank  of  the  United  States  r-.  The 
Bank  of  Georgia,  10  Wheat.  333,  6  C.  R.  120,  it  was  held,  that,  in  general,  a  payment 
received  in  forged  paper,  or  in  any  base  coin,  is  not  good ;  and  if  there  be  no  negli- 
gence in  the  party,  he  may  recover  back  the  consideration  paid  for  it,  or  sue  upon 
his  original  demand;  but  this  principle  does  not  apply  to  a  payment  made  bona  fide 
to  a  bank,  in  its  own  notes,  which  are  received  as  cash,  and  afterwards  discovered 
to  be  forged.  See  also  Gloucester  Bank  v.  Salem  Bank,  17  Mass.  33,  and  Pindall's 
Ex'ors  V.  North  W.  Bank,  7  Leigh.  617. 

"Bank-notes  constitute  a  part  of  the  common  currency  of  the  country,  and  ordi- 
narily pass  as  money.  When  received  as  payment,  the  receipt  is  always  given  for 
them  as  money.  They  are  as  good  a  tender  as  money,  unless  specially  objected  to ; 
and  as  Lord  Mansfield  observed,  in  Miller  v.  Race,  1  Bur.  Rep.  457,  they  are  not,  like 
bills  of  exchange,  considered  as  mere  securities  or  documents  for  debts."  10  Wheat 
333;  6  C.  R.  128.  See  also  Bayard  v.  Shunk,  1  Watts  <fe  Serg.  95;  Crutchfield  v.  Ro- 
bins, 5  Humph.  15 ;  Graham  v.  The  State,  5  Humph.  40 ;  Id.  140;  Phillips  v.  Blake, 
1  Mete.  156,  158. 

A  payment  in  current  bank-notes  discharges  the  debt,  although,  in  consequence 
of  th<*  previous  failure  of  the  bank,  of  which  both  parties  were  ignorant,  the  notes 
«rer«  <)f  no  -K^-lue  aX  the  'iime  of  payment     Baj-ard  v.  Shunk,  1  Watts  &  Serg.  92. 


656  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

to  a  bellman  in  the  street,  was,  in  one  case,  held  not  to  be  a  suffi- 
cient putting  into  the  post,  (g)  If  the  creditor  and  debtor  meet  and 
balance  their  account,  by  deducting  the  debt  out  of  some  other  de- 

(ff)  Hawkins  v.  Rutt,  Peake,  186.  This  ease,  however,  is  said  to  be  controverted 
by  a  late  decision,  of  which  I  have  been  unable  to  procui-e  a  note :  possibly  the  bell- 
man, in  Hawkins  v.  Rutt,  was  not  employed  by  government.  See  Pack  v.  Alexan- 
der, 3  M.  <fe  Scott,  189  ;  and  Skilbeck  v.  Garbett,  7  Q.  B.  846. 

Scruggs  V.  Gap,  8  Yerg.  175.  Edmonds  v.  Digges,  1  Grattan,  359.  Lowry  v.  Mur- 
rell,  2  Port.  280.  Camidge  v.  Allenby,  6  B.  &  C.  373 ;  13  E.  C.  R.  201.  And  see  also 
Young  V.  Adams,  6  Mass.  182,  185. 

But  in  New  York  the  contrary  has  been  held.  Ontario  Bank  v.  Lightbody,  11 
"Wend.  9;  S.  C.  13  "Wend.  101.  Thomas  v.  Todd,  6  Hill,  340.  See  also  Johnson  v. 
Titus,  2  Hill,  607.  And  in  Maine,  Frontier  Bank  v.  Morse,  22  Maine,  88 ;  Vermont, 
Wainwright  v.  Webster,  11  Vermt.  576;  and  New  Hampshire,  Fogg  v.  Sawyer,  9 
New  H.  365. 

A  promissory  note  is  payment  of  an  account  when  it  is  received  for  and  in  dis- 
charge of  such  account.  Sheehy  v.  Mandeville,  6  Cranch,  253.  In  Peters  i;.  Beverley, 
10  Pet.  532,  567,  it  is  said,  "The  law  on  this  subject  is  well  settled,  and  the  princi- 
ple well  and  succinctly  laid  down  in  the  case  of  James  v.  Hackly,  16  Johns.  277.  It 
is,  say  the  Court,  a  settled  doctrine,  that  the  acceptance  of  a  negotiable  note  for  an 
antecedent  debt,  will  not  extinguish  such  debt,  unless  it  is  expressly  agreed  that  it  is 
received  as  payment.  It  is  unnecessary  in  the  present  case  to  carry  the  principle  so 
far  as  to  say  there  must  be  an  express  agreement  for  that  purpose,  in  order  to  oper- 
ate as  payment :  but  the  evidence  must  certainly  be  so  clear  and  satisfactory  as  to 
leave  no  reasonable  doubt  that  such  was  the  intention  of  the  parties.  And  tlie  rule 
to  this  extent  is  settled  by  tiie  most  unquestionable  authority.  11  John.  513;  14 
John.  404;  2  Gill  &  John.  493;  7  Harr.  &  John.  92."  See  also  Bank  of  the  United 
States  V.  Daniel,  12  Pet.  57,  and  Arnold  v.  Camp,  12  John.  409. 

But  it  appears  to  be  now  settled  in  New  York,  that  even  an  express  agreement 
will  not  in  such  case  be  sufficient.  In  Frisbie  v.  Larned,  21  "Wend.  450,  after  decid- 
ing that  the  acceptance  of  the  note  of  a  third  person  in  payment,  was  prima  facie 
an  accord  and  satisfaction,  and  extinguished  the  debt,  the  Court,  Cowen,  J.,  proceed 
to  say,  "  The  case  is  different  from  that  where  a  party  gives  his  own  note  for  his  own 
debt,  which  is  receipted  as  in  full.  There,  on  default  of  payment,  the  creditor  has 
his  election  to  go  back  to  the  original  cause  of  action,  on  surrendering  the  note  to 
be  cancelled.  The  note  in  such  case  is  not  even  prima  facie  satisfaction.  But  it  is 
othei'wise  of  a  note  against  a  third  person,  transferred  by  the  debtor,  or  a  note  pro- 
cured from  a  third  person  as  surety,  and  accepted  as  satisfaction."  Citivg  New  York 
State  Bank  v.  Fletcher,  6  "Wend.  85 ;  Booth  v.  Smith,  3  "Wend.  66  ;  Kearslake  v.  Mor- 
gan, 5  T.  R.  513;  "VViseman  v.  Lyman,  7  Mass.  286,  290,  &c.  The  opinion  here  ex- 
pressed was  fully  confirmed  and  acted  on  in  the  cases  of  Cole  v.  Sackett,  1  Hill,  516 
and  "Waydell  v.  Luer,  5  Hill,  448,  in  which  it  was  held,  that  the  promissory  note  of 
a  debtor  given  for  a  precedent  simple  contract  demand  will  not  operate  as  a  pay- 
ment so  as  to  preclude  the  creditor  from  suing  on  the  original  consideration,  though 


CONTRACTS  OF  DEBT.  657 


Duty  of  Debtor. 


mand  by  the  debtor  against  the  creditor,  such  a  transaction  is  equi- 
valent to  actual  payment ;  (A)  and  so  in  an  agreement  that  goods 
furnished  by  the  debtor  shall  go  in  satisfaction  of  the  debt,  (i)  In 
the  absence  of  directions  from  the  creditor  there  must,  to  constitute 
a  legal  tender  of  the  debt,  be  an  actual  production  and  offer  of  the 
sum  due,  unless  the  creditor  dispense  with  it  by  a  declaration  that 
he  will  not  accept  it ;  {j)  and  this  tender  must  be  of  money^  if  be- 
yond 405.,  in  gold,  (^)  or  in  what  has  been  rendered  by  act  of  par- 
liament equivalent  to  money  for  that  purpose,  viz.,  notes  of  the 
Bank  of  England,  payable  to  bearer  on  demand,  which  are  a  legal 
tender  for  any  sum  ahove  Jive  pounds,  except  at  the  Bank  itself,  and 
its  branches.  (1)  But  although,  strictly  speaking,  a  legal  tender 
must  be  made  in  money,  if  required,  yet  a  tender  of  country  bank- 
notes, if  not  objected  to  on  that  account,  will  be  sufl&cient.  (m)    The 


(A)  Owens  v.  Denton,  5  Tyrw.  SCO ;  1  C.  M.  <&  R.  713.  In  such  a  case  the  balance 
struck  constitutes  a  new  demand,  and  the  Statute  of  Limitations  ruus  from  that  time 
only.     Ashley  v.  James,  11  M.  &  W.  542. 

(i)  Hooper  v.  Stephens,  4  Ad.  <fe  E.  71.     Hart  v.  Nash,  2  C.  M.  &  R.  337. 

{j)  Thomas  v.  Evans,  10  East,  101.  Dickinson  v.  Shee,  4  Esp.  67.  Glascott  v. 
Day,  5  Esp.  48.  Holland  v.  Phillips,  6  Esp.  46.  See  French  v.  Brook,  1  Bingh.  N.  C 
253.     See  Turner  v.  Crossley,  3  M.  <fe  W.  43. 

(k)  56  Geo.  3,  c.  68. 

(/)  Stat.  3  &  4  Wm.  4,  c.  6,  s.  98 ;  this  act  took  effect  from  1st  August,  1834,  and 
is  continued  by  7  <fe  8  Vict.  c.  32. 

(?n)  Polglass  V.  Oliver,  2  Tyi-wh.  92,  2  C.  <fe  J.  15,  where  the  other  cases  on  that 
subject  are  all  cited. 


given  under  an  express  agreement  that  it  was  to  be  received  in  full  satisfaction  and 
discharge.  And  that  the  giving  of  a  promissory  note  by  one  of  several  partners  or 
joint  debtors  for  a  demand  antecedently  due  from  all,  will  Diot  extingiu'sh  their  lia- 
bility, though  the  creditor  expressly  accept  the  note  in  satisfaction. 

In  the  recent  case  of  Marston  v.  Boynton,  6  Mete.  130,  it  is  said,  "  In  Massachu- 
setts it  is  held  that  the  acceptance  of  a  negotiable  note  is  prima  facie  evidence  of 
payment ;  but  it  is  so  held  because  such  is  the  presumed  intention  and  understand- 
ing of  the  parties.  But  it  is  open  to  proof  that  it  was  not  so  intended  and  imder- 
stood;  and  then  it  is  not  evidence  of  payment"  See  also  Butts  v.  Dean,  2  Mete.  76  ; 
Ilsley  V.  Jewett^  2  Mete.  168,  173.  As  to  a  note  not  negotiable,  Howland  v.  Coffin, 
9  Pick.  51. 

It  is  probable  that  the  weight  of  authority  is  in  favor  of  the  rule  as  laid  down  in 
Peters  v.  Beverley,  10  Pet.  597,  and  quoted  above.     See  the  cases  collected  in  Chitty 
on  Contracts,  6th  Am.  edition,  767. 
42 


658  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

tender  of  a  larger  sum  than  the  sum  due  is  legal ;  (?z)  but  a  tender 
of  a  larger  sum,  requiring  change,  is  not  so ;  (o)  nor  is  a  tender  good 
if  accompanied  by  a  condition,  (p)  as  that  a  document  shall  be 
given  up  to  be  cancelled,  or  a  receipt  in  full,  or  even  a  stamped  re- 
ceipt (q)  given,  or  that  it  shall  be  received  as  all  thai  is  due,  (?•)  or,  it 
seems,  with  a  protestation  against  the  creditor's  right  to  receive.  (5) 
And  it  is  a  general  rule,  that  a  tender  shall  not  be  in  terms  which 
would  compel  the  creditor  to  make  an  admission :  thus, — "  I  tender 
you  24:1.  in  payment  of  rent  due  at  Lady-day  last,"  is  a  bad  ten- 
der, {t)  But,  '•'  /  am  come  ivith  the  amount  of  your  hill,''^  accompanied 
by  the  production  of  the  money,  has  been  held  sufficient,  {u) 

Some  of  these  cases  are  not  very  easily  reconcilable  inter  sc,  if 
the  particular  facts  only  be  looked  at.  The  principle,  however, 
that  a  tender  must  be  unconditional,  is  recognized  in  all  of  them.  The 
observations  of  the  Court  of  Queen's  Bench,  in  Hemvood  v.  Oliver^ 
seem  certainly  more  in  accordance  with  that  which  the  understanding 
of  a  man  of  business,  unembarrassed  with  legal  distinctions,  would 
suo-o-est,  than  some  of  the  decisions  at  nisi  prius  above  referred  to. 
"  The  defendant,"  says  Mr.  J.  Patteson,  "  who  makes  a  tender,  al- 
ways means  that  the  amount  tendered,  though  less  than  the  plain- 
tiff's  bill,  is  all  he  is  entitled  to  in  respect  of  it.  How,  then,  would 
the  plaintiff  preclude  himself  from  recovering  more,  by  accepting 
an  offer  of  part  accompanied  by  expressions  which  are  employed  in 
every  tender? — Expressio  eorum  quce  tacite  insunt  nihil  operaiurJ^ 
At  the  same  time  it  must  be  observed,  that  in  the  very  case  then 
before  the  Court,  if  the  creditor  had  accepted  the  money  offered  in 

(n)  Dean  v.  James,  4  B.  &  Ad.  546.  "Wade's  case,  5  Rep.  114;  Noy,  'Z^  Beavans 
V.  Rees,  5  K  &  "W.  306. 

(o)  Robinson  v.  Cook,  6  Taunt.  336.  "Watkins  v.  Robb,  2  Esp.  "711.  Betterbee  v. 
Davis,  3  Camp.  70. 

(jo)  Mitchell  v.  King,  6  Car.  &  P.  23Y.  Evans  v.  Judkins,  4  Camp.  166.  Free  v. 
Kingston,  ibid  Huxham  v.  Smith,  2  Camp.  19.  Glascott  v.  Da}-,  5  Esp.  48.  See 
Hough  V.  May,  4  Ad.  &  E.  954.     Sed  vide  Cole  v.  Blake,  Peake,  179. 

{q)  Sed  vide  Richardson  v.  Jackson,  8  M.  &  W.  298.  Laing  v.  Meader,  1  C.  &  P 
5.57 

(r)  Sutton  V.  Hawkins,  8  C.  <fe  P.  259.  Cheminant  v.  Thornton,  2  C.  tfc  P.  50. 
Strong  V.  Harvey,  3  Bingh.  304;  11  Bell,  72. 

(s)  Simmons  y.  Wilmot,  3  Esp.  91 ;  but  see  Manning  v.  Lunn,  2  Car.  &  K.  13. 

(t)  Marquis  of  Hastings  v.  Thurley,  675,  see  Griffith  v.  Hodges,  1  C.  &  P.  419. 

{u)  Henwood  v.  Oliver,  1  Q.  B.  409. 


CONTRACTS  OF  DEBT.  659 


Duty  of  Debtor. 


the  terms  then  used,  "  I  am  come  with  the  amount  of  your  bill," 
he  would  have  found  it  difficult,  afterwards,  to  persuade  a  jury 
that  he  had  not  admitted  it  to  be  truly  what  it  was  called,  "  the 
amount  of  his  bill."  It  is  true  he  might  have  guarded  himself  by 
saying,  "  I  am  willing  to  take  it,  but  my  claim  on  account  of  my 
bill  is  larger;"  but  to  require  him  to  do  that,  would  be  to  shift  the 
onus  of  keeping  clear  of  words  implying  an  admission  from  the 
debtor  to  the  creditor. 

However,  if  the  creditor  refuse  to  receive  the  money,  on  some 
other  account,  ex.  gr.^  on  the  ground  that  more  is  due  to  him,  and 
do  not  object  to  the  informality  of  the  tender,  that  will,  in  general, 
cure  such  informality ;  {v)  but  though  an  informal  offer  of  the 
money  may  be  thus  available,  yet  there  must  be  an  offer,  {yd)  A 
tender  to  an  authorized  agent  is  a  tender  .o  his  principal;  {x)  and  a 
tender  to  one  of  several  joint  creditors  is  a  tender  to  all.  (?/) 

It  has  been  questioned,  whether  there  can  be  a  good  tender  of 
jpart  of  a  debt  so  as  to  protect  the  debtor  from  an  action  for  that 
part,  if  it  turn  out  that  more  was  due,  and  the  creditor  objected 
to  the  tender  of  the  part  upon  that  ground.  The  decisions  in  the 
Queen's  Bench  and  Exchequer  seem  to  be  at  variance  on  this 
point.  (2)  Perhaps  the  true  distinction  may  be  found  to  be  be- 
tween a  demand  severable  into  parts,  and  an  entire  demand, 
such  as  that  in  Cotton  v.  Godwin^  where  the  debt  was  a  promissory 
note. 

Although,  as  we  have  seen,  there  can  be  no  legal  tender^  except 
of  cash  or  its  equivalent,  yet  payment  («)  is  often,  by  mutual  consent, 
made  in  a  bill  or  note,  the  taking  of  which  amounts  to  an  agree- 
ment to  give  the  debtor  credit  for  the  time  it  has  to  run,  and  sus- 


(y)  See  Wright  v.  Read,  3  T.  R.  554.  Lockyer  v.  Jones,  Peake,  180.  Black  v. 
Smith,  Peake,  88.  Cole  v.  Blake,  Peake,  179.  But  see  Iluxhara  v.  Suiith,  Glascott  v. 
Day,  supra.  Read  v.  Goldi-ing,  2  M.  &  S.  86,  Richai'dsou  v.  Jackson,  8  M.  &  W. 
298. 

{w)  Thomas  v.  Evans,  10  East,  101.  Dickinson  v.  Shee,  4  Esp.  67.  See  Douglas 
»>.  Patrick,  3  T.  R.  685. 

{x)  Goodland  v.  Blewith,  1  Camp.  477.     Kirton  v.  Braithwaite,  1  M.  tt  W.  310. 

(y)  Douglas  v.  Patrick,  3  T.  R.  683. 

(z)  See  Brandon  v.  Newington,  3  Q.  B.  915.  Tyler  v.  Bland,  9  il.  <fe  W.  338. 
Cotton  V.  Godwin,  7  M.  &  W.  147. 

(a)  Maillard  v.  The  Duke  of  Argyle,  6  M.  &  Gr.  40. 


6G0  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

pend  the  creditor's  remedy  in  the  mean  while  (Z*)  (except  in  cases 
where  the  debt  is  also  secured  by  a  specialty) ;  (c)  or  is  otherwise  of 
higher  degree  than  simple  contract,  as,  for  instance,  if  it  be  due  on 
account  of  rent,  {d)  Still  a  bill  or  note  may,  by  mutual  agreement, 
operate  as  immediate  payment ;  (e)  and  the  transferable  note  of  the 
debt  or  himself  may  be  taken  in  discharge  of  a  liquidated  debt  of 
a  greater  amount.  (/)  It  is,  however,  in  general,  no  satisfaction  of 
any  debt  or  demand,  for  which  it  has  been  given,  {g)  but  onlyprma 
facie  evidence  of  payment,  rendering  it  necessary  that  the  creditor 
should  account  for  it,  (Ji)  before  he  can  be  entitled  to  recover  the 
consideration,  (i)  Yet,  although,  generally  speaking,  it  is  no  satis- 
faction, it  will  operate  as  such  if  the  debtor's  liability  upon  it  be 
discharged  by  its  loss,  or  by  the  holder's  laches  or  folly,  as  if  he 


(i)  Stedman  v.  Gooch,  1  Esp.  3.  Kearslake  v.  Morgan,  5  T.  R.  513.  Dangerfield 
V.  Wilby,  4  Esp.  159.     Davy  v.  Phelps,  3  M.  &  Gr.  300. 

(c)  Drake  v.  Mitchell,  3  East,  251.  Curtis  v.  Rush,  2  V.  &  B.  419  ;  B.  N.  P.  182. 
Worthington  v.  Wigley,  3  Bingh.  N.  C.  454.  But  in  Baker  v.  AValker,  14  M.  &  W. 
465,  the  Court  held,  that  a  note  payable  at  a  future  day,  which  did  not  appear  to  be 
transferable,  given  for  and  on  account  of  a  judgment  debt,  was  good,  because  the 
inference  was,  that  the  creditor  agreed  to  suspend  his  remedy,  which  was  a  sufficient 
consideration. 

(d)  Davis  V.  Gyde,  2  Ad.  &  E.  623. 

(e)  Sard  v.  Rhodes,  1  M.  &  W.  153. 
(/)  Sibree  v.  Tripp,  15  M.  &  W.  23. 

{g)  Puckford  v.  Maxwell,  6  T.  R.  52.  Owenson  v.  Morse,  IT.  R,  64.  Tapley  v. 
Martens,  8  T.  R.  451.  Constable  v.  Andrews,  2  C.  <&  M.  208.  Tarleton  v.  Alhusen, 
2  Ad.  &  E.  32.  Hough  v.  May,  4  Ad.  &  E.  954.  Goodwin  v.  Coates,  1  M.  &  Rob. 
221.  Where  Parke,  J.,  held,  at  N.  P.,  that  a  vendor  taking  from  vendee  the  note  of 
a  third  party,  payable  two  months  after  date,  and  not  indorsed  by  the  vendee,  was 
not  bound  to  present  it  before  suing  for  the  price,  for  that  it  was  the  duty  of  tha 
maker  to  pay  it  withoiit  demand,  and,  therefore,  that  of  the  vendee  to  see  it  paid. 
Scd  vide  Mercer  v.  Cheese,  4  M.  &  Gr.  804. 

(//)  Per  Pollock,  C.  B.,  Griffiths  v.  Owen,  13  M.  &  W.  64. 

(i)  This  was  thought  to  be  so,  even  in  pleading ;  for  when  to  a  declaration  for 
goods,  labor,  and  an  account  stated,  the  defendant  pleaded,  that  the  plaintiff  drew 
for  and  on  account  of  part  of  his  demand  a  bill,  which  defendant  accepted;  tla 
court  of  C.  P.  seemed  to  think  the  plea  sufficient,  and,  that  if  the  bill  had  not  been 
indorsed  over,  the  plaintiff  ought  to  reply  that  fact.  Mercer  v.  Cheese,  4  M.  <fe  Gr. 
804.  In  a  more  recent  case,  however,  Price  v.  Price,  16  M.  &  W.  233,  the  Court  of 
Exchequer  held  such  a  plea  to  be  bad,  and  that  it  was  incumbent  on  the  party 
pleading  such  a  plea  either  to  show  that  the  instrument  was  not  due,  or  that  the 
plaintiff  had  negotiated  it. 


CONTRACTS  OF  DEBT.  661 


Duty  of  Debtor. 


alter  it  so  as  to  discbarge  the  parties  thereto;  (j/')  unless,  indeed, 
the  debtor  being  himself  the  maker  or  acceptor,  could  have  no 
remedy  over  on  it  against  any  other  party,  and  consequently  can-  ^ 
not  be  damnified  by  the  alteration ;  (^)  or  if  the  creditor  agree  to 
receive  it  as  cash  and  take  upon  himself  the  risk  of  its  being 
paid,  (J)  or  if  it  were  transferred  to  him  by  way  of  sale,  {m)  unless 
the  party  giving  it  knew  at  the  time  that  it  was  of  no  value,  for  that 
is  fraud ;  (?i)  upon  discovery  of  which  the  holder  may,  if  the  instru- 
ment were  given  in  payment  for  goods,  disaffirm  the  contract  of 
sale,  and  sue  for  them  in  trover,  (o) 

If  the  creditor  negotiate  the  bill  or  note  for  value,  and  without 
rendering  himself  liable,  it  will  operate  as  payment,  though  dis- 
honored. Therefore,  in  Bunneij  v.  Poyntz^^iS)  where  the  agent  of 
a  vendor  took  the  notes  of  the  vendee  and  another  for  the  price, 
discounted  them  with  his  banker,  and  indorsed  them,  but  the  ven- 
dor, his  employer,  did  not  indorse  them,  the  Court  held  that  the 
vendor  must  be  considered  as  having  received  payment  for  his 
goods,  and  could  not  retain  them,  though  his  agent  afterwards  be- 
came bankrupt,  and  the  notes  were  dishonored. 

But  if  the  creditor  negotiate  the  bill  or  note  so  as  to  render 
himself  personally  liable  upon  it,  in  that  case  it  will  not  operate  as 
payment  if  dishonored.  Thus,  in  Miles  v.  Gorton^  (q)  where  the 
vendee  of  some  hops  accepted  a  bill  for  the  price,  which  the  ven- 
dor drew,  and  afterwards  indorsed  and   negotiated,   it  was  held, 

(j)  Bayley  on  Bills,  5th  ed.  365.  Alderson  v.  Langdale,  3  B.  &  Ad.  660.  Bridges 
V.  Berry,  3  Taunt.  130.  Bishop  v.  Rowe,  3  M.  &  S.  362.  See  Slomau  v.  Cox,  5 
Tyrwh.  175 ;  1  C.  M.  &  R.  471. 

(k)  Atkinson  v.  Hawdon,  2  Ad.  &  E.  626. 

(Z)  Read  v.  Hutchinson,  3  Camp.  352.  Sard  v.  Rhodes,  1  M.  <fe  W.  153.  See 
Owenson  v.  Moi'se,  supra.  Camidge  v.  Allenby,  6  B.  <fe  C.  373.  Ward  v.  Evans,  2 
Ld.  Raym.  930.  Brown  v.  Kewley,  2  B.  &  P.  518.  Clerk  v.  Mundell,  12  Mod.  303; 
1  Sal.  124     Anon.,  12  Mod.  408.     Anon,,  ibid.  570. 

(m)  Fydell  v.  Clarke,  1  Esp.  447.  Ux  parte  Shuttleworlh,  3  Ves.  368.  Bank  of 
England  v.  Xewman,  B.  N.  P.  277.     Kv  parte  Isbester,  1  Rose,  23. 

(w)  See  Fenn  v.  Harrison,  3  T.  R.  767. 

(o)  Hawes  v.  Ramsbottom,  1  R.  <fe  M.  414.  Bishop  v.  Shillito,  2  B.  cfe  A.  329. 
Read  v.  Hutchinson,  3  Camp.  352.  Earl  of  Bristol  v.  Wilsmore,  1  B.  ife  C.  514.  Kilby 
V.  Wilson,  1  R.  &  M.  178. 

ip)  4:B.  &  Ad.  568. 

(q)  4  Tyrwh.  293  ;  2  C.  ife  M.  5  )4.     See  Tarleton  v.  Alhusen.  2  Ad.  &  E.  32. 


662  MERCANTILE  CONTRACTS. 


Duty  of  Debtor. 


that  on  the  vendee  becoming  bankrupt,  and  the  bill  being  dishon- 
ored, the  vendor's  lien  on  the  hops  revived.  The  reason  of  this 
distinction  appears  to  be,  that  in  the  former  case  the  vendor  has 
obtained  value  for  the  instrument,  which  value  he  cannot  be  com- 
pelled to  refund,  and  would,  therefore,  be  paid  twice,  if  permitted 
to  recover  the  price  of  the  goods.  But,  in  the  latter  case,  he  is,  as 
an  indorser,  compellable  to  refund  the  value  he  has  received.  And 
I  conceive,  that,  on  the  same  principle,  if,  instead  of  indorsing  the 
instrument,  he  were  to  give  it  in  payment  for  other  goods,  inasmuch 
as,  on  its  dishonor,  his  liability  for  those  second  goods  would  re- 
vive, so  also  would  his  right  to  sue  for  the  price  of  his  own  goods 
if  delivered,  or  to  retain  them,  if  in  his  possession,  if  not  delivered. 
However,  in  this  latter  case,  that  viz.  of  Miles  v.  Gorton,  till  he  has 
actually  taken  up  the  bill,  or  paid  for  the  other  goods,  it  is  uncer- 
tain whether  the  bill  will  prove  valuable  to  him  or  not;  and  it 
seems,  therefore,  that  he  ought  not  to  be  allowed  to  sue  for  the 
price  of  his  own  goods  till  that  uncertainty  has  been  determined, 
though  if  he  have  them  in  his  hands  he  may  retain  his  lien  on 
them,  as  in  Miles  v.  Gorton.  In  Tarleton  v.  Alhusen,  (r)  the  doctrine 
just  laid  down  was  carried  a  step  further,  and  it  was  held,  that 
when  the  vendor  took  a  bill,  and  indorsed  it  to  B.  &  Co.,  who  sued 
the  acceptor,  and  obtained  judgment,  but  did  not  sue  out  execu- 
tion, and  the  vendor  afterwards  took  up  the  bill,  he  was  not  to  be 
considered  paid  for  his  goods,  upon  the  principle  laid  down  before 
in  this  Book,  Ch.  I.,  viz.,  that  judgment  is  not  per  se  a  satisfliction. 

In  one  case,  payment  by  the  delivery  to  the  bankrupt  of  his 
own  dishonored  acceptance,  was  held  sufficient,  (s)  but  that  seems 
to  have  proceeded  on  the  ground  that  the  bankrupt's  conduct 
amounted  to  an  assent  to  receive  it  as  cash,  otherwise  it  would  be 
difficult  to  reconcile  the  case  with  Hough  v.  Ma?j.  {t) 

If  payment  is  to  be  made  by  a  bill  payable  at  a  certain  period, 
the  creditor  cannot,  even  if  the  bill  be  not  delivered  according  to 
aoreement,  commence  an  action  on  the  consideration,  till  the  expi- 
ration of  that  period,  though  he  may  sue  in  the  mean  time  upon 
the  special  contract,  and  complain  of  the  non-delivery  of  the  bill 

(r)  2  Ad.  &  E.  32. 

((«)  Mayer  v.  Nias,  1  Bingh.  311. 

It)  4  Ad.  &  E.  954. 


CONTRACTS  OF  DEBT  GG3 


Duty  of  Debtor. 


in  conformity  thereto ;  (u)  and  where  goods  were  sold,  at  six  months' 
credit,  payment  then  to  be  made  by  a  bill  at  two  or  three  months, 
this  was  considered  in  eflfect  a  nine  months'  credit,  (v) 

It  has  been  decided  that  a  tenant  may  pay  rent  due  to  the  supe- 
rior lord,  if  threatened  with  distress  by  him,  and  treat  it  as  a  pay- 
ment of  the  rent  due  to  his  own  landlord,  (w) 

2dl3'.  Amount  of  Payment. — Interest. — The  amount  of  the  sum 
due  to  the  creditor,  is  frequentl}'',  between  the  time  of  contract  and 
that  of  payment,  increased  by  the  addition  of  Interest."^ 

Interest  is,  and  always  was,  payable  where  there  has  been  a 
contract  to  that  eflfect,  express,  or  to  be  implied  from  c'rcumstances, 
the  usage  of  trade,  or  the  mode  of  dealing  between  the  parties ;  (x) 
and  also  upon  a  bond,  bill,  or  promissory  note,  (y) 

(m)  Helps  V.  Wintei'bottom,  2  B.  tfe  Ad.  431.  See  Dutton  v.  Solomonson,  3  B.  & 
P.  582.     Mussen  v.  Price,  4  East,  147.     Brook  v.  White,  1  K  R.  330.     Price  v.  Nixon, 

5  Taunt.  338.     Day  v.  Picton,  10  B.  <fe  C.  120.     Paul  v.  Dod,  2  C.  B.  800. 

(y)  Helps  V.  Winterbottora,  ubi  supra,  Parke,  J.,  dubitante. 

{w)  See  Sapsford  v.  Fletcher,  4  T.  R.  511.  Taylor  v.  Zamira,  6  Taunt.  524.  See 
Cannan  v.  Wood,  2  M.  &  W.  465. 

{x)  Eddowes  v.  Hopkins,  Dougl.  376.  Marshall  v.  Poole,  13  East,  98.  Porter  v. 
Palsgrave,  2  Camp.  472.  Beecher  v.  Jones,  2  Camp.  428.  Boj'ce  v.  Warburton,  2 
Camp.  480.  Robinson  v.  Bland,  2  Burr.  1077.  Arnott  v.  Redfern,  3  Bingh.  353. 
Nichol  V.  Thompson,  1  Camp.  52.  Bruce  v.  Hunter,  1  Camp.  467.  Moore  i'.  Vough- 
ton,  1  Stark.  487. 

(y)  Vernon  v.  Cholmondeley,  Bunb.  119.  Doman  v.  Dibdin,  1  R.  <fe  M.  381. 
Francis  v.  Wilson,  1  R.  <fe  M.  105.  Farquhar  v.  Morris,  7  T.  R.  124.  Sed  vide  Hogan 
V.  Page,  1  B.  <fe  P.  337.  See  Parker  «.  Hutchinson,  3  Ves.  183.  Upton  v.  Lord  Fer- 
rers, 5  Ves.  803.  When  goods  were  to  be  paid  for  by  bill,  interest  may  be  recovered 
on  the  price  from  the  time  when  the  bill  would  have  been  due.     Farr  v.  Ward,  8  M. 

6  W.  25.  And  where,  after  the  sale  of  a  carriage,  the  vendee  wrote  as  follows : 
"The  document  you  have  sent  me  appears  to  be  in  the  nature  of  a  bill,  and  being 
payable  to  your  order  is  good  in  the  market,  just  what  I  wished  to  avoid,  the  docu- 
ment I  have  wished  to  give  you  was  simply  my  promissory  note ;"  this  was  held 
evidence  sufficient  to  entitle  the  jury  to  give  interest  as  part  of  the  price.  Davis  v. 
Smyth,  8  M.  &  W.  399. 


*  The  general  rule  is,  that  interest  is  to  be  paid  according  to  the  law  of  the  place 
where  the  contract  is  made,  unless  the  paj'ment  was  to  be  made  elsewhere,  and  then 
it  is  to  be  according  to  the  law  of  the  place  where  the  contract  was  to  be  performed- 
2  Kent's  Com.  460,  note.     Boyce  v.  Edwards,  4  Pet.  111. 

Rule  of  calculation  where  there  have  been  partial  payments. — The  correct  rule,  in 


6G4  MERCAXTILE  COIs^TRACTS. 

Duty  of  Debtor. 

Ill  most  other  cases,  there  was  a  considerable  dispute  upon  the 
question  of  interest,  and  the  leaning  of  the  courts  seemed  on  the 
whole  against  allowing  it.  (z)  However,  bj  stat.  3  &  4  W.  4,  cap. 
42,  it  is  enacted,  that  upon  all  debts  or  sums  certain,  payable  at  a 
certain  time,  or  otherwise,  the  jury,  on  the  trial  of  any  issue  or  in- 
quisition of  damages,  may,  if  they  thinh  fit,  allow  interest  to  the 
creditor,  at  a  rate  not  exceeding  the  current  rate  of  interest,  from 
the  time  when  such  debts  or  sums  certain  were  payable,  if  such 
debts  or  sums  be  payable  by  virtue  of  some  written  instrument  at 
a  certain  time;  or,  if  payable  otherwise,  then  from  the  time  when 
the  demand  of  payment  shall  have  been  made  in  writing,  so  as 
such  demand  shall  give  notice  to  the  debtor  that  interest  will  be 
claimed  from  the  date  of  such  demand  until  the  term  of  payment, 
provided  that  interest  shall  be  payable  in  all  cases  in  which  it  is 
now  payable  by  law.  (a)  And  that  the  jury,  on  the  trial  of  any 
issue  or  inquisition,  may,  if  they  think  fit,  give  damages  in  the 
nature  of  interest,  over  and  above  the  value  of  the  goods  at  the 
time  of  the  conversion  or  seizure,  in  all  actions  of  trover  or  trespass 

(z)  See  Gordon  v.  Swan,  12  East,  419.  Iliggins  v.  Sargent,  2  B.  <fc  C.  348.  Arnott 
V.  Redfern,  3  Bingh.  353.  De  Ilavilland  v.  Bowerbank,  1  Camp.  50.  Calton  v. 
Bragg,  15  East,  223.  Trelawney  v.  Thomas,  1  H.  Bl.  303.  De  Bernales  v.  Fuller,  2 
Camp.  426.  Kieliol  v.  Thompson,  1  Camp.  52.  De  Bernales  v.  Wood,  3  Camp.  258. 
Blackmore  v.  Flemyng,  V  T.  R.  446.  Hilhouse  v.  Davis,  1  M.  &  S.  169.  Page  v.  New- 
man, 9  B.  &  C.  378.  Foster  v.  Weston,  6  Bingh.  709.  Edwards  v  Verc,  2  Nev.  & 
Mann.  123 ;  5  B.  <fe  Ad.  287.     Fruhling  v.  Sehroeder,  2  Bingh.  N.  C.  77. 

(a)  Sect.  28.  See  on  the  construction  of  this  section,  Attwood  v.  Taylor,  1  M.  & 
Gr.  279. 


general,  is,  that  the  creditor  shall  calculate  interest  whenever  a  payment  is  made. 
To  this  interest  the  payment  is  first  to  be  applied ;  and  if  it  exceed  the  interest  due, 
the  balance  is  to  be  applied  to  diminisli  the  principal.  If  the  payment  falls  short 
of  the  interest,  the  balance  of  interest  is  not  to  be  added  to  the  principal,  so  as  to 
produce  interest.  This  rule  is  equally  applicable,  whether  the  debt  be  one  which 
expressly  draws  interest,  or  on  which  interest  is  given  in  the  name  of  damages. 
Story  V.  Livingston,  13  Pet.  371.  Ciiitir/  Smith  v.  Sliaw,  2  Wash.  C.  C.  167  ;  3  Cowen, 
note  a,  87.  See,  also,  Jackson  v.  State  of  Connecticut,  1  John.  Ch.  R.  17 ;  Jones  v. 
Ward,  10  Yerg.  170.  The  mercantile  usage  differs  from  the  practice  of  the  courts. 
It  is  to  compute  interest  upon  the  various  payments  up  to  the  time  of  settlement, 
and  deduct  this  amount  from  the  sum  of  principal  and  interest  calculated  thereon  to 
the  same  time.  All  the  American  decisions  on  the  subject  of  interest  are  collated  in 
the  American  Leading  Cases,  vol.  i.  p.  511. 


CONTRACTS  OF  DEBT.  665 


Duty  of  Debtor. 


de  honis  asportatis,  and  over  and  above  the  money  recoverable  in 
all  actions  or  policies  of  insurance.  {jS)  And  where  a  writ  of  error 
has  been  sued  out  in  any  action  personal,  and  judgment  given  for 
the  defendant  thereon,  interest  shall  be  allowed  by  the  Court  of 
Error  for  such  time  as  execution  has  been  delayed  by  such  writ  of 
error,  (c) 

By  sect.  17  of  the  Aholiiion  of  Arrest  Act,  ^1  &  2  Vict.  cap.  110,) 
all  judgment  debts  carry  interest  at  four  jper  cent,  for  which,  as 
well  as  for  the  principal,  execution  may  issue. 

With  respect  to  Compound  Interest,  i.  e.,  interest  on  a  balance 
of  account,  debiting  the  debtor  with  former  intercat,  it  is  allowable 
where  there  is  a  contract  to  that  effect,  either  express  or  to  be  col- 
lected from  circumstances,  as  where  the  parties  had  been  in  the 
habit  of  dealing  on  those  terms,  (cZ)  or  a  banker's  customer  knew  it 
to  be  the  practice  of  the  house,  (e)  but  not  otherwise.  (/)* 

Usury. ^ — Immediately  connected  with  the  subject  of  interest  is 

(6)  Sect.  29. 

(c)  Ibid. 

(d)  Bruce  v.  Hunter,  3  Camp.  467.     Newal  v.  Jones,  M.  &  M.  449.    See  4  Madd. 
64,  n. 

(e)  Moore  v.  Voughton,  1  Star.  48*7. 
(/)  Dawes  v.  Pinner,  2  Camp.  586,  n. 


*  Compound  interest  has  not  been  allowed  generally  in  the  United  States,  and 
this,  although  the  contract  contains  a  stipulation  to  pay  interest  annuall3^  Ferry  v. 
Ferry,  2  Cush.  R.  92.  Hastings  v.  Wiswall,  8  Mass.  455.  Doe  v.  Warren,  7  Greenl. 
48.  See  also  Childers  v.  Deane,  4  Rand.  406.  Rhodes  v.  Blythe,  2  B.  Monr.  336. 
Van  Benschooten  v.  Lawrence,  6  J.  C.  R.  313.     Contra,  Pierce  v.  Rowe,  1  N.  H.  179. 

f  The  law  of  usury  has  been  discussed  with  the  utmost  fullness  and  learning  in 
the  American  courts.  It  is  impossible,  in  the  brief  compass  of  a  single  note,  to  do 
more  than  state  some  of  the  elementarj'  doctrines  upon  the  subject.  In  Lloyd  v. 
Scott,  4  Pet.  Rep.  223,  it  is  said,  that  "  the  requisites  to  form  an  usurious  transaction 
are  three:  1.  A  loan,  either  express  or  implied.  2.  An  understanding  that  the 
money  lent  shall  or  may  be  returned.  3.  That  a  greater  rate  of  interest  than  is 
allowed  by  the  statute  shall  be  paid.  The  intent  with  which  the  act  is  done  is  an 
important  ingredient  to  constitute  this  offence.  An  ignorance  of  the  law  will  not 
protect  a  party  from  the  penalties  of  usury,  whtre  it  is  committed ;  but  where  there 
was  no  intention  to  evade  the  law,  and  tlie  facts  which  amount  to  usurj',  whether 
the}'  appear  upon  the  face  of  the  contract  or  by  otlier  proof,  can  be  shown  to  have 
been  the  result  of  mistake  or  accident,  no  penalty  attaches."  The  bona  fide  sale  of 
a  note,  bond,  or  other  security,  at  a  greater  discount  than  would  amount  to  legal 


QQQ  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

that  of  usury,  the  law  concerning  which,  so  far  as  it  remains  in 
force,  is  regulated  by  stat.  12  Ann.  stat.  2,  c,  16,  which  enacts,  that 
no  person  shall  take  either  directly  or  indirectly,  for  loan  of  any 
moneys,  wares,  merchandises,  or  commodities,  above  the  value  of 
51  for  the  forbearance  of  lOOZ.  for  a  year,  and  so  after  that  rate, 
&c. ;  and  that  all  bonds,  contracts,  and  assurances,  for  the  payment 


interest,  is  not  per  se  a  loan,  and  therefore  usurious.  Nichols  v.  Fearson  ct  al.,  1 
Peters'  Rep.  103.  Rice  v.  Mather,  3  Wend.  62.  Munn  v.  Commission  Co.,  15  Johns. 
Rep.  44.  Cram  v.  Hendrick,  T  "Wend.  569.  But  where  a  note  is  made,  not  upon  a 
valuable  consideration,  but  for  the  purpose  of  raising  money  by  having  it  discounted 
at  a  rate  exceeding  legal  interest,  there  the  usury  enters  into  its  concoction,  and  the 
note  is  void.     S.  C.  Dunham  v.  Dey,  1 3  J.  R.  40. 

So  strong  was  the  language  of  the  English  statute,  that  in  Floyer  v.  Edwards, 
Cowp.  Rep.  112,  Lord  Mansfield  declared,  that  "if  the  transaction  was  in  real  truth 
a  loan  of  mon£y,  the  wit  of  man  cannot  find  a  shift  to  take  it  out  of  the  statute."  A 
sale  of  bonds,  notes,  stock,  or  even  goods,  wares,  and  merchandise,  if  resorted  to  for 
the  purpose  of  disguising  and  concealing  a  loan  of  money,  will  be  usurious  and  void. 
The  sale  of  depreciated  stock,  at  or  beyond  its  par  value,  is  an  artifice  which  has 
been  frequently  resorted  to  for  the  purpose  of  covering  an  usurious  loan. 

Among  the  cases  in  which  this  subject  is  most  elaborately  examined,  the  student 
is  particularly  referred  to  Stribling  v.  Bank  of  the  Valley,  5  Rand.  132 ;  Campbell  v. 
Shields,  6  Leigh.  517  ;  Bank  of  the  U.  S.  v.  Waggener  et  al,  9  Peters,  378;  Rapelye 
V.  Anderson,  4  Hill,  472. 

Although  tlie  interest  reserved  must  be  greater  than  is  allowed  by  the  statute,  it 
is  immaterial  what  shape  tlie  usurious  gain  assumes.  It  may  be  money,  property, 
or  the  use  of  real  or  personal  estate.  Pollard  v.  Baj'lor,  4  Henn.  &  Munf.  223. 
Shanks  v.  Kennedy,  1  A.  K.  Mars.  65.     Hamm  v.  Alen,  1  Bibb,  333. 

But  an  agreement  to  pay  a  certain  sum,  exceeding  the  lawful  rate  of  interest, 
provided  the  principal  is  not  paid  by  a  day  certain,  is  not  usurious.  The  borrower 
may  avoid  payment  of  the  sum  stated,  by  punctual  paj^ment  of  the  principal;  and 
hence  the  former  sum  is  considered  as  a  penaltj'.  And  if  a  loan  is  to  be  returned  at 
a  fixed  day,  with  more  than  the  legal  rate  of  interest,  depending  upon  a  casualty 
which  hazards  both  principal  and  interest,  the  contract  is  not  usurious ;  but  it  is 
otherwise  where  interest  only  is  hazarded.  Lloyd  v.  Scott,  4  Peters'  S.  C.  R.  203. 
Colton  V.  Dunham,  2  Paige's  Rep.  267. 

It  is  well  settled  that  a  charge  for  exchange,  unless  used  as  a  cover  for  usury,  is 
valid.  Andrews  v.  Pond,  13  Peters,  65.  Buckingham  et  ah.  v.  McLean,  13  How.  S. 
C.  Rep.  150.  Creed  v.  Commercial  Bank,  11  Ohio  Rep.  489.  Pilcher,  assignee,  <fec., 
V.  The  Banks,  7  B.  Monr.  648.  The  reason  why  the  addition  of  the  current  rate  of 
exchange  to  the  legal  rate  of  interest  does  not  constitute  usury,  is  that  the  former  is 
a  just  and  lawful  compensation  for  receiving  payment  at  a  place  where  the  money 
is  expected  to  be  less  valuable,  than  at  the  place  where  it  is  advanced  and  lent. 

The  student  will  find  the  various  American  statutes  on  the  subject  of  usury,  and 
the  decisions  of  the  different  states,  collected  in  the  treatise  of  Blydenburgh  on  Usury. 


CONTRACTS  OF  DEBT.  667 


Duty  of  Debtor. 


of  more,  shall  be  void,  and  that  any  person  receiving  more  shall 
forfeit  the  treble  value  of  the  loan,  {g) 

Usury,  within  the  meaning  of  this  act,  is  constituted  either  by 
a  direct  loan  and  receipt  of  interest  at  more  than  live  per  cent.,  or 
some  device  for  the  purpose  of  concealing  such  a  loan,  which 
really  existed.  (//)  A  loan  of  stock  was  usurious,  if  it  was  to  be 
repaid,  at  the  option  of  the  lender,  by  replacing  the  stock,  or  by 
the  produce  with  five  per  cent,  interest,  {i)  So  if  the  discounter 
of  a  bill  stipulated  for  a  premium  to  be  paid  to  the  agent  employed 
by  the  holder  to  discount  it,  such  premium  making,  with  the  dis- 
count, more  than  five  per  cent,  (y)  So,  too,  a  sum  taken  under 
the  name  of  commission  might,  in  reality,  be  a  mere  cloak  for 
usury,  (/v)  So  might  a  contract  for  an  annuity,  by  which  the  prin- 
cipal of  the  grantee  is  never  put  in  jeopardy,  {l)  though,  generally 
speaking,  annuity  transactions  are  not  within  the  usury  laws,  {m) 
In  all  cases  of  this  sort,  the  bona  fides  of  the  transaction  was  the 
point  in  question,  and  so  it  continues  to  be  in  cases  to  which  the 
recent  acts  do  not  extend.  Thus,  where  a  note  was  discounted  at 
five  per  cent,  by  the  lender  of  a  sum  of  money,  who  also  took  a 
mortgage  of  land  as  a  collateral  security,  the  transaction  being 
found  by  the  jury  to  be  bona  fide,  was  held  valid;  although  the 
recent  acts  do  not  extend  to  loans  secured  by  mortgages  of  real 
property,  {n)  A  fresh  contract,  made  in  continuation  of  a  former  v. 
usurious  one,  was  void ;  (o)  unless,  indeedj  it  left  out  the  part  which 


(g)  In  declaring  for  the  penalty  given  by  this  statute,  the  precise  day  of  the 
usurious  contract  must  be  stated  in  the  declaration,  and  proved  as  laid.  See  Fox  v. 
Keeling,  2  Ad.  cfe  E.  670.  See  further  on  this  Act  the  elaborate  notes  to  Ferrall  v. 
Shaen,  1  Wms.  Saund.  295. 

(h)  Barclay  v.  "VValmeslej',  4  East,  55.  See  Parker  v.  Ramsbottom,  3  B.  <fe  C.  257. 
Meago  V.  Simmons,  M.  &  M.  121.     Gilpin  v.  Enderby,  5  B.  &  A.  954. 

(i)  White  V.  Wright,  3  B.  &  C.  272.  •  Chippendale  v.  Thurston,  M.  &  M.  411.  See 
Parker  v.  Ramsbottom,  3  B.  <fe  C.  257,  and  see  17  Ves.  44.  Maddoek  u.  Rumball,  8 
East,  304,  -where  the  transaction  was  upheld. 

(j)  Meago  V.  Simmons,  M.  &  M.  121.     See  Solarte  v.  Melvil,  7  B.  <fe  C.  430. 

{k)  Carstairs  v.  Stein,  4.  M.  &  S.  192.     See  Doe  v.  Gooch,  3  B.  <fe  A.  664. 

{l)  Fereday  v.  Wightwick,  1  R.  &  M.  50.     See  Ferguson  v.  Sprang,  1  Ad.  &  E.  576, 

(?n)  Flight  V.  Chaplin,  2  B.  <fe  Ad.  112. 

(»)  Doe  d.  Haughton  v.  King,  II  M.  <fe  W.  3?,d. 

(o)  Preston  v.  Jackson,  2  Stark.  237. 


668  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

made  the  former  one  usurious,  {p)  or  was  made  with  a  party  not 
privy  to  the  former  usury,  {q)  But,  if  an  usurious  contract  wa3 
made  in  continuation  of  a  legal  one,  the  former  contract  remained 
good,  though  the  latter  was  void,  (r)  The  usury  laws  have,  how- 
ever, by  a  series  of  legislative  enactments,  been  rendered  of  com- 
paratively little  importance.  We  have  already  considered  the 
exemption  of  certain  bills  and  notes  from  the  usury  laws,  by  stat. 
3  &  4  Wm.  4,  c.  98,  and  1  Victoria,  cap.  81,  is)  and  the  qualification 
of  the  statute  of  Anne,  by  stat.  5  &  6  Wm.  4,  cap.  41.  {i) 

The  provisions  of  these  acts  have  been  since  extended  by  stat. 
2  &  3  Yict.  c.  87,  which  enacts,  that  no  bill  or  note  not  having  more 
than  twelve  months  to  run,  nor  any  contract  for  the  loan  or  forhearance 
of  money ^  above  the  sum  of  101,  shall  he  affected  by  the  usury  laws,  (u) 

From  this  statute  are,  however,  excepted  loans  by  pawnbrokers, 
and  loans  upon  the  security  of  "a?z?/  lands,  tenements,  or  heredita- 
ments, or  any  estate  or  interest  therein^  (v)  The  act  was  to  remain  in 
force  till  1842,  but  its  operation  has  from  time  to  time  been  extended 
to  January  1st,  1851,  by  stats.  3  &  4  Vict.  cap.  83 ;  4  &  5  Vict,  c 
54 ;  6  &  7  Vict.  c.  45 ;  and  8  &  9  Vict.  c.  102. 

Appropriation  of  Payments.'^ — There   is   another  subject  con- 

{p)  Barnes  v.  Hedley,  2  Tannt.  184.     Wright  v.  Wheeler,  1  Camp.  165. 

{q)  Cuthbert  v.  Haley,  8  T.  R.  890.     Pickering  v.  Banks,  Forrest,  72. 

(r)  Parker  v.  Ramsbottom,  3  B.  ife  C.  257.     See  Gray  v.  Fowler,  1  II.  Bl.  462. 

(s)  See  on  this  strangely  worded  act,  Vallance  v.  Siddell,  6  Ad.  <fc  E.  932. 

{i)  Seei  ante,  cap.  1. 

(m)  See  Pennell  v.  Attenborough,  4  Q.  B.  867. 

{v)  See  as  to  this,  Bell  v.  Coleman,  2  C.  B.  268 


*  The  doctrine  on  this  subject  was  reviewed  in  the  case  of  Smith  v.  Loyd,  11 
Leigh.  512,  Judge  Allen  delivering  the  opinion  of  the  Court.  "As  to  the  application 
•of  payments  where  no  specific  appropriation  was  made  by  the  parties,  and  where  it 
does  not  appear  upon  what  claim  the  money  was  received,  generally  speaking,  the 
debtor  has  the  right  to  make  the  application.  If  he  fails  to  do  so,  the  creditor  having 
different  debts,  may  make  the  application  as  he  chooses.  But  where  neither  party 
makes  the  application,  and  the  question  is  referred  to  the  Court,  upon  what  principle 
is  the  adjustment  to  be  made  ?  According  to  the  civil  law,  tlie  presumable  intention  of 
the  debtor  was  resorted  to  as  the  rule  to  determine  the  application  ;  and  in  the  absence 
of  any  express  declaration  by  either,  the  inquiry  was,  what  application  would  be 
most  beneficial  to  the  debtor?  In  England  the  question  seems  to  be  still  unsettled, 
The  leading  cases  are  reviewed  by  the  Master  of  the  Rolls  in  Clayton's  case,  1  Meri 


CONTRACTS  OF  DEBT.  6G9 


Duty  of  Debtor. 


nected  with  payment,  which  this  seems  the  proper  place  for  con- 
sidering, viz.,  the  Appropriation  of  the  debtor's  payments. 

It  frequently  happens  that  a  party  who  pays  money  is  indebted 


vale,  605,  and  he  remarks,  that  "  the  cases  set  up  two  conflicting  rules,  the  presumed 
intention  of  the  debtor,  -which  in  some  instances  at  least  is  to  govern,  and  the  ex  post 
facto  election  of  the  creditor,  which  in  other  instances  is  to  prevail ;"  and  concludes 
that  he  would  be  much  embarrassed  were  the  point  to  be  decided  in  that  case.  The 
question  has  arisen  several  times  in  the  Supreme  Court  of  the  United  States.  In 
Field  V.  Holland,  6  Cranch,  2Y,  it  is  said :  "  If  the  application  is  made  by  neither  party, 
it  becomes  the  duty  of  the  Court,  and  is  to  be  exercised  with  a  sound  discretion.  It 
cannot  be  conceded  that  this  application  is  to  be  made  in  the  manner  most  advanta- 
geous to  the  debtor.  If  neither  party  avail  himself  of  his  power,  and  it  devolve3 
upon  the  Court,  it  would  seem  that  an  equitable  application  should  be  made.  And 
it  being  equitable  that  the  whole  debt  should  be  paid,  it  cannot  be  inequitable  to 
extinguish  first  those  debts  for  which  the  security  is  most  precarious."  And  in 
accordance  with  those  principles,  the  application  was  made  in  a  manner  most  advan- 
tageous to  the  creditor.  In  the  United  States  v.  Kirkpatrick,  9  "Wheaton,  737,  the 
Court  said :  "If  both  parties  omit,  the  law  will  apply  the  payments  according  to  its 
own  notions  of  justice."  And  in  that  case,  they  were  so  applied  as  to  operate  benefi- 
cially to  the  sureties  of  the  debtor,  and  against  the  creditor.  The  same  proposition 
is  laid  down  by  Justice  Story  in  U.  States  v.  Wardwell,  5  Mason,  82.  "The  point  has 
not  yet  been  decided  in  Virginia.  In  the  absence  of  any  express  authority,  I  incline 
to  the  opinion  that  the  position  taken  by  the  Supreme  Court  is,  upon  the  whole, 
the  best.  No  general  rule,  applicable  to  every  case,  could  be  adopted  and  adhered 
to  without  producing  great  hardship.  Men  keep  their  accounts  loosely ;  scarcely  any 
case  occurs  which  does  not  vary  in  some  material  circumstance  from  every  other  case. 
Justice  to  creditor  or  debtor  would  frequently  require  exceptions  to  any  specific  rule 
that  might  be  adopted ;  and  these  exceptions  would  multiply  with  the  ever- varying 
dealings  of  individuals,  until  at  length  the  rule  itself,  and  the  particular  cases  in  which 
it  could  apply,  would  become  exceptions."  S.  P.  Stamford  Bank  v.  Benedict,  15  Conn. 
437.  Chester  v.  Wheelwright,  ibid.  562.  Stone  v.  Seymour  et  al,  15  "Wend.  19 
Gwinn  v.  Whittaker,  1  Harr.  &  J.  754.  Briggs  v.  Williams,  2  Verm.  283.  Newmarcb 
V.  Clay,  14  East.  239. 

In  Glass  v.  Stinson,  3  Sumn.  98,  Mr.  Justice  Story,  carrying  out  the  suggestions  of 
Justice  Cowen,  in  Pattison  v.  Hull,  9  Cowen  Rep.  747,  held  that  the  riglit  of  the  cre- 
ditor to  elect  to  what  debt  he  would  appropriate  an  indefinite  payment  must  be 
restricted  to  those  cases  alone  in  which  it  is  a  matter  of  entire  indifference  to  the 
debtor  how  the  payment  is  applied,  and  where  a  consent  that  the  creditor  may  exer- 
cise his  discretion,  can  be  fairly  presumed.  Such  was  the  doctrine  of  the  Roman  law, 
sustained,  as  Judge  Storj'  thought,  by  a  great  weight  of  common  law  authorit}'.  This 
case  was  reviewed  by  C.  J.  Gibson,  in  a  long  and  eloquent  opinion  in  Logan  v.  Mason, 
6  Watts  &  Serg.  1,  in  which  he  contends  that  this  provision  of  the  Roman  law  has 
never  been  incorporated  in  the  common  law,  and  has  no  claim  to  such  adoption 
either  by  reason  of  authority  or  considerations  of  justice  and  expediencj*.  In 
Bower  v.  Marris,   1   Craig  <fe  Pliilb.   360,  Lord  Cottenham  observed,  tliat  without 


570  MERCANTILE  CONTRACTS. 

Duty  of  Debtor. 

m  several  ways  to  the  party  who  receives  it  from  him ;  in  such 
cases  it  becomes  a  question,  to  the  reduction  of  which  of  his  debts 
the  payrdent  must  be  applied.  The  rule  is,  that  the  party  paying 
has  power  to  make  the  application  at  the  time  of  payment,  {w)  which 
he  may  do  either -by  express  words,  or  a  conduct  indicative  of  his 
intention  ;  {x)  but  that  if  he  neglect  to  make  it,  the  party  receiving 
may,  (y)  and  is  not  bound  to  make  an  immediate  application ;  (z) 
and,  though  it  was  once  said  that,  perhaps,  he  ought  to  make 
one  within  a  reasonable  time,  (a)  it  seems  now  pretty  well  estab- 
lished that  he  may  make  it  at  any  time  before  the  matter  comes  to 
the  consideration  of  a  jury,  {b)  There  are  two  old  cases  in  which 
it  is  laid  down,  that  if  principal  and  interest  are  both  due,  a  general 
payment  shall  be  ascribed  first  to  the  interest,  (c) 

When  there  is  an  account  current  between  the  parties,  ex.  gr.,  a 

(w)  Per  Bayley,  J.,  Mayfield  v.  Wadsley,  3  B.  &  C.  357. 

{z)  Clayton's  case,  1  Meriv.  572.  Newmarch  v.  Clay,  14  East,  239.  Shaw  v.  Pic- 
ton,  4  B.  &  C.  715.   Taylor  D.  Kyraer,  3  B.  &  Ad.  320.    Marryatts  v.  White,  2  Stark.  101. 

{if)  Goddard  v.  Cox,  2  Str.  1194.  Plomer  v.  Long,  1  Stark.  153.  Marryatts  v. 
White,  2  Stark.  101.  Mathews  «;.  Walwyn,  4  Ves.  118.  Peters  v.  Anderson,  5  Tauct. 
596.  Hall  V.  Wood,  14  East,  243,  n.  Kirby  v.  Duke  of  Marlborough,  2  M.  &  S.  18. 
Bosanquet  v.  Wray,  6  Taunt.  597.  Bodenhain  v.  Purchas,  2  B.  &  A.  39.  The  follow- 
ing rule  may  be  useful  in  ascertaining  the  intention  with  which  any  particular  pay- 
ment was  made  and  received,  and  the  mode  in  which  it  ought  to  be  applied:  "Where 
a  creditor  receives,  without  objection,  what  is  offered  by  his  debtor,  solviturin  modmn 
solventis.  Where  the  creditor  objects,  recipitur  in  modum  recij)ie7itis."  Per  Tindal,  C. 
J,  Webb  V.  Weatherby,  1  Bingh.  N.  C.  502. 

(z)  Siinson  v.  Ingham,  2  B.  &  C.  56.     See  Cox  v.  Troy,  5  B.  &  A.  474. 

(a)   Viile  Simson  v.  Ingham,  per  Best,  J. 

(6)  Philpott  V.  Jones,  4  Nev.  &  Mann.  16  ;  2  Ad.  &  E.  42. 

(c)  Chase  v.  Box,  Freem.  261.     Crisp  v.  Black,  Finch,  89. 

doubt,  the  general  rules  upon  this  subject  were  derived  from  the  civil  law.  The 
general  doctrine  and  its  grounds  and  principles  are  very  elaborately  discussed  by 
Chancellor  Wythe,  in  Hill  v.  Gregory,  Wythe's  Rep.  81.  The  rule  of  the  common 
law,  as  established  by  the  principal  cases,  is,  that  the  ownership  of  the  money  deter- 
mines the  right  of  appropriation.  See  A.  L.  Cases,  vol.  1,  p.  308,  also  a  very  acute 
criticism  upon  the  rule  by  the  learned  editor  of  Wythe's  Reports,  p.  435.  See  also 
Donally  ?;.  Wilson,  5  Leigh.  329.  Vance  v.  Monroe,  4.  Gratt.  52.  Ross  v.  McLauchlin,  7 
Gratt.  87.  In  Virginia  it  has  been  held  that  the  debtor's  right  to  direct  the  appropria- 
tion, extends  so  far,  that  if  he  requires  it  to  be  confined  to  the  principal  of  an  interest- 
bearing  debt,  to  the  exclusion  of  the  interest,  the  creditor  is  bound  to  give  the  pay- 
ment that  direction.  Pindall's  Ex.  v.  Bank  of  Marietta,  10  Leigh.  481.  Miller  v.  Tre- 
villian,  2  Robins.  Rep.  1. 


CONTRACTS  OF  DEBT.  C71 


Dutv  of  Debtor. 


banking  account,  the  law,  in  the  absence  of  any  other  specific 
arrangement  between  them,  presumes  that  thej  intended  to  apply 
the  first  item  on  the  credit  side  to  the  first  item  on  the  debit  side, 
and  so  on.  {cl)  "  The  civil  law/'  said  the  Lord  Chief  Justice,  in 
Mills  V.  Fowkes^  "  it  is  said,  applies  the  payment  to  the  more  bur- 
densome of  two  debts,  where  one  is  more  burdensome  than  the 
other,  but  I  do  not  think  that  such  is  the  rule  of  our  law.  Accord- 
ing to  the  law  of  England  the  debtor  may  in  the  first  instance 
appropriate  the  payment — solvitur  in  modum  solventis :  if  he  omits 
to  do  so,. the  creditor  may  make  the  application — recipitur  in  modum 
recipientis :  but  if  neither  make  any  appropriation,  the  law  appro- 
priates the  payment  to  the  earlier  debt."  (e)  And  accordingly,  in 
that  case  it  was  held,  that,  the  debtor  having  made  no  appropriation 
at  the  time  of  payment,  the  creditor  had  a  right  to  a23propriate  a 
payment  made  generally  to  a  debt  barred  by  the  Statute  of  Limita- 
tions. (/)  Nay,  in  one  case  it  was  decided  that  an  attorney,  who 
had  done  work  for  a  corporation  without  a  retainer  under  seal, 
might  appropriate  a  general  payment  to  the  work  so  done  ;  though 
the  Court  held  at  the  same  time  that  he  could  not  have  recovered 
payment  in  an  action,  {g)  Where  there  are  distinct  demands,  one 
against  a  firm,  and  the  other  against  one  only  of  the  partners,  if  the 
money  paid  be  the  money  of  the  partners,  and  be  not  specifically 
appropriated  by  the  payer,  the  creditor  must  not,  and  the  law  will 
not,  apply  it  to  the  demand  upon  the  individual,  for  that  would  be 
to  pay  the  debt  of  one  with  the  money  of  others.  (A)  And  though 
where  prior  demands  are  equitable,  and  subsequent  ones  legal,  the 
creditor  may  apply  a  general  payment  to  the  former ;  (i)  yet,  if  the 
prior  ones  be  legal,  and  the  subsequent  equitable,  the  courts  will 
not  allow  a  general  payment  to  be  appropriated,  at  the  time  of  trial, 
to  the  latter,  {j)     Nor  will  ^n  appropriation  be  allowed,  which 

{d)  Clayton's  case,  1  Meriv.  572.  Bodenham  v.  Purclias,  2  B.  &  A.  39.  See  Dawe 
V.  Holdsworth,  Peake,  &4,  et  notas.  Wilson  v.  Hirst,  4  B.  &  A.  YeY.  But  see  Ileani- 
ker  V.  Wigg,  4  Q.  B.  792. 

(e)  Per  Tindal,  C.  J.,  in  Mills  v.  Fowkes,  5  Bingh.  K  C.  455. 

(/)  Accord.  Williams  v.  Griffiths,  5  M.  &  W.  300. 

{g)  Arnold  v.  Mayor  of  Poole,  4  M.  &  Gr.  806. 

(/;)  Thompson  v.  Brown,  M.  &  M.  40. 

(i)  Bosanquet  v.  ^Yray,  6  Taunt.  597 ;  2  Marsh.  519.  Sed  vide  Birch  v.  Tebbutt, 
2  Stark.  74. 

(i)  Goddard  -  Hodges,  S  Tyrwh.  213  ;  1  C.  &  M.  33. 


672  MERCANTILE  CONTRACTS. 

Duty  of  Creditor. 

would  deprive  the  party  paying  of  a  benefit,  sucli  as  the  taxation 
of  costs,  and  therefore  an  attorney  cannot  apply  a  general  payment 
to  the  taxable  items  of  his  bill  only,  {k)  If  some  of  the  demands  be 
illegal,  a  general  payment  will  be  applied  to  the  legal  demands,  (Z) 
but  where  an  act  of  parliament  does  not  render  a  particular  species 
of  contract  illegal,  but  only  prohibits  th^  enforcement  of  it  by  action, 

.  there  a  creditor  may  appropriate  a  general  payment  to  a  demand 
arising  out  of  sucli  a  contract,  (w)  Where  the  same  broker  sold 
goods  of  A.  and  goods  of  B.  to  the  payer,  a  general  payment,  if  in- 

-^  sufficient  to  discharge  both  debts,  must  be  applied  proportionably 
to  them  both,  (n)  An  intention  on  the  part  of  the  debtor  to  appro- 
priate to  a  particular  debt,  is  perhaps  more  easily  presumed,  in 
favor  of  a  surety,  where  there  are  any  circumstances  which  can  be 

^  considered  indicative  thereof;  (o)  but,  in  the  absence  of  such 
circumstances,  the  law,  it  seems,  will  not  apply  a  payment  in  his 
favor,  (^j) 

Section  III. — Duty  of  Creditor. 

The  duty  of  the  creditor  is,  to  receive  the  payment,  if  tendered 
at  the  proper  time,  and  give  a  proper  acquittance.  The  consequence 
of  his  refusing  payment  when  tendered,  will  be,  that,  if  he  after- 
wards commence  an  action  for  the  amount,  the  tender,  accompanied 
by  a  payment  of  the  sum  tendered  into  court,  will  be  a  good  de- 
fence, unless  the  creditor  can  prove  a  prior  or  subsequent  demand 
and  refusal,  {q)  Such  a  tender,  moreover,  will  prevent  interest 
from  afterwards  running  against  the  debtor,  (r) 

As  to  Acquittance. — It  seems  doubtful  whether  the  debtor  had, 

(yt)  James  v.  Child,  2  Tyrwh.  735. 

{I)  Ribbans  v  Crickett,  1  B.  &  P.  264.     Wright  v  Laing,  3  B.  <fe  C.  165. 

{m)  Philpott  V.  Jones,  4  Ner.  &  Mann.  16 ;  2  Ad.  &  E.  44.  Cruickshank  v.  Rose, 
1  M.  &  Rob.  100. 

(n)  Favence  v.  Bennett,  11  East,  86. 

(o)  Marryatts  v.  White,  2  Stark.  101. 

(p)  Plomer  v.  Long,  1  Stark.  153.  See  Kirby  v.  Duke  of  Marlborough,  2  M.  &  & 
18. 

(?)  Spybey  v.  Hide,  1  Camp.  181.  Rivers  v.  Griffiths,  5  B.  &  A.  630.  Coore  v 
Callaway,  1  Esp.  115. 

(r)  Dent  v.  Dunn,  8  Camp.  296.     See  Hume  v  Peploe,  8  East,  168 ;  4  Leon,  209 


COXTRACTS  OF  DEBT.  G7c 


Duty  of  Creditor. 


at  common  law,  a  right  to  demand  a  receipt  on  payment,  excepting 
from  the  King's  receiver.  (5)  However,  by  stat.  43  Geo.  3,  cap.  126, 
s.  5,  he  is  empowered  to  tender  a  blank  receipt,  at  the  time  of  pay- 
ment, which  the  creditor  is  bound  to  fill  up,  and  pay  the  amount  of 
the  stamp,  under  penalty  of  ten  pounds,  Q) 

A  receipt;  though  strong,  is  not  conclusive  evidence  of  pay- 
ment, (a)  unless  it  be  by  deed,  for  then  the  law  admits  no  evidence  to 
the  contrary,  (y)*  A  receipt  in  full  of  all  demands,  is  an  admission 
of  great  weight,  and  it  has  even  been  said,  that  in  the  absence  of  mis- 
take, it  is  conclusive ;  (tv)  but  this  doctrine  seems  incapable  of  being 
supported,  and  we  may  venture  to  assume  that  it  must,  like  other 
matters  not  amounting  to  estoppel,  be  used  as  evidence  to  be  sub- 
mitted to  the  jury,  and  capable  of  being  rebutted,  (x)  A  receipt  for 
less  than  51.  does  not  require  a  stamp ;  (?/)  other  receipts  do,  and 
cannot  be  stamped  after  they  have  been  written,  (2)  except  within 
fourteen  days,  on  payment  of  the  duty,  and  5?. ;  or  one  calendar 
month,  on  payment  of  the  duty,  and  10/.  (a) 

(«)  See  Cole  v.  Blake,  Peake,  179 ;  Bunb.  348 ;  Fitz.  Damage,  15 ;  Bro.  Ab.  Traite 
d^Exchequer,  *l ;  Bro.  Ab.  tit.  Faits,  pi.  8  ;  Fortescue,  145. 

{t)  See,  however,  the  observation  of  Parke,  B.,  in  Piichardson  v.  Jackson,  8  M.  & 
W.  298. 

(m)  Strattan  v.  Rastall,  2  T.  R.  366.  Lampon  v.  Corke,  5  B.  <fe  A.  606.  Skaife  v. 
Jackson,  3  B.  &  C.  421.     Greaves  v.  Key,  3  B.  <fe  Ad.  313. 

(«)  Gilb.  L.  Ev.  142. 

('(o)  Alner  v.  George,  1  Camp.  392.     See  Bristow  v.  Eastman,  1  Esp.  1*73. 

(x)  Benson  v.  Bennett,  1  Camp.  394,  n.  Lampon  v.  Corke,  ubi supra;  B.  K  P.  56. 
Farrar  v.  Hutchinson,  9  Ad.  &  K  641. 

(3/)  3  &  4  Wm.  4,  c.  23. 

{z)  23  Geo.  3,  c.  49,  s.  14. 

(a)  55  Geo.  3,  c.  55,  s.  11. 


*  It  has  been  held  in  Tennessee,  that  a  receipt,  whether  under  seal  or  not,  may  be 
explained  by  parol  evidence.     Jones  v.  Ward,  10  Yerg.  160. 
43 


BOOK  THE  FOURTH. 

OF    MERCANTILE    REMEDIES, 


OF    MERCANTILE    REMEDIES. 


It  is  proposed  to  treat,  in  this  Book,  of  Mercantile  Remedies:  that 
is,  omitting  all  consideration  of  those  universal  ones,  bj  action  at 
law  and  suit  in  equity,  which  are  open  to  merchants  in  common 
with  the  rest  of  her  Majesty's  subjects ;  to  speak  of  such  as  are,  from 
their  very  nature,  exclusively,  or  almost  exclusively,  appropriated 
to  that  class  of  the  community  with  whom  we  are,  in  this  Treatise, 
chiefly  concerned 


CHAPTER  I. 

STOPPAGE      IN      TKATiTSITU. 

Sect.  1.  Riglit  to  stop  in  transitu — what 

2.  Who  possesses  it. 

8.  How  long  it  continues. 

4.  How  defeated. 

5.  Sow  exercised. 


Section  1. — Right  to  stop  in  Transitu — ivhat. 

The  first  subject  which  we  shall  place  under  this  head,  is  that  of 
Stoppage  in  Transitu  ;  which  is,  indeed,  a  measure,  rather  of  preven- 
tion, than  of  cure ;  but  yet,  sufficiently  entitled  to  the  epithet  reme- 
dial, to  justify  its  present  collocation. 

When  goods  are  consigned  on  credit  by  one  merchant  to  another, 
it  sometimes  happens,  that  the  consignee  becomes  bankrupt  or  in- 


678  MERCANTILE  REMEDIES. 

Right  to  stop  in  Transitu — what. 


solvent,  (a)  wliile  the  goods  are  on  their  way  to  him,  and  before 
they  are  delivered.  In  such  case,  as  it  would  be  hard  that  the  goods 
of  the  consignor  should  be  applied  in  payment  of  the  debts  of  the 

(a)  In  Wilmshurst  v.  Bowker,  2  M.  &  Gr.  792,  the  L.  C.  J.  says:  "The  ordinary 
right  of  countermanding  the  actual  delivery  of  goods  shipped  to  a  consignee  is  limited 
to  the  cases  in  which  the  bankruptcy  or  insolvency  of  the  consignee  has  taken  place. 
The  law  as  to  this  point  is  very  clearly  laid  down  by  Lord  Stowell,  in  the  case  of 
The  Constitution,  3  Rob. .Ad.  R.  321,  and  in  many  cases  in  the  Common  Law 
Reports."  In  Wilmshurst  v.  Bowker,  the  goods  were  to  be  paid  for  by  a  banker's 
draft  at  two  months,  to  be  remitted  on  receipt  of  the  invoice  and  bill  of  lading;  and 
the  Court  held,  that,  on  failure  to  remit  such  draft,  the  vendor  might  countermand 
the  delivery  of  the  goods  (which  had  been  shipped)  by  the  special  terms  of  the  contract, 
though  it  was  admitted  that  the  property  had  passed  to  the  vendees.  It  was  not, 
therefore,  necessary  expressly  to  determine  any  thing  with  regard  to  the  general 
right  to  stop  ill  transitu.  Wilmshurst  v.  Bowker  has  since  been  reversed  in  Cam. 
Scacc.  1  M.  &  Gr.  882.  I  believe  that  if  the  Avord  insolvency  is  to  be  understood  in  its 
technical  sense,  merchants  have  very  generally  acted  as  if  the  right  to  stop  the  goods 
was  not  postponed  till  its  occurrence.  Insolvency,  however,  is  a  word  which  has 
been  sometimes  construed  by  the  courts  to  bear  a  much  larger  meaning.  In  Biddle- 
combe  v.  Bond,  4  Ad.  &,  E.  332,  it  was  held  in  a  contract  to  mean  a  general  inability 
to  pay  debts.  The  law  of  stoppage  in  transitu  is  as  old,  it  must  be  recollected,  as 
1670,  on  the  21st  of  March,  in  which  j'ear,  Wiseman  v.  Vandeput  was  decided;  so 
that,  if  insolvency  is  to  be  taken  in  a  technical  sense,  the  law  of  stoppage  iti  transitu 
has  been  varying  with  the  varied  enactments  of  the  legislature  regarding  it.  If  by 
insolvency  be  imderstood,  as  in  Biddlecombe  v.  Bond,  a  general  inability  to  pay  debts, 
of  which  probably  the  failure  to  pay  one  just  and  admitted  debt  would  be  satisfac- 
tory prima  facie  evidence,  the  meaning  of  the  term  would  be  more  stable,  and  the 
state  of  the  law  more  convenient.  In  some  of  the  reported  cases,  it  seems  to  have 
been  assumed  that  stoppage  of  payment  amounts  for  this  purpose  to  insolvency.  In 
Vertue  v.  Jewell,  1  Camp.  31,  the  terms  are  "  stopped  payment :"  it  is  true  that  the 
vendees  there  became  bankrupt,  but  not  till  after  the  stoppage  in  transitu  had  taken 
place.  In  Newsom  v.  Thornton,  6  East,  17,  the  notice  was  given  to  the  carrier  before 
the  bankruptcy  of  the  vendee,  but  after  he  had  stopped  payment ;  and  Lord  Ellen- 
borough,  in  his  judgment,  rests  the  right  to  stop  on  the  "  insolvency"  of  the  consignee. 
If  the  cases  were  gone  through  with  this  object,  it  is  believed  that  similar  observa- 
tions might  be  made  on  many  of  them.  See  among  others,  Dixon  v.  Yates,  5  B.  &  Ad. 
313,  and  ante,  note.  It  is  submitted,  therefore,  that  the  term  insolvency  (when  used 
trith  reference  to  this  branch  of  the  law)  is  satisfied  by  general  inability  to  pay,  evi- 
denced by  stoppage  of  payment.  It  might  be  conjectured,  from  the  judgment  in 
Wilmshurst  v.  Bowker,  that  whenever  a  particular  mode  of  paj-ment  has  been  stipu- 
lated for  by  the  contract,  which  would  in  its  nature  precede  the  delivery  of  the  goods, 
a  default  to  comply  with  such  stipulation  entitles  the  vendor  to  withdraw  tlie  pos- 
session of  the  goods  from  the  carrier,  though  the  property  may  have  vested.  This 
might,  0^  course,  happen  without  even  a  stoppage  of  paj-raent  on  the  part  of  the  ven- 
dees.    But  upon  a  writ  of  error,  the  Court  of  Exchequer  Chamber  unanimously  over- 


STOPPAGE  IX  TRANSITU.  679 

liight  to  stop  in  Transitu — what. 

consignee,  the  former  is  allowed  by  law  to  resume  possession  of 
them,  if  he  can  succeed  in  doing  so  while  they  are  on  their  way. 
This  resumption  is  called  stoppage  in  transitu^  and  was  first  allowed 
by  equity,  (6)*  as  it  is  now  also  by  common  law,  where,  on  account 


ruled  the  decision  of  the  Court  of  Common  Pleas,  considering  that  the  mere  failure 
of  the  vendee  to  comply  with  a  condition  subsequent,  the  sending  of  a  banker's  draft 
for  the  price,  gave  the  vendors  no  right  to  stop  the  goods  in  transitu  in  the  hands  of 
the  carriers,  after  the  property  had  vested  in  the  vendees. 

(6)  Viz.,  in  "Wiseman  v.  Vandeput,  2  Vern.  203.  Snee  v.  Prescott,  1  Atk.  24G. 
D'Aquila  v.  Lambert,  2  Eden,  75;  Ambl,  399.  There  is  an  analogous  proceeding  in 
the  civil  law  called  Revendicatio. 


*  "The  right  of  stoppage  in  transitu  is  nothing  more  than  extension  of  the  right 
of  lien,  which,  by  the  common  law,  the  vendor  has  upon  the  goods  for  the  price,  ori- 
ginally allowed  in  equity,  and  subsequently  adopted  as  a  rule  of  law.  By  a  bargain 
and  sale  without  delivery,  the  property  vests  in  the  vendee ;  but  where,  by  the  terms 
of  sale,  the  price  is  to  be  paid  on  delivery,  the  vendor  has  a  right  to  retain  the  goods 
till  payment  is  made;  and  this  right  is  strictly  a  lien — a  right  to  detain  and  hold  the 
goods  of  another,  as  security  for  the  payment  of  some  debt,  or  performance  of  some 
duty.  But,  when  the  vendor  and  vendee  are  at  some  distance  from  each  other,  and 
the  goods  are  on  their  way  from  the  vendor  to  the  vendee,  or  to  the  place  appointed 
by  him  for  their  delivery,  if  the  vendee  become  insolvent,  and  the  vendor  can  repos- 
sess himself  of  the  goods,  before  they  have  reached  the  hands  of  the  vendee  or  the 
place  of  destination,  he  has  a  right  so  to  do,  and  thereby  regain  his  lien.  This,  how- 
ever, does  not  rescind  the  contract,  but  only  restores  the  vendor's  lien  ;  and  it  can 
only  take  place  when  the  property  has  vested  in  the  vendee."  Rowley  v.  Bigelow, 
12  Pick.  313.  This,  it  will  be  seen,  is  in  accordance  with  the  opinion  of  Mr.  Justice 
Bayley,  cited  in  the  text.  "  This  right  may  be  exercised  at  any  time  before  the  goods 
reach  their  ultimate  destination,  and  come  to  the  possession  of  the  consignees.  And 
the  consignors  have  the  rigl.t  to  judge  for  themselves  of  the  danger  of  such  insol- 
vency, and  take  measures  \>^  guard  against  it  by  stopping  the  goods  in  transitu,  should 
the  insolvency  occur  before  the  goods  come  to  the  possession  of  the  consignees.  The 
effect  of  such  stoppage  is  not  to  rescind  the  contract  or  to  revest  the  general  property 
in  the  vendors,  but  to  reinstate  them  in  their  lien  and  right  to  hold  the  goods  in 
security  for  the  price."  Stanton  v.  Eager,  16  Pick.  474.  "  The  vendee  or  his  assignees, 
may  recover  the  goods,  on  payment  of  the  price;  and  the  vendor  may  sue  for,  and 
recover  the  price,  notwithstanding  he  had  actually  stopped  the  goods  in  transitu — 
provided  ho  be  ready  to  deliver  them  upon  paj'ment.  If  he  has  been  paid  in  part,  he 
may  stop  the  goods  for  the  balance  due  him  ;  and  the  part  payment  only  diminishes 
the  lien  pro  tanto  on  the  goods  detained."  2  Kent  Com.  541.  Newhall  v.  Vargas,  13 
Maine,  93;  S.  C.  15  Maine,  814.  See  also  Jordan  v.  James,  5  Ohio,  88.  Howatt  v. 
Davis,  5  Munf.  34.     Hanse  v.  Judson,  4  Dana,  10. 

The  nature  and  extent  of  the  vendor's  lien,  out  of  which  the  doctrine  of  stoppage 
VI  transitu  arises,  and  the  distinction  between  that  constructive  delivery  which  vests 


4 


680  MERCANTILE  REMEDIES. 

Right  to  stop  in  Transitu — what. 

of  its  remedial  nature,  it  is  regarded  with  considerable  favor. 
Whether  its  effect  be  or  be  not  to  dissolve  the  contract  of  sale 
between  the  consignor  and  consignee  of  the  goods  stopped,  is  a 
question  which  has  been  frequently  discussed,  (c)  particularly  in 
Olay  V.  Harrison  ;  {d)  Lord  Kenyon  was  of  opinion  that  it  did  not 
rescind  the  sale,  but  was  "  an  equitable  lien,  adopted  by  the  law  for 
the  purposes  of  substantial  justice ;"  an  opinion  which  certainly  con- 
sists best  with  the  decisions  which  have  taken  place,  that  payment 
of  part  of  the  price,  or  acceptance  of  a  bill  for  the  whole  of  it,  by  the 
vendee,  will  hot  defeat  the  vendor's  right  to  stop  in  transitu,  if  the 
vendee  become  insolvent  before  the  remainder  of  the  price  has  been 
liquidated,  or  the  bill  taken  up,  (e)  and  that  the  vendor  is  not,  when 
he  stops  in  transitu,  obliged  to  tender  back  a  bill  he  has  received  on 
account  of  the  price.  (/) 

Mr.  Justice  Bayley,  in  a  modern  case,  {g)  has  given  a  description 
of  the  nature  of  a  vendor's  lien  for  his  price,  wide  enough  to  include 
the  right  of  stoppage  in  transitu,  and  seemingly  opposed  to  the  idea 
that  the  exercise  of  that  right  operates  as  a  recision  of  the  contract 
of  sale.  "The  vendor's  right,"  said  his  Lordship,  "in  respect  of 
the  price,  is  not  a  mere  lien,  which  he  will  forfeit  if  he  parts 
with  the  possession,  but  grows  out  of  his  original  ownership  and 
dominion.  If  the  seller  has  dispatched  the  goods  to  the  buyer,  and 
insolvency  occurs,  he  has  a  right,  in  virtue  of  his  original  owner- 
ship, to  stop  them  in  transitu — Why  ?  Because  the  property  is 
vested  in  the  buyer,  so  as  to  subject  him  to  the  risk  of  any  accident, 
but  he  has  not  an  indefeasible  right  to  \h.Q  possession  ;  and  his  insol- 

(c)  In  Stephens  v.  Wilkinson,  2  B.  <k  Ad.  320.  In  Edwards  v.  Brewer,  2  M.  &  W. 
375,  and  Gibson  ».  Oarruthers,  8  M.  &  W.  321,  the  Court  adverted  to  it  as  undeter- 
mined.  And  see  Wilmshurst  v.  Bowker,  5  Bingh.  N.  C.  541.  In  Bell's  Comm.  it  is 
treated  as  a  recision  (3d  ed.),  1.  2,  p.  2,  c.  1. 

id)  10  B.  &  C.  99. 

(«)  Hodgson  V.  Loy,  7  T.  R.  440.     Feise  v.  Wray,  3  East,  93. 

(/)  Edwards  v.  Brewer,  2  M.  &  W.  375. 

{g)  Bloxam  v.  Saunders,  4  B.  <fe  C.  941.  See  Wilmshurst  v.  Bowker,  5  Bingh.  N. 
C.  541. 


the  property  in  the  vendee,  and  that  actual  delivery  which  defeats  the  right  of  iht 
vendor  to  hold  the  goods  as  a  security  for  the  price,  are  very  clearly  explained  by  C. 
J.  Shaw  in  Arnold  v.  Delano,  4  Cush   Rep.  33. 


STOPPAGE  IN"  TRANSITU.  QSl 


Right  to  stop  in  Transitu — what. 


vency,  without  payment  of  the  price,  defeats  that  right.  And  if 
this  be  the  case,  after  he  has  dispatched  the  goods,  and  while  they 
are  in  transitu  ;  a  fortiori,  is  it,  where  he  has  never  parted  with  the 
goods,  and  when  no  transitus  lias  begun.  The  buyer,  or  those  who 
stand  in  his  place,  may  still  obtain  the  right  of  possession,  if  they 
will  pay  or  tender  the  price,  or  they  may  still  act  upon  their  right 
oi  projiertij,  if  anything  unwarrantable  is  done  to  that  right.  If, 
for  instance,  the  original  vendor  sell  when  he  ought  not,  they  may 
bring  a  special  action  against  him  for  the  injury  they  sustain  by 
such  wrongful  sale,  and  recover  damages  to  the  extent  of  that 
injury,  but  they  can  maintain  no  action  in  which  the  right  ot  pro- 
ferty  and  right  of  possession  are  both  requisite,  unless  they  have 
both  those  rights."  (A)  In  Edwards  v.  Brewer,  too,  Parke,  B.,  says, 
"  the  effect  is  the  same,  as  if  the  consignor  had  not  delivered  them 
on  board  ship.  Then,  if  so,  he  has  a  right  to  retain  them  till  pay- 
ment of  the  whole  price." 

In  Wenfworth  v.  Outhwaite,  (i)  the  question  was  discussed  in  the 
Exchequer.  Lord  Abinger  expressed  his  opinion  to  be,  that  the 
contract  of  sale  would  be  rescinded,  the  other  Barons,  Parke, 
Alderson,  and  Eolfe,  stating  their  inclination  to  be  to  the  contrary. 
The  point,  however,  is  not  involved  in  the  decision.  The  decision 
in  Martindale  v.  Smith  {j)  seems  to  have  considerable  bearing  on 
the  question,  and  to  favor  the  opinion  of  the  three  Barons. 

Although  the  vendee  may  have  become  insolvent,  still  if  the 
state  of  his  accounts  with,  the  vendor  be  such  that  the  vendor  is 
upon  the  whole,  indebted  to  the  vendee,  he  cannot  stop  in  transitu 
goods  of  less  value  consigned  to  the  vendee,  on  account  of  the 
balance;  for  the  delivery  of  them  to  the  vendee's  representatives 
can,  in  that  case,  be  productive  of  no  injustice:  and  if  the  balance 
against  him  be  occasioned  by  the  vendee's  being  under  acceptances 
for  his  accommodation,  he  cannot  stop  in  transitu  until  the  bills  are 
paid,  ih) 

(A)  Accord.  Milgate  v.  Kebble,  3  M.  &  Gr.  100,  wliere  it  was  held  that  the  vendee 
could  not  maintain  trover  against  the  vendor  for  taking  the  goods  away,  the 
plaintiff  not  being  in  actual  possession,  and  the  price  which  was  to  be  paid  hcfort 
removal,  unpaid. 

(i)  10  M.  &  W.  451. 

(i)  1  Q.  B.  389. 

{k)  Vertue  v.  Jewell,  4  Camp.  31. 


682  MERCANTILE  REMEDIES. 

Who  possesses  it. — How  long  it  continues. 


Section  II. —  ^V7lo  possesses  it. 

The  person  who  stops  goods  in  transitu  must  not  be  a  mere 
surety  for  their  price,  one,  for  instance,  who  has,  at  the  request  of 
the  vendee,  accepted  bills  drawn  by  the  vendor,  for  their  purchase 
money.  (J)  But  a  person  abroad,  who,  in  pursuance  of  orders  sent 
him  by  a  British  merchant,  purchases  goods,  on  his  own  credit,  of 
others  whose  names  are  unknown  to  the  merchant,  and  charges  a 
commission  on  the  price,  is  a  consignor,  so  as  to  entitle  him  to  stop 
the  goods  in  transitu^  if  the  merchant  fail  while  they  are  on  their 
passage ;  for  he  stands  in  the  light  of  a  vendor,  and  the  British 
merchant  o?his  vendee:  (m)  and  so  is  a  person  who  consigns  goods 
to  be  sold  on  the  joint  account  of  himself  and  the  consignee.  (?i) 


Section  III. — How  long  it  continues. 

The  period  during  which  the  right  to  stop  the  goods  continues, 
is,  as  we  have  seen,  co-extensive  with  that  of  their  transit  from  the 
vendor  to  the  purchaser.  Hence,  in  cases  where  the  propriety  of  a 
resumption  of  this  sort  is  questioned,  the  point  disputed  generally 
is,  whether  at  the  time  of  seizure  by  the  vendor,  the  transit  of  the 
goods  had  or  had  not  determined.  Such  cases  always  mainly  de- 
pend upon  their  own  peculiar  circumstances,  but  the  general  rule  to 
be  collected  from  all  the  decisions  is,  that  goods  are  to  be  deemed 
in  transitu^  so  long  as  they  remain  in  the  possession  of  the  carrier, 
as  such,  whether  by  water  or  land,  (o)  even  though  such  carrier 
may  have  been  appointed  by  the  consignee  himself;  {lo)  and  also 
while  they  are  in  any  place  of  deposit  connected  with  the  trans- 

{l)  Siffken  v.  Wray,  6  East,  371.    See  Sweet  v.  Pym,  1  East,  4. 

(jm)  Faise  v.  "Wray,  3  East,  93. 

(jf.)  Newsora  v.  Thornton,  6  East,  17.  As  to  the  authority  of  an  agent  to  stop 
goods  in  transitu,  and  the  effect  of  a  ratification,  NichoUs  v.  Le  Feuvre,  2  Bing.  K  C. 
81.     Whitehead  v.  Anderson,  9  M.  &  W.  518. 

(o)  IMills  V.  Ball,  2  B.  &  P.  457. 

(/))  Hoist  V.  Pownal,  1  Esp.  240.  Northey  v.  Field,  2  Esp.  613.  Hodgson  v.  Loy 
7  T.  R.  440.     Jackson  v.  Nicliol,  5  Bingh.  N.  C.  508. 


STOPPAGE  m  TRANSITU.  G83 

How  long  it  continues. 

mission  and  delivery  of  them,  (q)  and  until  they  arrive  at  the  actual 
or  constructive  possession  of  the  consignee.*  Thus,  if  goods  be 
landed  at  a  seaport  town,  and  there  deposited  with  a  wharfinger 

(q)  Stokes  v.  La  Riviere,  cited  in  Bothlingk  v.  Inglis,  3  East,  381.     Smith  v.  Goss, 

1  Camp.  282.  Coates  v.  Railton,  6  B.  <fe  G.  422.  Nicholls  v.  Le  Feuvre,  2  Bingh. 
K  C.  81.  Jackson  v.  Kichol,  5  Bingh.  K  C.  508.  James  v.  Griffin,  1  M.  &  A7.  20. 
Edwards  v.  Brewer,  2  M.  <fe  W.  375.     James  v.  Griffin  igain  came  before  the  court  in 

2  M.  &  W.  622,  where  it  appeared  that  the  goods  were  landed  at  the  warehouse  of  a 
wharfinger,  which  the  bankrupt  used  as  his  own  for  the  purpose  of  storing  such 
goods.  But  the  bankrupt,  though  he  allowed  them  to  be  landed  there,  did  not 
intend  to  take  possession  of  them.  It  was  held  by  three  Barons,  Abinger,  C.  B. 
dissent.,  that  evidence  of  his  intention  was  admissible,  though  it  had  not  been  com- 
municated to  the  wharfinger,  and  that  his  intention  not  to  take  possession  of  the 
goods  prevented  the  determination  of  the  transit.  See  Whitehead  v.  Anderson,  9  M. 
&  W.  518. 


*  "The  law  appears  to  be  well  settled  that  the  right  of  stoppage  in  transitu  exists 
so  long  as  the  goods  remain  in  the  hands  of  a  middleman  on  the  way  to  the  place  of 
their  destination,  and  that  the  right  terminates  whenever  the  goods  are  or  have  been 
either  actuallj^  or  constructively  delivered  to  the  vendee ;  a  delivery  to  a  general 
agent  of  the  vendee  is  of  course  tantamount  to  a  delivery  to  himself.  The  time 
during  which  the  right  exists,  therefore,  is  during  the  whole  period  of  the  transit 
from  the  vendor  to  the  purchaser,  or  the  place  of  ultimate  destination,  as  designated 
to  the  vendor  by  the  buyer;  and  this  transit  continues  so  long  as  the  goods  remain 
in  the  possession  of  the  middleman,  whether  he  be  the  carrier  either  b}"  land  or  by 
water,  or  the  keeper  of  a  warehouse  or  place  of  deposit  connected  with  the  trans- 
mission and  deliveiy  of  the  goods."  Walworth,  Chancellor,  Covell  v.  Hitchcock,  23 
-Wend.  613.  "Goods  may  be  stopped  so  long  as  the  ti-ansit  continues,  whether  by 
land  or  water,  from  the  consignor  to  the  consignee,  and  whether  they  are  in  the 
hands  of  the  carrier,  a  warehousekeeper,  wharfinger,  or  any  other  middleman  con- 
nected with  the  transportation.  The  right  of  stojipage  ceases  when  the  goods  have 
reached  their  place  of  destination,  and  have  come  to  the  actual  or  constructive  pos- 
session of  the  consignee.  It  was  once  said  by  Lord  Kenyon,  that  the  goods  must 
have  come  to  the  corjjoral  touch  of  the  consignee ;  but  he  afterwards  Avished  that 
the  expression  had  never  been  used:  and  it  is  now  full^^  settled  that  a  constructive 
possession  is  sufficient.  It  is  enough  that  the  goods  have  reached  the  place  of  de- 
livery, and  the  consignee  has  exercised  some  act  of  ownership  over  them."  Bronson, 
C.  J.,  Mottram  v.  Ilej'er,  1  Denio,  487.  And  it  was  held  where  the  consignee  received 
the  bill  of  lading,  paid  the  freight,  and  entered  the  goods  at  the  custom  house, 
although  they  were  taken  to  the  public  store  and  remained  tliere,  the  duties  being 
unpaid,  until  the  bankruptcy  of  the  consignee  and  demand  of  the  agent  of  the  con- 
signors, that  the  transitus  had  ended  and  there  was  no  right  to  stop  the  goods.  This 
ease  was  distinguished  from  that  of  Noi-they  ?;.  Field,  2  Esp.  613,  by  tlie  facts  that 
the  freight  was  paid,  and  the  goods  entered  at  the  custom  house  by  the  consignee. 
See  also  Ilause  v.  Judson,  4  Dana,  12. 


684  MERCANTILE  REMEDIES. 

How  long  it  continues.    . 

appointed  by  tTie  consignee  to  forward  them  thence  by  land  to  his 
own  residence,  they  are  subject  to  the  consignor's  right  of  stoppage, 
while  in  the  hands  of  the  wharfinger,  (r)  But  (s)  the  transitus  is 
completely  at  an  end  when  the  goods  arrive  at  an  agent's  who  is  to 
keep  them  till  he  receives  the  further  orders  of  the  vendee.  If  a 
consignee  be  in  the  habit  of  using  the  warehouse  of  a  carrier, 
packer,  wharfinger,  or  other  such  person,  as  his  own,  for  instance, 
by  making  it  the  repository  of  his  goods,  and  disposing  of  thern 
there,  the  transit  will  be  considered  at  an  end  when  they  have  ar- 
rived at  such  warehouse,  {t)  In  cases,  however,  where  the  right  of 
stoppage  171  transitu  is  to  be  defeated  by  a  constructive  possession 
through  the  medium  of  the  carrier,  acts  of  dominion  exercised  by 
the  vendee  over  the  goods  while  in  the  carrier's  hands,  (as,  for  in- 
stance, by  taking  samples,)  will  not  have  the  effect  of  creating  such 
a  constructive  possession,  unless  they  be  accompanied  by  such  cir- 
cumstances as  denote  that  the  carrier  was  intended  to  keep,  and 
assented  to  keep,  the  goods  in  the  nature  of  an  iigentfor  custochj.{u) 
Nay,  if,  after  goods  are  sold,  they  remain  in  the  vendor's  own 
warehouse,  and  he  receives  warehouse  rent  as  such  and  not  as  quasi 
parcel  of  the  price,  that  operates  as  a  delivery  to  the  purchaser,  and 
puts  an  end  to  the  right  to  stop  in  transitu :  {v)  and  it  has  been 
decided,  that  where  part  of  the  goods  sold  by  one  entire  contract  is 
taken  possession  of  by  the  vendee,  without  any  intention  on  the 
vendor's  part  of  retaining  the  rest,  but  as  a  step  towards  and  in 
progress  of  the  delivery  of  the  whole  ;  that  is  to  be  deemed  a  taking 
possession  of  the  whole ;  {uS)  though  it  is  otherwise  if  there  were 

(r)  Mills  V.  Ball,  2  B.  &  P.  457.  * 

(s)  By  Lord  Ellenborough  in  Dixon  v.  Baldwin ;  and  Parke,  B.,  in  "Wentworth  v. 
Outhwaite,  10  M.  &  W.  450. 

(t)  Ricliardson  v.  Goss,  3  B.  &  P.  119.  Scott  v.  Petit.  3  B.  &  P.  469.  Foster  v. 
Frarapton,  6  B.  &  C.  107.  Allen  v.  Gripper,  2  Tyrwh.  217;  2  C.  &  J.  218.  Went- 
worth  V.  Outhwaite,  10  M.  &  W.  436.  Dodson  v.  Wentworth,  4  M.  &  Gr.  1080.  Rose 
V.  Pickford,  8  Taunt.  83.  See  James  v.  Griffin,  2  M.  &  "W.  622,  and  the  judgment  in 
Whitehead  v.  Anderson,  9  M.  &  W.  534. 

(m)  Whitehead  v.  Anderson,  9  M.  &  W.  518. 

(ii)  Hurry  v.  Mangles,  1  Camp.  452.  See  Miles  v.  Gordon,  and  see  Lord  EUenbo- 
rough's  remarks  in  Stoveld  v.  Hughes,  14  East,  308. 

(?t))  Hammond  v.  Anderson,  1  N.  R.  69,  and  see  Slubey  v.  Hey  ward,  2  H.  Bl.  504, 
and  the  remarks  on  them  in  Hahson  v.  Meyer,  6  East,  614.  Jones  v.  Jones,  8  M.  & 
W.  431. 


STOPPAGE  IX  TRANSITU.  GS5 

How  defeated. 

such  an  intention,  {x)  But  it  lias  been  said  that,  iDvima  fucie^  a  de- 
livery of  part  imports  an  intention  to  deliver  the  whole,  {y)  And 
if  the  vendee  charter  a  ship  to  convey  the  goods,  not  to  himself, 
but  to  a  foreign  port,  on  a  commercial  speculation  for  his  own 
benefit,  a  delivery  on  board  that  ship  is,  in  point  of  law,  a  delivery 
to  the  vendee  himself,  and  a  determination  of  the  transit ;  (z)  for,  as 
between  him  and  the  seller,  the  goods  have  arrived  at  the  end  of 
their  journe}^,  and  their  voyage  on  board  the  chartered  vessel  is  a 
new  one  under  the  direction  of  the  purchaser. 


Section  IV, — How  defeated. 

It  has  been  already  observed,  that  the  delivery  of  goods  to  a 
carrier  named  by  the  vendee,  though  a  delivery  to  the  vendee  himself, 
for  many  purposes,  is  not  such  a  one  as  to  put  an  end  to  the  right 
to  stop  them  in  transitu;  and  it  has  been  thought  that  the  vendee, 
when  a  particular  place  of  delivery  has  been  appointed,  cannot 
anticipate  the  regular  determination  of  the  transit,  by  going  to  meet 
the  goods  upon  their  journey,  (a)*  This,  however,  as  a  general 
rule,  has  been  much  questioned.  "  If,"  said  Baron  Parke,  in  White- 
head V.  Anderson,  {b)  "  the  vendee  take  them  out  of  the  possession 

(x)  Bunney  v.  Poyntz,  i  B.  &  Ad.  568.  Dixon  v.  Yates,  5  B.  &  Ad.  313.  Tanner 
V.  Scovell,  14  M.  <fe  W.  28. 

(3/)  Per  Taunton,  J.,  Betts  v.  Gibbons,  2  Ad.  &  E.  56,  sed  qiucre.  And  in  Tannei"  v. 
Scovell,  14  M.  &  W.  28,  the  Court  of  Exchequer  dissented  from  the  dictum  of  Taun- 
ton, J.,  and  approved  of  this  quaere.     See  p.  3*7,  G.  M.  D. 

{£)  Fowler  v.  M'Taggart,  cited  7  T.  R.  442,  1  East,  522,  and  3  East,  388.  Jones  v. 
Jones,  8  M.  &  W.  431. 

(a)  Hoist  V.  Pownal,  1  Esp.  240,  Lord  Kenyon.  Sed  vide  the  observations  of  Lord 
Alvanley,  in  Mills  v.  Ball,  2  B.  &  P.  461,  and  those  of  Chambre,  J.,  in  Oppenheim  v. 
Russell,  3  B.  &  P.  54.     See,  too,  Foster  v.  Frampton,  6  B.  &  C.  107. 

(6)  9  M.  &  W.  533. 

*  It  is  said,  2  Kent  Com.  547,  that  the  better  opinion  now  is,  that  if  the  vendee 
intercepts  the  goods  on  their  passage  to  him,  and  takes  the  possession  as  owner,  the 
delivery  is  complete,  and  the  right  of  stoppage  is  gone.  The  same  is  said  in  Jordan 
V.  James,  5  Ohio,  88.  As  to  the  doctrine  in  the  text  in  relation  to  the  effect  of  an 
attachment,  see  Buckley  v.  Furniss,  15  Wend.  137;  IS'aylor  v.  Dennie,  8  Pick.  198; 
Hause  v.  Judson,  4  Dana,  13 :  of  a  sale,  lUsley  v.  Stubbs,  9  Mass.  65 :  of  the  negotia- 
tion of  a  bill  of  lading,  Conard  v.  Atlantic  Ins.  Co.,  1  Pet.  386 ;  Stubbs  v.  Lund.  7 
Mass.  457. 


686  MERCANTILE  REMEDIES. 


How  defeated. 


of  the  carrier  into  his  own  before  their  arrival,  with  or  without  the 
consent  of  the  carrier,  there  seems  no  doubt  that  the  transitus  is  at 
an  end,"  But,  at  all  events,  whatever  may  be  the  effect  of  the  re- 
ceipt of  goods  by  the  vendee  before  the  regular  determination  of 
the  transit,  it  seems  clear  that  the  vendor's  right  to  stop  them 
cannot  be  taken  away  by  the  vendee's  making  a  demand  of  them, 
while  on  their  journey,  with  which  the  carrier,  whether  rightly  or 
wrongly,  refuses  to  comply,  (c)  Kor  will  the  vendor's  right  be  de- 
feated by  the  exercise  of  any  claim  against  the  consignee,  such,  for 
instance,  as  process  of  foreign  attachment  at  the  suit  of  a  creditor 
of  the  vendee,  {d)  or  the  carrier's  claim  of  a  general  lien  for  the 
balance  due  to  him  by  the  vendee,  (e)  or  (generally  speaking)  by  his 
vendee's  selling  them  again  to  a  third  party,  the  ordinary  rule  of 
law  being  that  the  second  vendee  of  a  chattel  cannot  stand  in  a 
better  situation  than  his  vendor.  (/)  We  have,  however,  seen  that 
the  negotiation  of  a  bill  of  lading  will  defeat  the  vendor's  right  to 
stop  in  transitu ;  and  the  Factor's  Acts,  as  we  have  also  seen,  (^7) 
profess  to  confer  similar  efl&cacy  on  the  transfer  of  the  instruments 
which  are  therein  enumerated.  (A) 

It  must,  however,  be  observed,  that  the  negotiation  of  a  bill  of 
lading  or  other  instrument  by  way  of  pledge  defeats  only  the  legal 
right  to  stop  in  transitu,  for,  in  equity,  the  vendor  may,  by  giving 
notice  to  the  pledgee,  resume  his  former  interest  in  the  goods,  sub- 
ject to  the  pledgee's  claim,  and  will  be  entitled  to  the  residue  of 
their  proceeds  after  the  pledgee's  demand  has  been  satisfied  out  of 
them,  or  to  the  goods  themselves,  if  it  be  satisfied  aliunde,  {i)  not- 
withstanding the  pledgee  may  have  other  demands  against  the 
consignee.  The  indorsement,  therefore,  of  a  bill  of  lading  as  a 
pledge  for  a  specific  sum,  though  it  transfers  the  property  in  the 
goods,  will  only  bar  the  right  of  the  consignor  to  stop  in  transitu 
to  that  extent,  and  in  a  court  of  equity  he  may  recover  from  the 

(c)  Jackson  v.  Nichol,  5  Bingh.  K  C.  508.    "Whitehead  v.  Anderson,  9  M.  &.  TV.  518. 
\d)  Smith  V.  Goss,  1  Camp.  282. 

(e)  Butler  v.  Woolcot,  2  N  R.  64.     Nicholls  v.  Le  Feuvre,  2  Bingh.  N.  C.  81. 
(/)  Dixon  V.  Yates,  5  B.  A:  Adol.  313. 
((/)  Ante,  b.  i.  cap.  5,  p.  ITS  to  187. 

(A)  See  Zwinger  v.  Samuda,  Holt,  K  P.  C.  395;  but  see  the  case  in  banc,  7  Taunt. 
265.     See  Haw<-s  v.  Watson,  2  B.  &  C.  540. 
{i)  In  re  Westzinthus,  5  B.  &  Ad.  81*7. 


STOPPAGE  IN  TRANSITU.  687 

How  exercised. 

indorsee  the  difference  between  the  sum  for  which  the  pledge  was 
made  and  the  sum  realized  by  their  sale,  although  the  indorsee  has 
other  claims  upon  the  consignee,  (j) 

Section  Y. — Hoio  exercised. 

A  consignor  who  is  desirous,  and  who  has  a  right  to  stop  his 
goods  in  transitu^  is  not  obliged  to  make  an  actual  seizure  of  them 
while  upon  their  road ;  it  is  sufficient  to  give  notice  to  the  carrier 
in  whose  hands  they  are,  on  the  delivery  of  which  notice  it  becomes 
that  person's  duty  to  retain  the  goods,  so  that  if  he  afterwards,  by 
mistake,  deliver  them  to  the  vendee,  the  vendor  may  bring  trover 
foi*'  them,  (k)  even  against  the  vendee's  assignees,  if  he  himself  have 
become  bankrupt ;  and  the  carrier,  who,  after  the  receipt  of  such  a 
notice,  delivers  the  goods  to  the  vendee,  is  guilty  of  a  tortious  act, 
for  which  he  may,  of  course,  be  held  responsible.  (/) 

This  Notice  must,  however,  that  it  may  be  effectual,  be  given  to 
the  person  who  has  the  immediate  custody  of  the  goods ;  if  given 
to  a  principal  whose  servant  has  such  custody,  it  must  be  given  at 
such  a  time,  and  under  such  circumstances,  that  tlie  principal,  by 
the  exercise  of  reasonable  diligence,  may  communicate  it  to  his  ser- 
vant, {m) 

(j)  Spalding  v.  Paiding,  6  Beav.  376. 
(k)  Litt  V.  Cowley,  7  Taunt.  169. 

{I)  Stokes  V.  De  la  Riviere,  (Lord  Mansfield,)  cited  in  Bothlingk  v.  Inglis,  3  F/.iat» 
881.     Hunter  v.  Beale,  (Lord  Mansfield,)  cited  3  T.  R.  466. 
(»«)  Whitehead  v.  Anderson,  9  M.  &  W.  518. 


CHAPTER  IL 

LIEK. 

Sect.  1.  Lien — what. 

2.  How  acquired. 

3.  How  lost. 


Section  I. — Lien — lohat. 

A  LIEN  is  a  right  to  retain  property,  until  a  debt  dne  to  the  person 
retaining  has  been  satisfied,  (a)  It  is  not  incompatible  with  a  right 
on  the  part  of  the  person  claiming  it  to  sue  for  the  same  debt ;  but 
he  is  allowed  to  do  so,  retaining  his  lien  as  a  collateral  security,  {b) 
There  are  two  species  of  liens  known  to  the  law,  viz.,  Particular  imdi 
General.  Particular  liens  are  where  persons  claim  to  retain  the 
goods  in  respect  of  which  the  debt  arises,  and  these  are  favored  by 
the  law.  General  liens  are  claimed  in  respect  of  a  general  balance 
of  account,  and  these  are  to  be  taken  strictly,  (c)*     "Where  a  lien 

(a)  2  East,  235 ;  2  Eose,  35Y.  In  Sunbolf  v.  Alford,  3  M.  <fe  "W.  248,  an  innkeeper 
eet  np  a  claim  of  lien  on  his  guest's  person,  ■which  was,  however,  negatived  by  the 
Court  without  hesitation,  as  was  his  claim  of  a  right  to  take  the  guest's  coat  from  his 
person  and  detain  it. 

(6)  Hughes  V.  Lennj-,  5  M.  &  W.  183. 

(c)  Per  Heath,  J.,  3  B.  &  P.  494. 


*  In  the  case  of  McFarland  v.  Wheeler,  26  Wend.  46Y,  where  the  definition  and 
distinction  stated  in  the  text  were  referred  to,  as  having  been  adopted  in  our  Ameri- 
can decisions  and  text  books,  it  was  also  expressed  as  the  opinion  of  the  Court,  "that 
when  goods  or  other  articles  subject  to  a  particular  lien  are  delivered  in  part,  those 
retained  may  be  held  to  secure  the  payment  for  all  tlie  labor,  skill,  or  ex]')ense  laid 
out  upon  the  whole,  under  one  and  the  same  contract,  between  the  same  parties,  thus 


LIEN.  689 

How  acquired. 

exists,  it  is  available,  although  the  debt  for  which  the  party  retain- 
ing claims  to  hold  the  goods  be  of  more  than  six  years'  standing, 
and  the  remedy  by  action  at  law  barred,  in  consequence,  by  the 
Statute  of  Limitations,  {d)  The  goods,  while  they  continue  in  the 
possession  of  the  person  entitled  to  a  lien,  cannot  be  seized  in  exe  ' 
cution  for  the  real  owner's  debt,  (e) 


Section  II. — Hoiu  acquired. 

The  doctrine  of  lien  originated  in  certain  principles  of  the  com- 
mon law,  by  which  a  party  who  was  compelled  to  receive  the  goods 
of  another  was  also  entitled  to  retain  them  for  his  indemnity ;  thus 
carriers  and  innkeepers  had,  by  the  common  law,  alien  on  the  goods 

(d)  Spears  v.  Hartley,  3  Esp.  81.     Higgins  v.  Scott,  2  B.  <fe  Ad.  413.     Ee  Broom 
head,  16  L.  J.  Q.  B.  355. 

(e)  Legg  V.  Evans,  6  M.  &  "W.  36. 


constituting  one  debt.     26  "Wend.  480.     See  same  case  10  "Wend.  318.    Schmidt  v. 
Blood,  9  Wend.  268. 

In  the  case  Ex  parte  John  S.  Foster,  2  Story,  143,  144,  Judge  Story,  referring  to 
the  remark  of  Lord  Tenterden,  that  the  word  lien,  in  its  proper  sense  in  the  law  of 
England,  imports  that  the  party  is  in  possession  of  the  thing  which  he  claims  to  de- 
tain ;  and  that  where  there  is  no  possession,  actual  or  constructive,  there  can  be  no 
lien, — says  that  this  is  generally,  perhaps  universally,  true,  at  the  common  law,  inde- 
pendently of  statuable  provisions,  or  of  special  contract  "But  in  the  maritime  law 
liens  are  recognized,  independently  of  possession,  actual  or  constructive ;  such  as  in 
cases  of  seamen's  wages,  and  bottomry  bonds  and  liens  by  material  men  ujion  foreign 
ships.  But  in  such  cases,  there  is  no  pretence  of  a  vested  lien,  until  the  labor  or  ser- 
vice is  complete,  or  the  voyage  ended,  and  the  contract  become  absolute.  Until  that 
period,  it  is  merely  inchoate,  and  conditional,  and  imperfect.  In  equity,  also,  liens 
exist  independent  of  possession,  either  actual  or  constructive;  as,  for  example,  the 
lien  of  a  vendor  on  the  land  for  the  unpaid  purchase  money.  But  it  has  been  long 
the  established  doctrine  in  equity,  that  a  lieu  is  not,  in  strictness,  either  a,  jus  in  re,  or 
a  jus  ad  rem  ;  that  is,  it  is  not  a  property  in  the  thing  itself,  nor  does  it  constitute  a 
right  of  action  for  the  thing.  It  more  properly  constitutes  a  charge  upon  the  thing. 
It  is,  therefore,  at  most,  a  simple  right  to  possess  and  retain  property,  until  some 
charge  attaching  to  it  is  paid  or  discharged;  or  a  mere  right  to  maintain  a  suit  in 
rem  to  enforce  payment  of  the  charge.  Mr.  Justice  Buller,  speaking  of  liens  at  the 
common  law,  is  equally  expressive.  He  says :  "  Liens  are  aot  founded  on  property, 
but  they  necessarily  suppose  the  property  to  be  in  some  other  person,  and  not  in  him 
who  sets  up  the  right.  They  are  qualified  rights."  Lickbarrow  v.  Mason,  6  East^ 
note,  p.  21,  24.  Conard  v.  Atlantic  Ins.  Co.,  1  Pet.  386,  441,  442. 
44 


C90  MERCANTILE  REMEDIES. 

How  acquired. 

v  intrusted  to  their  charge ;  (/)  the  rescuer  of  goods  from  perils  of 
the  sea  has,  as  we  have  already  remarked,  on  grounds  of  public 
, policy,  a  lien  at  common  law  for  salvage ;  and  it  is  a  principle  that 
I  where  an  individual  has  bestowed  labor  and  skill  in  the  alteration 
I  and  improvement  of  the  properties  of  the  subject  delivered  to  him, 
-f   he  has  a  lien  on  it  for  his  charge :  thus  a  miller  and  a  shipwright  {g) 
have  each  a  lien ;  so  has  a  trainer,  for  the  expense  of  keeping 
w  and  training  a  race-horse,  (A)  for  he  has,  by  his  instruction,  wrought 
an  essential  improvement  in  the  animal's  character  and  capabilities. 
And,  if  the  owner  of  a  stallion  receive  a  mare  for  the  purpose  of 
being  covered,  he  has  a  lien  on  her  for  his  charge,  for  she  will  be 
•^  rendered  more  valuable  by  proving  in  foal,  (i)     But  here  the  rule 
.:  appears  to  stop,  and  not  to  include  cases  wherein  expense  has  been 
bestowed  upon  the  object  claimed  to  be  retained,  without  producing 
'  any  alteration  in  it :  {j)  thus,  it  has  been  decided  that  a  livery-stable 
keeper  has  no  lien  for  the  keep  of  a  horse,  {k)  nor  agister  of  a  horse 
or  cow  {I)  for  its  agistment.     Such  is  the  description  of  a  lien  at 
common  law.     Whenever  one  of  any  other  kind  is  sought  to  be 
established,  the  claim  to  it  is  not  deduced  from  principles  of  com- 
mon law,  but  founded  upon  the  agreement  of  the  parties,  either 


(/)  Skinner  v.  Upsha-w,  Ld.  Rayra.  752. 

{fj)  Ex  parte  Oclienden,  1  Atk.  235.  Franklin  v.  Hosier,  4  B.  <ii  A.  3il.  See  Ex 
parte  Bland,  2  Rose,  91. 

ill)  Bevan  v.  Waters,  M.  &,  M.  236.  See,  however,  the  observations  of  Parke,  B., 
in  that  case,  in  Jackson  v.  Cummins,  5  M.  &  W.  350,  351. 

(i)  Scarfe  v.  Morgan,  4  M.  tfe  W.  270. 

{j)  Stone  V.  Lingwood,  1  Str.  651 :  and  see  8  C.  &  P.  6;  sedvide  1  H.  BI.  85. 

{k)  Wallace  v.  Woodgate,  R.  &,  M.  293.  Judson  v.  Etheridge,  1  C.  &  M.  743.  But 
see  Taylor  v.  James,  2  RoUe's  Abr,  92 ;  M.  pi.  3.  Lenton  v.  Cook,  B.  N.  P.  45.  See 
Sanderson  v.  Bell,  2  C.  &  M.  304.     4  Tyrwh.  244,  uhi,  per  Baylej',  B.: 

"  The  two  cases,  Wallace  v.  Woodgate  and  Bevan  v.  Waters,  in  one  of  which  the 
right  of  lien  was  allowed,  and  in  the  other  not,  seem  to  me  to  point  out  the  true  dis- 
tinction. In  the  case  of  the  livery-stable  keeper,  who  does  nothing  to  the  horse  ex- 
cept supplying  him  with  hay  and  oats,  there  is  no  lien,  but  where  work  is  done  by 
training  a  horse,  there  Is  a  right  of  lien.  In  the  case  of  a  livery-stable  keeper  who 
dressed  a  horse,  if  the  claim  for  dressing  could  be  separated,  in  that  respect  there 
might  be  some  right  of  lien,  but  if  an  entire  claim,  compounded  of  feeding  and  dress- 
ing, is  set  up,  it  must  attach  for  both  ;  the  trainer  probably  claimed  for  nothing  but 
training,  and  so  his  claim  was  allowed." 
{I)  Jackson  v.  Cummins,  5  M.  &,  W.  342. 


i^ 691 

How  acquired. 

expressed  or  to  be  inferred  from  usage,  (m)  and  will  fail,  if  some 
such  contract  be  not  shown  to  have  existed,  (/z)* 

(m)  See  Najlor  v.  Mangles,  1  Esp.  109.     Kirkman  v.  Showcross,  6  T.  R.  14. 

(7i)  Pratt  V.  Vizard,  5  B.  &  Ad,  808.  See  also  Ogle  v.  Storey,  4  B.  &  Ad.  735,  and 
qucere,  if  that  case  be  law.  See  Harrington  v.  Price,  3  B.  &  Ad,  170,  Cumpson  v. 
Haigh,  2  Bingh.  K  C.  449. 


*  Most  of  the  principles  mentioned  in  the  preceding  part  of  this  section  were  re- 
cognized in  the  case  of  Grinnell  v.  Cook,  3  Hill,  485,  and  Wentworth  v.  Day,  3  Mete. 
352.  In  the  first  case  it  was  held  that  the  lien  of  an  innkeeper  on  property  intrusted 
to  his  charge  only  existed  where  the  party  owning  the  property  was  a  guest ;  and 
that  where  horses  had  been  sent  to  an  inn  to  be  kept  by  a  person  not  a  guest,  the 
innkeeper  had  no  lien  on  them  for  his  charge  of  keeping.  In  such  case  he  stands  in 
the  same  situation  as  a  livery-stable  keeper.  This  point  was  decided  in  the  same 
way  by  Parke,  B.,  in  Binns  v.  Pigot,  9  Carr.  &  P.  208  ;  38  E.  C.  R.  82.  But  in  tlie  case 
of  Mason  v.  Thompson,  9  Pick.  280,  a  different  opinion  appears  to  have  been  held. 
If  a  horse  is  brought  to  an  inn  by  a  wrong-doer  or  a  thief,  the  lien  of  the  innkeeper, 
if  he  had  no  notice  of  the  wrong,  and  act  honestly,  will  prevail  against  the  claim  of 
the  ti'ue  owner.     Black  v.  Brennan,  5  Dana,  312;  3  Hill,  490, 

The  law  has  been  sometimes  laid  down  in  elementary  treatises,  that  a  common 
carrier  who,  without  any  knowledge  or  suspicion  of  wrong,  receives  goods  from  a 
wrong-doer  or  thief,  may  detain  them  against  the  true  owner,  until  his  freight  or 
hire  for  carriage  has  been  paid.  The  point  was  so  ruled  in  England  at  an  early 
period,  in  the  case  of  the  Exeter  carrier,  cited  by  C.  J.  Holt,  in  Yorke  ■».  Greenaugh, 
2  Ld,  Ray.  866,  and  was  incidentally  recognized  by  the  Supreme  Court  of  Pennsyl- 
vania, in  King  v.  Richards,  6  Whart.  418.  It  has  not  been  expressly  adjudicated  in 
England  since  the  Nisi  Prius  case  referred  to,  and  would  not,  it  is  supposed,  be  now 
acknowledged.  It  has  been  decidedly  repudiated  in  several  recent  American  cases. 
Fitch  V.  Newberry,  1  Dougl.  (Michigan)  R.  1.  Buskirk  v.  Purin,  2  Hall,  561.  Robin' 
son  V.  Baker,  5  Gushing  Rep.  137.  "There  is  no  reason,"  says  Fletcher,  J.,  in  the  last 
case,  "  why  the  common  carrier  should  be  exempt  from  the  universal  rule  of  law, 
that  no  man's  property  shall  be  taken  from  him  without  his  consent,  express  or  im- 
plied. Why  should  not  the  principle  of  caveat  emptor  apply  to  him?  The  reason, 
and  the  only  reason  given,  is,  that  he  is  obliged  to  receive  goods  to  carry,  and  should 
therefore  have  a  riglit  to  detain  the  goods  for  his  paj'.  But  he  is  not  bound  to  re- 
ceive goods  from  a  wrong-doer.  He  is  bound  only  to  receive  goods  from  one  who 
may  rightfully  deliver  them  to  him,  and  he  can  look  to  the  title,  as  well  as  persons 
in  other  pursuits  in  life.  Nor  is  a  carrier  bound  to  receive  goods  unless  the  freight 
is  first jiaid  to  him  ;  and  he  may  in  all  cases  secure  the  payment  of  the  carriage  in 
advance."  The  case  of  the  innkeeper,  who  has  a  lien  for  keeping  a  stolen  horse,  has 
been  distinguished  from  that  of  the  carrier  upon  this  ground : — It  is  equally  for  the  n  4-'^ 
benefit  of  tlie  owner  to  have  his  horse  fed  by  the  innkeeper,  in  whose  custody  he  is 
placed,  whether  left  by  liimself,  or  agent,  or  a  thief;  in  either  case  food  is  necessary 
for  the  preservation  of  the  horse,  and  the  innkeeper  confers  a  benefit  upon  tlie  owner 
by  feeding  him.     But  it  cannot  be  said  tliat  a  carrier  confers  a  benefit  on  the  owiiei 

■     ,■         i  .  ,      !-  ■.'''"     >• 


692  MERCANTILE  REMEDIES. 

How  acquired. 

By  Special  Agreement. — With,  respect  to  liens  by  express  agree- 
ment, little  need  be  said ;  the  question,  whether  one  have  or  have 
not  been  created,  depends  upon  the  special  terms  of  each  individual 
contract.  Where  the  intention  of  the  parties  to  create  one  is  plain, 
there  can  be  no  doubt  of  their  legal  right  to  carry  it  into  effect,  (o) 

(o)  See  Small  v.  Moats,  9  Bingh.  574.     Ward  v.  Bell,  1  C.  &  M.  848. 


of  goods,  by  carrying  them  to  a  place  "where  perhaps  he  never  designed  and  does 
not  wish  them  to  go.  « 

The  fiuder  of  lost  property  on  land,  has  no  right  to  salvage  at  common  law  ;  but 
if  the  owner  offer  a  reward  either  to  a  particular  jjerson,  or  generally  to  any  one  who 
will  return  it  to  him,  it  is  a  valid  contract.  And  if  on  the  offer  of  the  finder  to 
restore  the  property,  the  owner  refuses  to  pay  the  reward,  the  finder  has  a  lien  for  it 
on  the  property,  and  may  retain  the  possession  until  the  reward  is  paid  or  tendered. 
Wentworth  v.  Tmy,  3  Mete.  352. 

A  mere  creditor  happening  to  have  in  his  possession  specific  articles  belonging  to 
his  debtor,  has  no  lien  upon  them.  Allen  v.  Megguire,  15  Mass.  490.  Jarvis  v.  Rogers, 
15  Mass.  389,  414. 

To  create  a  lien  on  a  chattel,  the  party  claiming  it  must  show  the  just  possession 
of  the  thing  claimed ;  and  no  person  can  acquire  a  lien,  founded  upon  his  own  ille- 
gal or  fraudulent  act  or  breach  of  duty ;  nor  can  a  lien  arise  where,  from  the  nature 
of  the  contract  between  the  parties,  it  would  be  inconsistent  with  the  express  terms 
or  the  clear  intent  of  the  contract :  for  example,  if  the  goods  were  deposited  in  the 
possession  of  the  party,  for  a  particular  purpose,  inconsistent  with  the  notion  of  a 
lien,  as,  to  hold  them  or  the  proceeds  for  the  owner  or  a  third  person.  Randall  v 
Brown,  4  How.  S.  C.  424. 

"  Originally  the  remedy  by  retainer  seems  to  have  been  only  co-extensive  with 
the  workman's  obligation  to  receive  the  goods ;  a  limitation  of  it  which  would,  per- 
haps, be  inconsistent  with  its  existence  here,  for  we  have  no  instance  of  a  mechanic 
being  compelled  to  do  jobs  for  another.  But  even  the  more  recent  British  decisions 
have  extended  it  to  the  case  of  every  bailee  who  has,  by  his  labor  or  still,  conferred 
value  on  the  thing  bailed  to  him.  Chapman  v.  Allen,  Cro.  Car.  2Y1.  Jackson  v.  Cum- 
mins, 5  Mees.  &  Wels.  349.  But  as  an  exclusive  right  to  the  possession  of  the  thing 
is  the  basis  of  such  a  lien,  it  exists  not  in  favor  of  a  journeyman  or  day  laborer, 
whose  possession  is  that  of  his  employer,  and  who  has  no  other  security  for  his  wages 
than  the  employer's  personal  responsibility  on  the  contract  of  hiring."  Mclntyre  o. 
Carver,  2  "Watts  &  Serg.  392,  395,  Gibson,  C.  J.  But  it  was  held  in  this  case,  that 
where  one  contracts  to  build  a  house  for  another,  and  matei'ial  is  delivered  to  him 
for  the  purpose,  although  he  is  not  the  absolute  owner  of  the  material  delivered,  he 
has  power,  by  virtue  of  his  contract  with  the  owner,  to  employ  whom  he  would  to 
work  it  up,  and  thus  give  room  for  a  specific  lien  on  it,  which  would  be  available 
against  both  himself  and  his  employer.  And  the  lien  of  a  mechanic  who  had,  under 
such  circumstances,  received  lumber  from  a  master-builder  and  worked  it  up  into 
panel  doors,  was  sustained. 


LIEX.  693 

How  acquired. 

and,  as  they  can  deal  as  thej  please  with  their  own  property,  they 
may,  of  course,  frame  their  contract  so  as  to  exclude  the  right  of 
lien,  as  well  as  to  create  or  to  extend  it ;  and  this  may  be  done, 
either  by  direct  words,  or  the  insertion  of  some  stipulation  incom- 
patible with  the  existence  of  a  right  of  lien,  (p)  or  a  similar  usage 
of  trade,  consistent  with,  and  incorporated  by  implication  into,  the 
contract,  (q)  Indeed,  it  once  was  thought,  that  wherever  there  was 
an  agreement  for  the  payment  of  a  fixed  sum,  the  right  of  lien  must 
be  taken  to  have  been  abandoned.  (?•)  But  this  doctrine,  which 
seems  unreasonable,  has  been  overturned ;  and  the  rule  now  is, 
that  the  mere  existence  of  a  special  agreement  will  not,  of  itself, 
exclude  the  right  of  lien,  but  that,  if  any  of  its  terms  be  inconsis- 
tent with  such,  right,  it  will  do  so.  (s)*  Thus,  an  agreement,  stipu- 
lating for  payment  in  a  particular  manner  and  out  of  a  particular 
fund,  might  possibly  be  held  inconsistent  with  the  right  of  lien,  (t) 
Thus,  too,  it  is  remarked  by  Baron  Parke,  in  his  judgment  in  Jack- 
son V.  CumminSj  (u)  that,  even  if  a  lien  could  have  been  claimed  at 

(p)  Owenson  v.  Morse,  V  T.  R.  64.  Boardman  v.  Sill,  1  Camp.  410,  n.  "Walker  v. 
Birch,  6  T.  R.  258.  "Wej-mouth  v.  Boyer,  1  Ves.  jun.  416.  See  Lucas  v.  Nockells,  10 
Bingh.  loY.     Crawsliaw  v.  Ilomfray,  4  B.  &  A.  50. 

(q)  Raitt  v.  Mitchell,  4  Camp.  146. 

(r)  Brennan  v.  Currint,  Say.  R.  224 ;  B.  N.  P.  45.     Collins  v.  Ongley,  there  cited. 

(.s)  Chase  v.  "Westmore,  5  M.  &  S.  180.  Hutton  v.  Bragg,  2  Marsh.  345,  349;  1 
Taunt.  25. 

(t)  See  Pinnock  v.  Harrison,  3  M.  &  W.  532. 

(m)  5  M.  &.  W.  350,  351. 


*  It  may  not  be  amiss  to  remark  here,  that  liens  are  sometimes  recognized  and 
protected  in  a  court  of  equity  which  a  court  of  law  would  not  regai-d.  For  while  at 
law  the  general  rule  seems  to  be  that  a  grant  or  assignment  is  not  valid,  unless  the 
thing  which  is  the  subject  of  it  has  an  existence  actual  or  potential,  at  the  time  of 
euch  grant  or  assignment,  and  that  a  mere  possibility  is  not  assignable,  yet  in  equity, 
t  has  been  stated,  by  an  eminent  judge,  to  be  a  clear  result  from  all  the  authorities, 
ihat  whenever  the  parties,  by  their  contract,  intend  to  create  a  positive  lien  or 
charge,  either  upon  real  or  upon  personal  property,  whether  then  owned  by  the  as- 
signor or  contractor,  or  not,  or  if  personal  property,  whether  it  is  then  in  esse  or  not, 
it  attaches  in  equity  as  a  lien  or  charge  upon  the  particular  property,  as  soon  as  the 
assignor  or  contractor  acquires  a  title  thereto  against  the  latter,  and  all  persons  as- 
serting a  claim  thereto,  under  him,  either  voluiitaril}-,  or  with  notice,  or  iu  bank- 
ruptcy. Story,  J.,  in  Mitchell  v.  Winslow,  2  Story  R.  630,  638,  644,  and  cases  Hior* 
eited. 


694  MERCANTILE  REMEDIES. 

How  acquired. 

common  law  in  respect  of  agistment  generally,  it  would  be  excluded 
in  a  case  of  agistment  of  milcli  cows,  by  a  necessary  implication 
arising  from  th.e  nature  of  the  subject  matter,  since  the  owner  must 
have  possession  of  tliem  during  the  time  of  milking,  which  estab- 
lishes that  it  was  not  intended  the  agister  should  have  the  entire 
control.  His  Lordship  observes,  that  a  similar  implication  would 
arise  in  the  case  of  a  livery -stable  keeper,  since  it  must  be  his  in- 
tention that  the  owner  of  the  horse  should  take  him  out ;  and  that 
even  in  such  a  case  as  Sevan  v.  Waters,  there  might  be  a  distinction 
between  the  situation  of  the  trainer  of  a  horse  for  ordinary  pur- 
poses, and  the  trainer  of  a  race-horse,  which,  according  to  usage, 
may  be  taken  away  to  run  for  various  plates  during  his  tia-ning. 

By  Usager — As  to  liens  resulting  fi'om  usage,  these  depend  upon 
implied,  as  those  last  mentioned  upon  express  contract,  (y)  The 
usage  whence  such  an  agreement  may  be  implied,  is  either  the  com- 
mon usage  of  trade,  or  that  of  the  parties  themselves,  in  their  pre- 
vious dealings  with  each  other.  (?y)  Of  this  description  are  most 
general  liens,  none  of  which  existed  at  common  law,  but  all  depend 
upon  the  agreement  of  the  parties  themselves,  either  expressed,  or 


(ii)  Eushforth  v.  Iladfield,  6  East,  519 ;  7  East,  224.  Kirkmaa  v.  Shawcross,  6  T. 
R.  14.     Barnett  v.  Brandao,  6  M.  &  Gr.  630. 

{to)  Holderness  v.  CoUinson,  7  B.  &  C.  212,  per  curiam.  Ex  parte  Ockenden,  1  Atk. 
236.     Kirkman  v.  Showcross,  6  T.  R.  14. 


*  Most  of  the  liens  mentioned  by  the  author  under  this  head  have  been  recog- 
nized and  enforced  in  the  United  States.  As  to  the  lien  of  a  banker,  see  Bank  of 
Metropolis  v.  New  England  Bank,  1  How.  S.  C.  238 ;  Neponset  Bank  v.  Leland,  5 
Mete.  259;  Bank  of  Metropolis  v.  New  England  Bank,  6  How.  212;  Lawrence  v. 
Stonington  Bank,  6  Conn.  R.  521.  Tliat  bankers  possess  a  genei'al  lien,  which  will  be 
judicially  noticed,  was  established  in  England  in  tlie  recent  case  of  Brandao  v.  Bar- 
nett, 3  Man.  Grang.  &  S.  530.  Of  a  factor  Brandor  v.  Phillips,  2  How.  S.  C.  121 ; 
Brown  v.  McGran,  14  Pet.  495  ;  Holly  v.  Iluggeford,  8  Pick.  73  ;  Everett  v.  Saltus,  15 
Wend.  478;  Kollock  v.  Jackson,  5  Georg.  Rep.  153;  Farnum  v.  Bontelle,  13  Mete. 
159.  A  purchasing  factor  has,  it  seems,  the  same  lien  as  a  selling.  Bryce  v.  Brooks, 
26  "Wend.  367  ;  S.  C.  21  Wend.  14.  Stevens  v.  Robins,  12  Mass.  180.  A  warehouse- 
man has  a  specific  not  a  general  lien ;  but  he  ma}'  deliver  a  part  and  retain  tha 
residue  for  the  price  chargeable  on  all  the  goods  received_by  him  under  the  sama 
bailment,  provided  the  ownership  of  the  whole  is  in  the  same  person.  Steinman  v 
Wilkins,  7  Watts  &  Serg.  466. 


LIEX.  695 

How  acquired. 

to  be  inferred  from  their  previous  dealings,  or  from  the  usage  of 
trade  and  the  decisions  of  the  courts  of  law  thereon,  (a:)  It  has 
been  settled,  that  an  attorney  has  a  lien  for  his  general  balance,  on 
papers  of  his  clients,  which  come  to  his  hands  in  the  course  of  his 
professional  employment,  {y)  So  a  banker,  who  has  advanced 
money  to  a  customer,  has  a  lien  for  his  general  balance,  (2)  upon 
securities  belonging  to  such  customer,  which  come  into  his  hands, 
but  not  on  muniments,  pledged  for  a  specific  sum,  (a)  or  left  casually 
at  his  shop,  after  his  own  refusal  to  advance  money  on  them,  {b)  or 
negotiable  instruments,  belonging  to  a  third  person,  left  in  the 
banker's  hands  by  his  customer,  (c)  So  it  has  been  determined  that 
calico  printers,  (c?)  dyers,  (e)  and  wharfingers,  (/)  have  liens  for  their 
general  balance,  but  not  fullers,  {g)  However,  notwithstanding  these 
decisions,  it  does  not  appear  certain  that  the  right  of  lien  may  not, 
even  with  respect  to  some  of  the  above  trades,  be  hereafter  con- 
tested, for  the  Court  has  remarked  with  respect  to  wharfingers,  that 
there  may  be  a  usage  in  one  place  varying  from  that  which  prevails 
in  another ;  (Ji)  the  party,  therefore,  claiming  to  retain  goods  for  a 
general  balance,  should,  in  almost  every  instance,  be  prepared  with 

{x)  See  Leuckhart  v.  Cooper,  3  Bingh.  N.  C.  99,  in  which  defendant  claimed  a  lien 
by  the  custom  of  London,  which  the  C.  P.,  however,  held  to  be  iinroasonable. 

{y)  Stevenson  v.  Blakelock,  1  M.  &.  S.  535.  If  he  be  the  town-clerk  of  a  corpora- 
tion, or  steward  of  a  manor,  he  will  have  a  lien  for  work  done  in  his  professional, 
though  not  for  work  done  in  his  official  capacity.  King  v.  "Williams,  5  Ad.  &  E.  423. 
Worrall  v.  Johnson,  2  Jac.  <fe  "Walk.  214. 

(2)  Davis  V.  Bowsher,  5  T.  R.  488.  Bolton  v.  Puller,  1  B.  &  P.  539.  Giles  v.  Per- 
kins, 9  East,  12.  See  Bosanquet  v.  Dudman,  1  Stark,  1.  Barnett  v.  Brandao,  6  M.  & 
Gr.  630. 

(a)  Vanderzee  v.  Willis,  3  Bro.  C.  C.  21. 

(i)  Lucas  V.  Dorien,  7  Taunt.  278. 

(c)  Brandao  v.  Barnett,  1  M.  &  Gr.  908;  S.  C.  6  M.  &.  Gr.  630.  Dom.  Proc.  12 
CI.  &  Fin.  787. 

(J)  Weldon  v.  Gould,  3  Esp.  268. 

(e)  Saville  v.  Burchard,  4  Esp.  53.  See  also  6  East,  623.  Yet  in  other  cases  the 
evidence  has  been  insufficient  to  establish  it.  Green  v.  Farmer,  4  Burr.  2214.  Close 
V,  "Waterhouse,  6  East,  523,  n.     Bennett  v.  Johnson,  2  Chitty,  455. 

(/)  Naylor  v.  Mangles,  1  Esp.  109.  Spears  v.  Ilartly,  3  Esp.  81.  The  lien  of 
wharfingers  was  said  by  Lord  Kenyon,  in  Naylor  v.  Mangles,  to  have  been  proved  so 
often  that  it  was  a  settled  point. 

(r/)  Rose  v.  Hart,  8  Taunt.  499.     2  B.  Moore,  547. 

(//)  Holderness  v.  Collinson,  7  B.  &  C.  212. 


tJ96  MERCANTILE  REMEDIES. 


How  acquired. 


evidence  of  the  usage  applicable  to  his  own  case.  It  is,  however, 
established  too  well  for  dispute,  that  a  factor  has  a  lien  upon  all 
goods  in  his  hands,  for  the  balance  of  his  general  account ;  (i)  and 
even  on  the  price  of  those  with  the  possession  of  which  he  has 
parted.  Thus  where  A.  consigned  goods  to  B.,  a  factor,  to  whom 
he  owed  more  than  their  value,  and  B.  sold  them  to  C,  to  whom  he 
was  himself  indebted,  the  factor  having  become  bankrupt,  it  was 
decided  that  he  had  a  lien  on  the  whole  price  due  from  C,  which 
must  consequently  be  placed  to  the  credit  of  his  assignees,  in 
winding  up  his  account  with  C,  and  that  A.  was  not  entitled  to  any 
portion  of  it.(y)  But  a  factor  has  not  a  lien  for  debts,  which 
accrued  before  his  character  as  such  commenced,  {k)  Policy  brokers 
have  also  a  general  lien,  and  may  avail  themselves  of  it  to  obtain 
payment  of  the  balance  due  to  them  from  their  employer,  though 
merely  an  agent,  if  he  did  not  disclose  his  principal ;  (1)  but  not  if 
they  know,  or  there  is  enough  to  indicate  to  them  his  representa- 
tive character,  {m)  Whether  carriers  have,  by  the  usage  of  trade,  a 
general  lien,  is  a  matter  which  has  been  of  late  years  a  good  deal 
disputed :  {n)  the  prevailing  opinion  seems  to  be  that  they  have. 
But  the  master  of  a  ship  has  no  lien  on  the  vessel,  or  her  freight, 
either  for  his  wages  or  disbursements  on  her  account,  (o) 

(i)  Honghton  i'.  Matthews,  3  B.  &  P.  485.  Krugei-  v.  Wilcox,  Ambler,  252.  Gar- 
dener V.  Coleman,  cited  1  Burr.  -IQ-t ;  6  East,  28,  n.     Man  v.  Shifner,  2  East,  523. 

(_/)  Hudson  V.  Granger,  5  B.  &  A.  27.  See  Drinkwater  v.  Goodwin,  Cowp.  251, 
and  ante,  book  i.  c.  5. 

{k)  Houghton  v.  Matthews,  3  B.  &  P.  485.  See  Walker  v.  Birch,  6  T.  R.  258,  per 
Lawrence,  J.     Olive  v.  Smith,  5  Taunt.  56.     Weldon  v.  Gould,  3  Esp.  268. 

(1)  Mann  v.  Forester,  4  Camp.  60.  Westwood  v.  Bell,  ibid.  349.  Bell  v.  Jutting, 
1  Moore,  155. 

(»i)  Maans  v.  Henderson,  1  East,  335.  Snook  v.  Davidson,  2  Camp.  218.  See, 
however,  Man  v.  Shifner,  2  East,  523,  529,  where  a  broker  employed  by  a  factor  to 
insure  was  held  to  have  a  lien  on  the  policy,  to  the  extent  of  the  factor's  balance 
against  his  principal :  this  was  on  the  ground  that  the  factor  had  a  lien,  and  that  the 
broker  raicht  be  considered  his  servant  to  retain  the  goods.  See  Maccombie  v.  Da- 
vies  1  East,  5.  Therefore  the  right  of  a  sub-agent  to  retain  against  the  principal  can 
never  extend  bej-ond  that  of  the  immediate  agent.  Solly  v.  Rathbone,  2  M.  &  S.  298.' 
Bee  Jackson  v.  Clarke,  1  Y.  A  J.  216. 

{n)  Rushforth  v.  Iladfield,  6  East,  519 ;  1  East,  244.  Aspinall  v.  Pickford,  3  B.  & 
P.  44,  n.  a. 

(o)  Hussey  v.  Christie,  9  East,  426;  13  Ves.  594.  Smith  v.  Plummer,  1  B.  &  A. 
575     Atkinson  v.  Cotes  worth,  3  B.  &  C.  647. 


LIEN.  G07 

How  lost. 

Section  III. — How  lost.^ 

As  a  lien  is  a  right  to  retain  possession,  it  follows  of  course  that 
where  there  is  no  possession  there  can  be  no  lien,  {p)  It  also  fol- 
lows that  where  the  possession  of  the  goods  has  once  been  aban- 

i'p)  Hutton  V  Bragg,  1  Taunt.  14.  Kruger  v.  Wilcox,  Ambl.  25-1 ;  1  Burr.  494. 
Sweet  V.  Pym,  1  East,  4.  The  peculiarity,  in  this  respect,  of  a  vendor's  lien,  if  it  can 
properly  be  so  called,  for  his  price,  has  been  treated  of  in  the  last  chapter. 

*  In  MacFarland  v.  "Wheeler,  26  Wend.  473,  it  is  said,  that  "the  very  definition 
of  the  word  lien  as  the  right  to  retain,  indicates  that  it  must  cease  when  the  posses- 
sion is  relinquished.  This  principle,  so  clearly  founded  in  reason  and  so  congruous 
to  public  utility  and  the  convenience  of  trade,  is  supported  by  the  uniform  testimony 
of  the  decisions."  Accordingly,  it  was  held,  in  that  case,  where  the  owners  of  a  saw- 
mill permitted  boards  sawed  by  them  at  a  stipulated  price,  to  be  removed  from  their 
mill  yard  to  the  bank  of  a  canal,  at  the  distance  of  half  a  mile  from  tlie  mill,  that  they 
had  lost  their  lien  in  respect  to  third  persons ;  although  it  was  expressly  stipulated 
between  the  parties  that  the  lien  should  continue  notwithstanding  tlie  removal.  But 
it  appears  to  have  been  considered,  that  had  the  boards,  after  their  removal,  been 
placed  under  the  control  of  a  third  person  with  notice  of  the  lien,  the  claim  of  the 
mill-owners  would  have  been  protected. 

And  although  it  is  stated,  generally,  that  a  lien  is  forfeited  by  deliver}-,  yet  a  de- 
livery procured  by  a  fraud  is  not  within  the  rule.  And  thus,  if  a  common  carrier  be 
induced  to  deliver  goods  to  the  consignee,  by  a  false  and  fraudulent  promise  of  the 
latter  that  he  will  pay  the  freight  as  soon  as  they  are  received,  the  delivery  will  not 
amount  to  a  waiver  of  the  carrier's  lien,  but  he  may  disaffirm  and  sue  the  consignee 
in  replevin.     Bigelow  v.  Heaton,  6  Hill,  43. 

The  doctrine  stated  in  the  text,  that  a  lien  cannot  be  set  up  to  defeat  a  claim  for 
the  goods,  if  the  party,  when  a  demand  was  made,  put  his  riglit  to  detain  on  a  differ- 
ent ground,  was  recognized  in  Everett  v.  Coffin,  6  Wend.  608,  and  Saltus  v,  Everett, 
20  Wend.  267,  S.  C.  15  Wend.  475.  But  in  the  first  case  it  was  said,  that  "  it  will  be 
found  that  wherever  this  doctrine  has  been  applied,  the  defendant  not  merely  omit- 
ted to  assert  his  lien,  but  put  his  right  distinctly  upon  some  other  ground."  See 
White  V.  Garner,  2  Bingh.  23. 

In  the  case  of  Chandler  v.  Belden,  18  John.  155,  it  was  held,  that  the  right  to  re- 
tain goods  for  the  freight  grows  out  of  the  usage  of  trade,  and  does  not  exist  where 
the  parties  have,  by  their  agreemeni,  regulated  the  time  and  manner  of  paying  the 
freight,  especially  where  the  cargo  is  to  be  delivered  before  the  time  fixed  for  the 
payment.  See  further  as  to  waiver  of  lien  by  taking  a  security  for  payment,  Bryce 
V.  Brooks,  26  Wend.  367 ;  S.  C.  21  Wend.  14.  As  to  loss  of  lien,  see  also  Holly  v 
Iluggeford,  8  Pick.  23.  Legg  v.  Willard,  17  Pick.  140.  Townsend  v.  Newell,  14 
Pick.  332.  Jordon  v.  James,  5  Ohio,  88.  Partridge  v.  Dartmouth  College,  5  New 
Earn.  286. 


698  MERCAT^fTILE  REMEDIES. 

How  lost. 

doned,  tlie  lien  is  gone ;  but,  when  tlie  master  of  a  ship,  in  obedi- 
ence to  revenue  regulations,  lands  goods  at  a  particular  wharf  or 
dock,  he  does  not  thereby  lose  his  lien  on  them  for  the  freight ;  {q) 
and,  where  they  are  not  required  to  be  landed  at  any  particular 
dock,  the  common  practice  is  to  land  them  at  a  public  wharf,  and 
direct  the  wharfinger  not  to  part  with  them  till  the  charges  upon 
them  are  paid :  (?-)  in  this  case  the  wharfinger  is  the  shipmaster's 
agent,  and  the  goods  remain  in  the  constructive  possession  of  the 
latter.  But  otherwise,  the  rule  concerning  possession  is  so  strict, 
that  if  a  party  having  a  lien  on  goods,  cause  them  to  be  taken  in 
execution  at  his  own  suit,  and  purchase  them,  he  so  alters  the  na- 
ture of  the  possession,  that  his  lien  is  destroyed,  though  the  goods 
may  have  never  left  his  premises.  (5)  And  if,  when  the  goods  are 
demanded  from  him,  he  claim  to  retain  them  on  some  different 
ground,  and  make  no  mention  of  his  lien,  he  will  be  considered  as 
having  waived  it,  and  the  owner  of  the  goods  may  sue  him,  with- 
out tendering  a  satisfaction  for  the  debt  which  created  his  lien,  (t) 
For  it  is  to  be  remembered,  that,  in  all  cases,  the  owner  of  the 
goods,  on  tendering  such  satisfaction,  has  a  right  to  his  property ; 
and  if  the  creditor  refuse,  after  sucli  tender,  to  restore  it,  he  does  so 
at  his  peril,  for  if  the  tender  were  sufiicient  in  amount,  he  is  a 
wrong-doef,  and  answerable  for  his  misconduct  in  an  action.  Nor, 
indeed,  is  an  actual  tender,  strictly  so  called,  necessary  if  the  person 
in  whose  possession  the  goods  are  have  signified  his  refusal  to  ac- 
cept the  amount  really  due.  {11)  Moreover,  the  possession  must  be 
lawful:  a  creditor  cannot  tortiously  seize  upon  his  debtor's  goods, 
and  then  claim  to  retain  them  by  virtue  of  a  lien ;  (y)  so,  if  he 

{q)  "Wilson  v.  Kymer,  1  M.  &  S.  15Y. 

(r)  Abbott  on  Shipping,  377,  8th  ed. 

(s)  Jacobs  V.  Latour,  5  Bingh.  130. 

{t)  Boardman  v.  Sill,  1  Campb.  410,  n.,  and  see  Knight  v.  Harrison,  2  Saund.  on 
PI.  and  Evidence,  641,  and  Thompson  v.  Trail,  6  B.  &  C.  36.  Jones  v.  Tarleton,  9 
M.  &,  W.  675.  Dirks  v.  Richards,  4  M.  &  Gr.  574.  Caunce  v.  Spanlon,  7  M.  <fe  Gr. 
903. 

(m)  Jones  V.  Tarleton,  9  M.  &  W.  657. 

(v)  Taylor  v.  Robinson,  2  Moore,  730.  See  Nicholls  v.  Glent,  8  Price,  547.  So  it 
■would  seem  from  the  judgment  in  Saund erson  v.  Bell,  2  C.  &  M.  304,  4  Tyrwh.  244, 
that  if  he  claim  a  lien  of  too  large  a  description,  the  whole  retainer  becomes  tortious, 
though  he  really  possess  one  of  a  narrower  description.  But  Scarfe  v.  Morgan,  4  M. 
&.  "W.  270,  is  contrary  to  this  notion. 


LIEN.  699 

How  lost. 

abuse  the  goods,  as,  for  instance,  by  pledging  tliem,  his  lien  is  for 
feited.  {to) 

A  right  of  lien  is  not,  however,  determined  by  an  alteration  in 
the  property  of  the  goods  over  which  it  is  exercised,  (x)  Thus, 
where  the  lading  of  a  ship  belongs  to  the  charterer,  and  such  lading 
is  subject  to  the  ship-owner's  lien  for  the  freight  reserved  by  the 
charter-party,  such  lading,  if  it  be  sold  by  the  charterer  after  it  is 
put  on  board,  will  pass  to  the  purchaser,  subject  to  the  lien  which 
the  ship-owner  had  before  the  sale,  {y) 

If  a  security  is  taken  for  the  debt  for  which  the  party  has  a 
lien  upon  the  j)roperty  of  the  debtor,  such  security  being  payable 
at  a  distant  day,  the  lien  is  gone,  (z)  So,  too,  if  the  parties  come  to 
a  new  arrangement  and  agree  that  the  debt  shall  be  paid  in  a  par- 
ticular manner.  But  a  mere  right  of  set-off  to  an  amount  equal 
to  that  for  which  the  lien  is  claimed  does  not  destroy  it,  for  in  that 
case  there  are  two  parties  having  mutual  claims  on  one  another, 
with  this  difference,  that  one  has  a  security,  and  the  other  has 
not,  and  in  the  absence  of  special  agreement  to  that  effect,  it 
would  be  obviously  unjust  to  deprive  the  former  of  his  advan- 
tage, (a) 

(?y)  Scott  V.  Newington,  1  M.  <fe  Rob.  252.  Jones  v.  Cliffe,  3  Tyrwh.  511 ;  1  C.  <fc 
M.  640. 

(x)  Small  V.  Moats,  9  Bingli.  574.     Dixon  v.  Yates,  5  B.  <fe  Ad.  313. 

(y)  9  Bingh.  592. 

{z)  Hewison  v.  Guthrie,  2  Bingh.  K  C.  755.  Or  if  the  creditor  execute  a  composi- 
tion deed  which  includes  a  release  of  the  original  debt.  Cowper  v.  Green,  1  M.  A 
W.  633.     Buck  v.  Shippam,  1  Phillips,  694. 

(a)  See  Pinnock  v.  Harrison,  3  M.  <fe  "W.  532,  judgment  of  Alderson,  _B. 


GENERAL   INDEX 

TO    THE    ORIGINAL    WORK. 


ABAXDOXilEXT,     See  Maritime  Insurance,  410. 
ACCEPTANCE, 

of  Bills  of  Exchange,  297.     See  Bills  of  Exchange. 

Supra  Protest,  803. 

of  goods  ■w^ithin  meaning  of  Statute  of  Frauds,  608.    See  Sale. 
ACCOiBIODATIOX  BILL, 

presentment  of,  when,  311-315. 

notice  to  drawer  o^  when  dispensed  with,  330,  331. 
A.CCOUXT, 

between  partners,  cannot  be  had  at  law,  TO. 

how  taken  in  equity,  71,  72. 

under  builder's  hand,  to  be  produced  on  registry  of  a  ship,  234i 
iCTS, 

of  God,  carrier  not  responsible  for,  361,  387.    See  Carriers. 
ADJUSTiflEXT, 

what,  483. 

Iiow  far  binding,  484,  485. 
ADiURALTT, 

court  of)  its  jurisdiction  between  part  owners  of  ships,  249. 

in  suits  for  seamen's  wages,  554-556. 

in  suits  for  master's  wages,  656. 
ADMISSION, 

by  agent  binds  principal,  189. 

renders  a  verbal  guaranty  binding,  when,  565-568. 
ADYAXCES, 

by  agent,  when  to  be  repaid,  167.     See  Principal  and  Agent, 
AFFREIGHTMENT, 

Contract  of,  by  Charter-party. 

charter-party,  what,  369,  370. 
need  not  be  by  deed,  370. 


702  INDEX  TO  THE 

AFFREIGHTMENT— coniiwwi. 

may  be  made  by  whom,  370. 

its  usual  contents,  370-3'72. 

time  of  sailing  material,  371. 

description  of  ship's  burthen,  not  couclusiy^e,  ib. 

clause  respecting  detnurrage,  how  construed,  372-374. 

possession  of  ship,  when  hela  to  pass  to  merchant  under  charter-party,  375 
Contract  for  Conveyance  in  a  General  Skip 

what,  376. 

its  terms  usually  contained  in  bill  of  lading,  ib. 

bill  of  lading  commonly  made  out  in  parts,  ib. 

its  form,  ib. 

a  negotiable  instrument,  077 

how  negotiated,  377,  378. 

the  property  in  the  goods  passed  by  its  negotiation,  379. 

but  not  tne  right  to  sue  on  the  contract,  380. 

right  to  stop  in  transitu,  may  be  defeated  thereb}'',  379. 

provided  that  the  assignee  have  acted  bona  fide,  ib. 

negotiation  of  bill  of  lading  by  factor,  its  effect,  380. 
Duties  of  Master  and  Owner  under  a  Contract  of  Affreightment. 

with  respect  to  the  preparation  for  the  voyage,  381. 

with  respect  to  the  commencement  and  course  of  voyage,  382-384. 

with  respect  to  the  completion  of  voyage,  385,  386. 

their  liabilities,  wherein  narrowed  by  bill  of  lading,  387. 

wherein  by  legislative  enactment,  388,  389. 

amount  of  liability  of  owners,  how  restricted  by  statute,  ih. 
Puties  of  Merchant  under  Contract  of  Affreightment. 

must  lade  in  due  time  and  manner,  389. 

and  pay  the  charges  due  on  his  commodities,  390. 

primage,  what,  ib. 

average,  what,  ib. 

freight,  denotes  the  price  of  carriage,  891. 

is  not  due  unless  the  carriage  be  performed,  ib. 

consequences  of  this  rule,  392. 

freight  is  not  forfeited  by  a  necessary  interruption  of  the  voyage,  fS. 

due  in  some  cases,  though  the  carriage  be  net  completed,  ib. 

amount,  how  calculated,  393,  394. 

remedies  of  owner  for  the  freight,  394. 

has  a  lien  for  it  on  the  goods  carried,  ib. 

may  sue  on  charter-partj',  ib. 

may  sue  on,  consignee  or  indorsee  of  the  bill  of  lading,  in  what  cases,  395,  396, 

stranger  to  the  contract,  may  become  chargeable  with,  or  entitled  to  freights 
how,  396,  897. 

part  payment  of  freight  may  be  claimed  when,  397-401. 
Ovneral  Average,  401-403.     See  Average. 
Salvage,  404.    See  Salvage. 
Dissohition  of  Contracts  of  Affreightment, 

may  be  by  consent  of  parties,  408. 


ORIGINAL   WORK.  703 

AFFRElGB.T^^l'E^T— continued 

or  a  declaration  of  government  rendering  them  illegal,  403. 

not  by  an  embargo,  ib. 

except  ill  certain  cases,  ib. 

by  a  prohibition  to  export  the  cargo,  ib. 

unless  the  prohibition  be  that  of  a  foreign  government,  ib. 

voyage  to  a  blockaded  port   rendered  illegal  by  the  notification  of  thfl 

blockade,  409. 
unless  there  be  no  intention  of  breaking  iie  blockade,  ib. 
AGENCY.     See  Principal  and  Agent. 
AGENT.     See  Principal  and  Agent. 
AGREEMENT. 

construction  of  the  word,  when  used  in  Statute  of  Frauds,  576,  577. 

comprehends  Parties,  Consideration,  and  Promise,  577. 

difference  between  the  effect  of  Statute  on  Prosjiective  and  Retrospective  Agrefr- 

mente,  577-579. 
may  be  collected  from  distinct  papers,  if  connected  in  sense,  580 
from  letters  to  third  parties,  580. 
ALIEN, 

friend,  his  rights,  39. 
enemy,  his  rights,  40. 

enemy,  cannot  insure,  412.    See  Maritime  Insurance. 
except  by  royal  license,  ib. 
ALTERATION, 

of  bill  or  note,  effect  of,  340.     See  Bill  of  Exchange. 
APPOINTMENT, 

of  agent,  how  made,  149.     See  Principal  and  Agent, 
when  may  be  by  parol,  ib. 
when  must  be  in  writing,  ib. 
when  by  deed,  ib. 
APPRENTICESHIP, 

necessity  of,  abolished,  558. 
Contracts  of , 

their  nature  and  form,  557,  558. 
rights  and  duties  of  apprentice,  559,  560. 
of  master,  ib. 

contract  how  dissolved,  56C 
assignment  of  apprentice,  56L 
APPROPRIATION, 
of  Payments, 

may  be  made  by  debtor  at  the  time  of  payment,  670. 
afterwards  by  creditor,  ib. 

when  there  is  an  account  current,  how  made,  670,  67i. 
cases  in  which  the  creditor  cannot  appropriate,  671,  372. 
APPROVED  BILL, 

meaning  of  those  words,  624, 
ARBITRATION, 

between  master  and  servant,  535,  536.     See  Hiring  and  Servief. 


704  IXDEX  TO  THE 

ARTICLES, 

of  partnership,  62.     See  Partnership. 
ASSIGNMENT, 

of  apprentice,  561. 
AT  AND  FROM, 

construction  of  those  words  in  policies,  428.     See  Maritime  Insurant 
AUCTION, 

sale  by,  within  Statute  of  Frauds,  608.    See  Sale. 
AUCTIONEER, 

his  authority  as  agent  of  both  parties,  619.    See  Sale, 
AUTHORITY, 

of  agent,  147.     ^ee  Principal  and  AgerU. 
AVERAGE, 

general,  401. 

particular,  390. 

exemption  from,  in  policies,  448. 


B. 

iiANK-NOTE,  285.     See  Bills  of  Exchange. 
BANKS, 

different  classes  of,  281-283. 
power  of,  to  issue  bills  and  notes,  ib. 
mode  of  charging  members  of  joint  stock,  284,  285. 
regulations  of  joint  stock,  formed  since  May  6th,  1844,  129. 
BARGAIN,  602,  603.    See  Sale. 
BARRATRY, 

perils  by,  440,  441.    See  Perils,  Maritime  Insurance, 
BILL  OF  LADING,  376.     See  Affreightment. 
BILL  OF  SALE, 

of  ship,  242.     See  Shipping. 
of  goods,  passes  property  on  delivery,  597. 
BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES. 
1.  Their  Definition,  Requisites,  and  Form. 
bill,  what,  262. 
note,  -what,  263. 
check,  what,  ib. 
bank-note,  ib. 
their  legal  effect,  264,  265. 
Requisites. 

must  be  an  order  or  promise,  266,  267. 
for  pajTiient  of  money,  267. 
in  a  certain  sum,  ib.. 
unconditionally,  267,  268. 
effect  of  fraudulent  insertion  of  words,  271. 
Inland  Bill  or  Note. 
form  of,  272. 


ORIGINAL  WORK.  705 

BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES— con  ^wwed 
Amount,  273. 
Stamp,  273,  274. 

must  be  affixed  before  instrument  is  made,  273. 

exception,  ib. 

when  not  requisite,  ib. 

duty  not  enhanced  by  reservation  of  interest,  274. 

■what  notes  may  be  reissued  without  further  stamping,    . 
Date,  not  essential,  ib. 

consequence  of  omission,  ib. 

post-dating,  when  penal,  ib. 
Time  for  Payment, 

month,  signification  of,  275. 
Place  of  Payment,  ib. 

may  be  ejsecified,  ib. 

consequence  of  naming  it  in  memorandum,  ib. 
Designation  of  Payee. 

consequence  of  mistake  in  name,  ib. 

how  designated  to  render  bill  transferable,  276. 

fictitious  payees,  consequence  of,  276,  277. 

payee  must  not  be  uncertain,  277. 

consequence  of  leaving  blank  for  payee's  name,  ib. 
Name  of  Maker  or  Drawer, 

must  be  written  by  himself  or  agent,  ib. 

must  not  be  uncertain,  ib. 

may  be  written  before  instrument  is  complete,  ib, 

bills  of  joint  stock  companies,  how  drawn,  278. 

bills  of  joint  stock  banks,  how  drawn,  ib. 
Name  of  Drawee. 

bill  may  be  addressed  to  di-awer  himself,  ib. 

but  is  rather  a  note  than  bill,  ib. 

may  be  addressed  to  a  house,  ib. 
Foreign,  Bill, 
form  of,  ib. 
drawn  in  sets,  279. 
stamp,  when  necessary  to  it,  ib. 
2.  Parties  to  Bill  or  Note, 
must  be  competent,  280. 
infant,  ib. 

feme  covert,  280,  281. 

banking  corporations  and  partnerships,  281. 
Bank  of  England,  282. 
banks  of  six  or  fewer  than  six  persons,  ib. 
banks  of  more  than  six,  282-284. 
joint  and  several  parties,  286,  287. 
3    Transfer  of  Bills  and  Notes. 

bills  and  notes  excepted  from  the  rule  that  choses  in  action  are  not  tran* 
ferable,  288. 

45 


706  IXDEX  TO   THE 

BILLS  OF  EXCHAiVGE  AND  PROMISSORY  NOTES— con^mwci 

when  transferable  by  delivery,  288. 

when  by  indorsement,  ib. 

how,  if  for  less  than  five  pounds,  ib. 

Indorsement, 

in  full  or  blank,  289. 

restrictive,  290.  \ 

cannot  be  for  part  unless  residue  be  paid,  ih. 

consequence  of  omitting  words  of  transfer,  ib. 
Indorsement  by  whom  made. 

by  representatives  of  holder,  291. 

by  assignee  of  bankrupt,  when,  ib. 

by  husband,  ib. 
liability  of  person  transferring  in  auter  droit,  ib. 
transfer  by  thief  or  finder,  292. 
Time  of  Transfer. 

either  before  or  after  bill  is  due,  ib. 

consequence  of  taking  it  overdue  or  dishonored,  292,  2S3. 

in  what  cases  negotiable  after  it  has  been  paid,  294. 

legal  effect  of  indorsement,  ib. 

of  transfer  by  delivery,  295. 

meaning  of  term  indorsement,  296. 
4.  Acceptance, 

when  necessarj',  297. 

may  be  made,  when,  ib. 

how,  on  a  foreign  bill,  ib. 

how,  on  an  inland  bill,  ib. 

how,  on  Irish  or  Scotch  bills,  ib. 

no  particular  form  requisite,  ib. 

nor  signature,  ib. 

what  words  amount  to  acceptance,  298. 

what  acts  may  amount  to  acceptance,  299. 

acceptance  may  be  absolute  or  conditional,  ib. 

conditional  acceptance  may  be  refused,  ib. 

consequences  of  taking  it,  ib. 

acceptance  varying  from  tenor  of  bills,  may  be  refused,  300. 

consequences  of  taking  it,  ib. 

acceptance  once  complete  and  issued  irrevocable,  ib. 

before  issued  revocable,  ib. 

acceptance  admits  drawer's  ability,  ib. 

if  made  after  sight  of  bill,  admits  his  signature,  ib. 

but  not  the  ability  or  signature  of  indorser,  ib. 

though  his  name  was  on  the  bill  when  accepted,  ib. 

admits  drawer's  ability  to  indorse  if  bill  were  payable  to  his  order,  300, 

301. 
its  effect  when  drawer  is  fictitious,  301. 

if  bill  be  drawn  and  indorsed  by  procuration,  admits  procuration  to  draw,  ib. 
but  not  procuration  to  indorse,  ib. 


ORIGIKAL  WORK.  707 

BILLS  OF  EXCIIAXGE  AND  PROMISSORY  'NOTES— contmued. 
Acceptance  for  Honor, 

what,  SOL 

inures  to  whose  benefit,  ib. 

if  no  name  be  specified,  is  considered  to  be  for  the  honor  of  drawer,  16. 

several  on  the  same  bill  allowed,  ib. 

may  be  by  drawee,  ib. 

holder  not  bound  to  take  it,  ib. 

what  must  be  done  to  charge  acceptor  for  honor,  302. 
Acceptance  sicpi-a  Protest, 

what,  303. 

necessity  for  protest,  ib. 
Acceptor  for  Honor,  his  remedy,  ib 
Second  Acceptance,  not  allowed  for  honor,  ib. 

will  inure  as  a  guaranty,  ib. 
'     Presentment, 

necessity  for,  303,  304. 
when  excused,  305,  306. 
To  whom  made,  314. 
where  made,  315,  316. 

presentment  for  acceptance,  when  made,  316,  317. 
for  payment,  when  made,  318,  319. 
days  of  grace,  what,  320. 
when  allowed,  ib. 

number  of  days  of  grace,  in  different  countries,  320,  321. 
how  computed,  321. 
Usance,  signification  of,  ib. 
how  computed,  ib. 

presentment  must  be  at  a  seasonable  time  of  day,  ib. 
what  time  seasonable,  ib. 
6   Notice, 

in  case  of  dishonor,  must  be  given  to  persons  whom  holder  intends  tc 

charge,  321,  322. 
neglect  to  give  notice  of  non-acceptance  discharges  prior  parties,  322. 
though  bill  required  no  acceptance,  ib. 

except  against  holders  for  value  without  notice  of  the  dishonor,  ib. 
notice  does  not  mean  mere  knowledge,  ib. 
may  be  proved  by  admissions  or  inference,  ib. 
notice  must  come  from  whom,  323. 
no  peculiar  form  of  notice,  ib. 
its  requisites,  323-327. 
Protest, 

necessary  in  case  of  dishonor  of  foreign  bill,  327 

copy  of  should  be  sent  with  notice,  ib. 

when  dispensed  with  on  a  foreign  bill,  ib. 

not  requisite  for  inland  bill  ib. 

nor  notbig,  though  usual,  i  ■ 

nature  of  protest,  ib. 


708  INDEX   TO   THE 

BILLS  OF  EXCHAXQE  AND  PROMISSORY  ^OTEB—contimced. 

in  England  must  be  stamped,  328. 

"where  to  be  made,  ib. 
Time  at  which  notice  must  he  given,  328-330. 

day  of  dishonor  not  too  soon,  328. 

each  party  has  a  day  to  give  notice,  329. 

day  of  public  rest  excluded,  ib. 

and  days  made  holy  by  a  man's  peculiar  creed,  ih. 

banker  presenting  for  a  customer  has  the  Bame  time  as  if  he  wese  a 
holder,  ib. 

customer  has  a  further  time,  ib. 

when  residence  of  previous  parties  is  unknown,  what  notice  sufficient, 
329,  330. 

time  not  enlarged  by  premature  notice   to   the  party  transmitting 
notice,  330. 
notice  need  not  be  in  writing,  ib. 
may  be  sent  to  counting-house,  ib. 
transmission  of  it  by  post  sufficient,  ib. 
though  it  be  not  received,  ib. 
letter,  how  to  be  directed,  ib. 

if  no  post,  may  be  sent  by  the  ordinary  conveyance,  330,  331 
Notice,  how  dispensed  with. 

by  part  payment  with  full  knowledge  of  the  facts,  33L 

when  drawer  has  no  effects  in  drawee's  hand,  332. 

danger  of  relying  on  this  excuse,  ib. 

liability  of  a  party  discharged  by  want  of  notice  cannot  be  revived,  333, 

consequence  of  notice,  ib. 
t.  Payment, 

to  whom  made,  334. 

in  case  of  forgery,  drawee,  if  he  accept,  must  pay  bona  fide  holder  for 

value,  ib. 
if  he  pay  without  accepting,  cannot  recover  his  money,  ib. 
at  least  unless  he  give  notice  the  same  day,  ib. 
will  have  no  remedy  against  the  party  whose  name  is  forged,  ib. 
unless  that  party  have  been  guilty  of  negligence,  ib. 
must  ascei'tain  the  sufficiency  of  procurations,  335. 
should  not  pay  before  the  bill  or  note  is  due,  ib. 
Payment  supra  Protest,  what,  ib. 
Payment  how  enforced,  335,  336. 

proceedings  stayed  on  what  terms,  336. 

party  paying  becomes  a  holder,  ib. 

as  on  a  transfer  from  whom,  ib. 
What  recoverable. 

in  general,  principal,  interest,  and  expenses,  ib. 

interest,  from  what  time  it  runs,  336,  33Y. 

computed  up  to  what  time,  337. 

exjienses  of  noting  and  postage,  how  recovered,  ib. 

re-exchange,  ib. 


ORIGINAL  WORK.  709 

BILLS  OF  EXCHANGE  AND  PROMISSORY  Is  OTES— continued. 
8.  Resistance  against  Payment. 

defendant  either  denies  bis  original  liability,  or  contends  tliat  it  is  deter 

mined,  337. 
Grounds  for  denying  his  original  liability,  337,  338. 
Defect  hi  holder's  title,  338. 
Insufficiency  of  Consideration. 

consideration  prima  facie  presumed,  ib. 

but  presumption  may  be  rebutted,  ib. 

want  of  consideration,  when  a  defence  in  toto,  339. 

when  pro  tanto,  ib. 

duress,  ib. 

fraud,  ib. 

bill  lost  or  stolen,  ib. 

defence  founded  on  insufficiency  of  consideration,  how  rebutted,  339- 
342. 

effect  of  taking  bill  overdue,  342. 
Illegality  of  Consideration, 

examples  of,  342-344. 

though  but  in  part,  vitiates  the  instrument  in  toto,  344. 

but  does  not  render  the  good  part  of  the  consideration  irrecoverable,  ib. 

vitiates  substituted  instrument,  if  the  first  be  renewed,  ib. 

unless  the  illegal  part  of  the  consideration  be  excluded,  ib. 

in  what  cases  it  formerly  vitiated  the  instrument  in  the  hands  of  a  bona 
fide  holder  for  value,  ib. 

present  state  of  the  law  on  that  subject,  344,  345. 

what  bills  exempt  from  the  usury  laws,  345. 

illegal  transfer  of  good  bill  or  note,  its  consequence,  346. 
Grounds  for  contending  that  defendant's  liability  is  determined. 
Suspension, 

by  renewal,  346,  347. 

verbal  promise  to  renew,  when  a  defence,  347. 

written  agreement  to  renew,  effect  of,  ib. 
Extinguishment. 

extinguishment  not  equivalent  to  satisfaction,  ib. 

does  not  protect  third  parties,  ib. 
Satisfaction, 

by  payment  or  its  equivalent,  348. 

exonerates  all  parties,  349. 

effect  of  taking  defendant  in  execution,  ib.    ' 

satisfaction  may  be  pro  tanto,  ib. 

material  alteration  of  bill  or  note  when  issued,  a  satisfaction,  349,  350, 

except  against  parties  consenting,  350. 

renders  a  new  stamp  necessary,  ib. 

unless  it  were  to  correct  a  mistake,  ib. 

what  alterations  material,  ib. 

alteration  before  issue  with  consent  of  parties,  does  not  vitiate,  351. 

when  bill  or  note  is  considered  issued,  ib. 


710  INDEX  TO   THE 

BILLS  OF  EXCHANGE  AND  PROMISSORY  IsOTIB— continued. 
cancellation  by  mistake  no  satisfaction,  351. 
Discharge^ 
what,  ib. 

by  ■waiver,  352.         ■ 
express  waiver,  ib. 
implied  waiver,  ib. 
by  indulgence  to  principal,  353. 
maker  and  acceptors  considered  principals,  ib. 
indorsees,  their  sureties,  ib. 

discharged  by  indulgence  to  makers  or  acceptors,  zb. 
unless  they  consent  to  it,  ib. 
not  discharged  by  mere  forbearance,  ib. 
nor  by  holders  taking  a  collateral  security,  ib. 
subsequent  indorser  discharged  by  indulgence  to  prior  one,  ib. 
but  prior  indorser  not  discharged  by  indulgence  to  subsequent  one,  354 
semble,  that  accommodation  acceptor  and  maker  are  not  sureties,  ib. 
drawer  not  discharged  by  indulgence  to  accommodation  acceptor,  ib. 
semble,  that  joint  maker  cannot  be  looked  on  as  a  surety,  354,  355. 
9.  Remedy  on  Lost  Bills  and  Notes. 

no  remedy  at  law,  if  finder's  transferee  could  gain  a  title,  355.  « 

nor  action  for  the  consideration,  ib. 

loss  of  half  a  note,  consequence  of,  355,  356. 

if  bill  or  note  were  destroyed  or  lost,  while  unindorsed,  or  having  none  but 

special  indorsements,  action  perhaps  lies,  357. 
unless  defendant  would  have  remedy  over,  ib. 
in  such  a  case  after  judgment  by  default,  court  will  refer,  ib. 
consequence  of  losing  bill  overdue,  ib. 
loser  of  bill  or  note  may  enforce  payment  in  equity,  358. 
stat.  9  ife  10  Wm.  4,  c.  17,  s.  3,  its  construction,  ib. 
BLANK, 

left  in  bill  or  note  for  payee's  name,  consequence  of,  277. 
BLOCKADE, 

voyage  with  intention  to  violate  it,  illegal,  409. 

voyage  to  a  blockaded  port,  without  intent  to  violate  the  blockade,  legal,  ih 
BOND, 

in  restraint  of  trade,  generally  \oid,  88. 
in  partial  restraint,  when  good,  ib. 
on  registry  of  ship,  234,  235.    See  Shipping. 
BOOK, 

of  registry,  235.     See  Shipping. 
BOTTOMRY, 
what,  527. 

difference  between  bottomry  and  respondentia,  ib. 
differences  between  loans  on  bottomry  and  common  loans,  ib. 
in  the  risk,  527,  528. 
in  the  amount  of  interest,  528. 

difference  between  the  remedy  on  a  loan  to  the  owner,  and  on  one  to  the  mas- 
ter, 528,  529. 


ORIGINAL  WORK  711 


BOTTOMRY— continued. 

authority  of  mastei*  to  hypothecate,  529. 

its  advantages,  ib. 

may  be  exercised,  ia  what  cases,  530 

remedy  of  lender,  531. 

■where  there  are  several  creditors,  the  last  preferred,  ib. 
BOUGHT  AND  SOLD  NOTES, 

what,  620,  621. 

must  correspond,  621.     See  Sale. 
BRITISH, 

what  ships  properly  so  called,  230.    See  Shipping. 

what  seamen,  230,  231. 
BROKER,  150-152.     See  Principal  and  Agent. 

the  agent  of  both  parties  in  contracting  sales,  620. 

binds  his  principals  inter  se,  how,  ib 

Insurance  Broker,  his  character,  413. 
BY-LAWS.     See  Corporation. 


CAPTURE, 

of  a  ship,  title  acquired  by,  238. 

its  effect  in  divesting  owner's  property  at  common  law,  40*7. 

how  altered  by  statute,  40*7,  408. 

rule  in  case  of  the  capture  and  recapture  of  an  ally's  ship,  408. 
CARRIERS. 

common  carriers,  what,  359,  360. 

their  duties,  360,  361. 

are   answerable   for   every   loss,   save   by  the    act  of  God    and   the    King's 
enemies,  361. 

formerly  were  accustomed  to  limit  their  responsibility  by  notices,  362. 

contents  of  notice,  ib. 

effect  of  it,  362. 

only  exonerated    them    from    loss    occurring   without   misfeasance   on  their 
part,  ib. 

unless  the  employer  had  misbehaved,  ib. 

law  respecting  land  carriers  now  regulated  by  stat.  11  Geo.  4,  and  1  Wm.  4  «■  68 
364,  365. 

effect  of  that  statute,  366. 

who  is  the  proper  person  to  sue  in  case  of  loss,  ib. 

booking-office-keepers,  when  liable,  367. 

remuneration  of  carriers,  ib. 
CHARTER, 

of  incorporation,  powers  of  crown  in  granting  it,  109 

how  forfeited,  145,  146. 
CHARTER-PARTY,  369-375.     See  Affreightment. 
CHECK, 

what,  263. 


712  INDEX   TO  THE 

CHECK — continued. 

consequence  of  writing  banker's  name  across  it,  334. 

See  further,  Bills  of  Exchange. 
CIRCULAE, 

to  announce  dissolution  of  partnership,  when  proper,  56,  87. 
CLERGY, 

their  incapacity  to  trade,  41. 
COLLECTOR, 

of  customs,  his  authority  in  registering  ships,  233.     See  Shipping. 
COMPANY,  101.     See  Joint  Stock  Company. 
COMPOUND  INTEREST,  665.     See  Interest. 
COMPTROLLER, 

of  customs,  his  authority  in  registering  ships,  233.     See  Shipping. 
CONCEALMENT, 

of  a  material  fact  avoids  policy,  486,  500-502.     See  Insurance. 
CONSIDERATION, 

for  bill  or  note  prima  facie  presumed,  338. 

want  of,  a  defence,  when,  338,  339. 

illegality  of,  342-358.     See  Illegality. 

See  further.  Bill  of  Exchange. 
CONSIGNTIE, 

when  liable  for  freight,  395.     See  Affreightment. 
CONSOLIDATION  RULE, 

what,  494. 
CONTRIBUTION,^ 

right  of  surety  to,  586.     See  Guaranty. 
CONVOY, 

what,  455. 

nature  of  warranty,  to  depart  with  convoy,  455,  456. 
CORPORATION, 

Municipal.     See  Custom. 

aggregate,  what,  140. 

how  created,  141. 

trading  corporation  may  differ  from  others  in  its  powers  of  contracting,  14i 

corporation  may  do  some  small  acts  without  deed,  ib. 

liable  in  equity  to  expenses  of  its  own  formation,  145. 

may  make  by-laws,  ih. 

how  dissolved,  145,  146. 

its  debts,  generally  speaking,  extinguished  on  dissolution,  146. 

crown  may  extend  the  individual  liability  of  its  members,  ib. 
COUNTING  HOUSE, 

notice  of  dishonor  sent  there  sufficient,  330. 
COURT, 

of  admiralty.     See  Admiralty. 

foreign  prize  courts,  rule  concerning  their  competency,  457. 
COVENANT, 

not  to  sue  one  partner  no  discharge 'to  others,  97. 
CREDIT.     See  Debt. 


ORIGINAL  WORK.  713 

CUSTOMS, 

of  corporate  towns  restraining  trade,  41,  42. 

D. 

DATE, 

of  bill  or  note,  2'74,  2Y5. 

of  policy  of  insurance,  446,  447.     See  Policy  of  Insurance. 
DEBT, 

Contract  of  Debt,  what,  653. 
Duty  of  Debtor, 

must  tender  payment  before  action  brought,  651. 

payment,  how  to  be  made,  ib. 

where  creditor  has  chalked  out  mode,  it  is  sufficient  to  adopt  it,  655. 

in  the  absence  of  directions  from  creditor,  what  tender  legal,  657-659. 

payment  by  bill  or  note,  effect  of,  659. 

suspends  creditor's  remedy,  ib. 

generally  speaking,  no  satisfaction,  unless  the  instrument  be  paid,  060. 

will  operate  as  a  satisfaction,  though  instrument  be  not  paid,  when,  660-6)65; 

amount  of  payment,  when  increased  by  interest,  663-665. 

what  interest  legal,  665. 

payments,  how  appropriated,  66S-6'72.     See  Appropriation. 
Duty  of  Creditor, 

to  receive  payment,  when  tendered,  672. 

consequence  of  his  refusal,  ib. 

to  give  a  proper  acquittance,  672,  673. 

receipt  may  be  tendered  to  him  at  time  of  payment,  673. 

penalty  for  not  filling  it  up,  ib. 

effect  of  receipt  in  evidence,  ib. 

when  it  requires  a  stamp,  ih. 
DEBTOR.    ^eeDebt. 
DECLARATION, 

of  interest,  when  requisite,  426. 
does  not  require  underwriters'  consent,  ib. 
but  ought  to  be  communicated  to  them,  427. 
071  Registry  of  Ships,  its  contents,  234. 
DEED, 

requisite  in  general  to  bind  corporations,  141,  142. 
when  dispensed  with,  143. 
of  Inspection.    See  Note. 
of  sale.     See  Bill  of  Sale 
DEL  CREDERE, 

what,  163 
DELAY, 

when  in  the  nature  of  a  deviation,  401. 
DELIVERY, 

of  goods,  constructive  takes  place,  when,  60S,  609. 
to  agent,  binds  jjrincipal,  601. 


714  IM)EX  TO  THE 

DEMURRAGE, 

■what,  371. 

clause  respecting  it  in  charter-party,  how  construed,  372. 
DESERTION, 

forfeiture  of  seamen's  wages  by,  550-553.     See  Seamen. 
DEVIATION, 

its  effect  on  policy,  459,  460.     See  Maritime  Insurance. 
DISCHARGE, 

of  liability  on  bill  or  note,  what  amounts  to,  351-353. 

of  servants  for  misconduct,  534. 
DISMISSAL, 

of  servant,  when  justifiable,  ih. 
DISPUTES, 

between  master  and  servant,  when  to  be  settled  by  arbitration,  536. 
DISSOLUTION, 

of  corporations,  145,  146.     See  Corporation. 

of  partnership,  53.     See  Partnership. 
DISTRESS, 

privilege  against,  of  goods  bailed  to  a  trader,  225 
DOCUMENTATION, 

implied  warranty  of,  in  policy,  470, 
DORMANT  PARTNER.    See  Partnership. 


E. 

EARNEST.    ^e&Sale. 
EMBARGO, 

effect  of,  on  contracts  of  affreightment,  408. 
ENEMIES, 

See  Aliens. 

perils  by,  436,  437.    See  Perils. 

carrier  not  responsible  for  loss  occasioned  by,  361.     See  Carrier, 
EXCHANGE, 

what,  590. 

how  it  differs  from  a  sale,  ih. 
EXECUTOR, 

of  a  deceased  partner,  his  liabilities,  89. 

when  liable  personally  on  bill  or  note,  291. 
EXTINGUISHMENT, 

of  remedy  on  bill  or  note,  347. 

F. 

FACTOR, 

See  Principal  and  Agent,  150,  178,  et  »eq, 
FEME  COVERT, 

cannot  trade,  40. 

except  by  custom  of  London,  41. 

may  be  an  agent,  149. 


ORIGINAL  WORK.  715 

FIRE, 

perils  by.     See  Perils. 
FIRE  INSURANCE, 

nature  of,  503. 

insured  must  have  an  interest  in  the  subject  matter  of  insurance,  504. 

Policy  of,  not  assignable,  505. 

avoided  by  misrepresentation  or  concealment,  506,  507. 
description  of  property  in,  508-518. 

"warranties  contained  in  it  must  be  strictly  complied  "with,  519-523. 
liability  of  insurer,  its  extent,  524-526. 
FIRM.     See  Partnership. 
FIXTURES, 

for  mercantile  purposes,  how  privileged,  225. 
FORBEARANCE, 

to  sue  principal  does  not  discharge  surety,  583. 
FORFEITURE, 

of  seamen's  "wages,  549-553.    See  Seamen. 

of  unregistered  vessel,  231.     See  Shipping. 
FORGERY, 

of  bill  or  note,  334, 
FRANCHISES  OF  CORPORATION.    See  Corporation. 
FRAUD, 

of  agent,  principal  "when  answerable  for,  195. 
FREIGHT, 

See  Affreightment,  869. 

meaning  of  word  in  policy,  426. 

must  be  insured  eo  nomine,  ib. 

is  the  mother  of  wages,  548. 
FURNITURE, 

meaning  of  word  in  policy,  426. 


G. 

GAMING, 

when  a  defence  to  action  on  bill  or  note,  343. 
GAMING  POLICY.     See  Inmrance. 
GENERAL  AVERAGE, 

meaning  of  the  term,  401. 

cannot  be  unless  the  whole  adventure  has  been  in  jeopard}-,  ih. 

the  damage  to  be  made  good  may  consist  either  in  loss  or  expense  incurred,   b 

must  have  been  incurred  voluntarily,  ib. 

what  objects  contribute  to  make  good  the  damage,  402. 

amount  of  contribution,  how  calculated,  ib. 

antiquity  of,  ib. 
GENERAL  SHIP, 

what,  3*76. 
GOODS, 

meaning  of,  in  policy,  426.  ' 


716  INDEX  TO  THE 

GOODWILL, 

recognized  as  a  valuable  interest,  252. 

except  where  the  profits  of  the  business  arise  from  personal  skill,  ib. 

Bale  of  goodwill  does  not  preclude  seller  from  setting  up  the  same  kind  of  biisi 

ness  in  the  same  neighborhood,  ib. 
by  conveyance  of  a  shop  the  goodwill  passes,  ib. 
sale  of  stocJc  and  goodwill  requires  stamp,  252,  253. 
GRACE, 

days  of,  319,  320.     See  Bill  of  Exchange. 
GUARANTIES. 

Nature  and  Form  of  Guaranty. 
guaranty,  what,  562. 
must  be  in  writing,  564. 
but  money  paid  in  pursuance  of  a  verbal  guaranty  is  liot  recoverable  back, 

565. 
verbal  guaranty  sometimes  enforced  against  attorney,  566. 
may  be  rendered  binding  by  an  admission,  567,  568. 
effect  of  the  Statute  of  Frauds  on  guaranties  considered,  569-580. 
Stamp,  when  requisite,  580,  581. 
Surety,  how  far  liable. 

continuing  guaranty,  what,  581,  582. 
Surety,  how  discharged. 

by  discharge  or  indulgence  to  principal,  582,  583. 
by  substituting  a  new  agreement  with  principal,  583. 
not  by  mere  forbearance,  ib. 
or  by  indulgence  to  which  he  has  consented,  ib. 

effect  on  suretyship  by  deed,  of  an  indulgence  to  principal  by  parol,  58-1. 
continuing  guaranty,  how  countermandable,  ib. 
countermanded  by  death  of  surety,  ib. 
by  alteration  of  guaranty,  684,  585. 
Surety,  how  indemnifed. 

may  apply  to  equity  to  be  exonerated,  585. 
may  sue  at  law  for  reimbursement,  ib. 
has  a  right  to  the  benefit  of  securities,  ib. 
may  sue  his  co-sureties  for  contribution,  586. 

difference  between  times  of  suit  for  reimbursement  and  for  co7itribution,  ib 
distinction  between  the  right  to  contribution  at  law  and  in  equit}',  ib. 
contribution,  how  calculated,  ib. 
when  not  claimable,  586,  587. 

right  to  contribution  not  affected  by  the  form  of  contract,  587. 
Jiejtresentations  in  the  Nature  of  Guaranties,  587-589. 

H. 
HIRING  AND  SERVICE, 
contract  of,  532. 

general  hiring  construed  to  be  for  a  year,  ib. 
determinable  in  case  of  menial  servant  by  a  month's  warning,  ib. 
in  other  cases,  servant,  if  unjustly  dismissed,  is  entitled  to  a  year's  wages,  53S. 


ORIGINAL  WORK.  71-7 

mRING  AND  SEliYICE— continued. 

if  he  quit  causelessly,  or  be  justly  dismissed,  to  none,  533. 

■what  misconduct  justifies  master  in  dismissing  him,  534. 

payment  of  wages,  ■when  it  must  be  in  cash,  535. 

agreement  for  hiring  exempt  from  stamp  duty,  ib. 

disputes  bet-ween  master  and  servant,  ho-w  decided  by  arbitration  535,  536. 


L 

ILLEGALITY, 

a  defence  to  action  on  bill  or  note,  342-344. 

though  but  in  part,  vitiates  the  instrument  in  toto,  344. 

vitiates  substituted  instrument,  if  first  be  rene^wed,  ib. 

unless  the  illegal  part  be  excluded,  ib. 

See  further,  Bill  of  Uj;chanc/e. 

effect  of  illegality  on  a  sale,  646-652.     See  Sale. 

on  a  partnership,  50,  51.     See  Partnership. 

on  insurance.     See  hisurance. 
INDORSEE.     See  Indorsement. 
INDORSEMENT, 

of  bill  or  note,  288.     See  Bill  of  Exchange. 

of  bill  of  lading,  3T'7.     See  Bill  of  Lading. 
INDULGENCE, 

to  one  party  to  bill  or  note,  ■when  it  discharges  other  parties,  358. 

to  principal  discharges  surety,  582. 

unless  he  have  consented,  583. 
INFANT, 

cannot  trade,  40. 

may  be  an  agent,  149. 

may  avoid  partnership,  49. 

consequence  of  his  not  doing  so  at  his  full  age,  ib. 
INLAND  BILL,  2*72.     See  Bill  of  Exchange. 
INSTRUCTIONS, 

of  agent,  how  construed,  153.     See  Principal  and  Agent 
INSTRUMENT, 

negotiable.     See  Negotiable  Instruments. 
INSURANCE, 

See  Maritime  Insurance,  Fire  Insurance,  Life  Insurance. 

agent,  when  bound  to  make,  162.     See  Principal  and  Agent. 
INTENTION, 

to  deviate,  does  not  discharge  underwriter,  463. 
INTEREST, 

on  bill  or  note,  how  computed,  336,  33*7. 

of  money,  when  payable  at  common  law,  663. 

when  by  stat.  3  &  4  W.  4,  c.  42,  664. 

what  amount  legal,  ib. 

compound  interest,  payable,  when,  665. 

interest  on  bottomry  or  respondentia  loan,  628.    See  Bottomry. 


^jg  INDEX  TO  THE 

INTEREST — continued. 

Interest  on  Subject  Matter  of  Insurance. 

when  and  what  requisite.     In  Maritime  Insuranxx,  414-41 » 
in  Life  Insurance,  495,  496. 
in  Fire  Insurance,  504. 

nature  of,  need  not  be  expressed  in  policy,  42'7. 
declaration  of,  426.     See  Declaration  of  Interest. 
INTEREST  OR  NO  INTEREST, 
meaning  of,  in  policy,  414. 


J. 

JETTISON, 

perils  by,  438.     See  Perils. 
JOINT  STOCK  COMPANIES, 
what,  101. 

differ  from  other  partnerships  in  their  regulations,  ib 
different  classes  of,  102. 
how  formed,  103. 
deed,  its  usual  contents,  ib. 
transferability  of  shares  under,  104,  105. 
act  of  parliament,  usual  contents  of,  106-108. 
new  mode  of  creating  companies  by  patent  described,  108. 
enactments  of  1  Vict.  0,73—109-112. 

1  &8  Vict.  0.  110—112-128. 
7  &  8  Vict.  c.  113— banks,  129. 
how  dissolved,  129,  130. 
rights  and  liabilities  of  members  of,  ititcr  se,  &.C.,  130-132. 

mode  of  making  and  enforcing  calls,  132,  133. 

forfeiture  of  shares  by  non-payment,  133,  134. 

to  third  persons,  134-139. 

acts  establishing,  how  construed,  134,  135. 

liability  of  members,  when  it  commences,  135. 

power  of  directors  to  bind  company,  136,  137. 

by  bill,  137,  138. 

power  of  mere  shareholders  to  bind  company,  139. 
JUS  ACCEFSCENDI,  222-224:.    &ee  Mercantile  Property. 

as  to  ships,  248. 
JUSTICES, 

of  the  peace,  their  power  in  claims  for  seamen's  wages,  5oo,  5o6.    bee  beamed 

their  power  in  disputes  with  workmen,  536. 


LASCARS, 

may  serve  in  British  ship  within  Company's  charter,  231. 


ORIGIISrAL  WORK.  719 

LIBERTY, 

to  deviate,  461,  462.     See  Maritime  Insurance. 
care  must  be  taken  not  to  exceed  it,  462. 
LICENSE, 

requisite  to  enable  alien  enemy  to  trade  with  tins  countrj-,  40. 
LIEN, 

■what,  688. 

difference  between  general  and  particular  liens,  ib. 

How  acquired. 

persons  compelled  to  receive  goods  have  a  lien  at  common  law  for  their  in- 

demnit}'-,  689. 
salvor  has  a  lien  for  salvage,  690. 

persons  who  by  their  labor  have  improved  the  things  delivered  to  them,  ib. 
persons  who  have  bestowed  expense  without  producing  alteration  have  not,  ib. 
liens  may  be  created  by  express  or  implied  agreement,  690,  691. 
may  be  prevented  from  arising  either  by  express  or  implied  contract,  691-694. 
liens  may  result  from  the  usage  of  trade,  693. 
depend  upon  implied  agreement,  694. 
general  liens,  of  this  description,  694,  695. 
who  possess  them,  695,  696. 
Row  lost. 

by  abandoning  possession,  697,  698. 
>  by  taking  the  goods  claimed  in  execution,  698. 
•^  by  claiming  to  retain  them  on  another  ground,  ib. 
'^  by  the  owner's  tendering  satisfaction,  ib. 

by  abusing  the  goods,  699. 
*^  by  change  of  property,  ib. 
\b  by  giving  credit,  ib. 
LIFE  INSURANCE, 
nature  of,  495. 

insured  must  have  an  interest  in  the  life,  496. 
nature  of  interest  required,  496,  497. 

Declaration,  subscribed  by  the  party  whose  life  is  insured,  498. 
its  contents,  ib. 

is  incorporated  by  reference  into  policy,  ib. 
construction  of  its  conditions,  498-500. 

policy  avoided  by  concealment  or  misrepresentation,  500,  501. 
LIGHTERS, 

underwriter  when  responsible  for  loss  of  goods  transhipped  into  them,  432. 
LLOYD'S, 

usage  of,  not  binding  on  non-subscribers,  421. 
LOSS, 

of  bill  or  note,  rules  concerning,  355-358.     See  Bill  of  Exchange. 
In  case  of  insurance,  472.     See  Insurance. 
LOST  OR  NOT  LOST, 

meaning  of,  in  policy,  433.    See  Maritime  Insurance. 


720  INDEX  TO  THE 


M 

MAEITIME  INSURANCE. 

what,  410-412. 

Parties  to  Contract  of  Insurance. 

at  common  law  any  person  might  have  been  an  insurer,  412. 
monopoly  of  Royal  Exchange  and  London  Assurance  companies,  ih. 
its  abolition,  ih. 
alien  enemies  cannot  insure,  ib. 
unless  by  royal  license,  ih. 

English  subject,  when  looked  on  as  an  enemy,  413. 
occupation  of  a  neutral  territory  by  enemies,  its  effect^  ib. 
brokers,  their  character,  ib. 
Subject  Matter  of  Insurance, 

must,  generally  speaking,  be  one  in  which  the  insured  is  interested,  414 
common  law,  effect  of  the  words  interest  or  no  interest,  ib. 
in  what  case  the  insured  need  not  have  an  interest,  ib. 
wager  policy,  what,  ih. 

insurable  interest,  what  constitutes,  415,  416. 
insurance  of  seamen's  wages  illegal,  417. 
reassurance  illegal,  ib. 
exceptions,  ib. 

illegal  voyage,  or  goods  employed  in  illegal  commerce,  uninsurable,  418 
trading  with  an  enemy,  generally  illegal,  ib. 
unless  by  royal  license,  ib. 

infirmity  in  any  part  of  an  integral  voyage  vitiates  the  whole,  ib. 
The  Policy, 

difference  between  the  effect  of  the  printed  and  the  written  part,  419. 

parol  evidence  cannot  be  received  to  control  meaning  of,  ih. 

iisage  admitted  to  explain  it,  420. 

usage  of  Lloyd's  not  binding  on  non-subscribers,  421. 

open  policy,  what,  ib. 

valued  polic}',  what,  ib. 

must  not  be  used  as  a  cover  for  wagering,  422. 

form  of  policy  on  ship  and  goods,  422-424. 

Principal  Parts  of  Policy. 

Name  of  Imured,  ita  insertion,  how  far  requisite,  424. 

name  of  ship,  effect  of  misdescription,  how  obviated,  42a. 
Subject  of  Insurance,  must  be  accurately  described,  ib. 

freight,  what  may  be  described  as,  426. 

must  be  insured  eo  nomine,  ih. 

furniture  what  insurable  as,  ib. 

goods,  what  insurable  as,  ib. 

profits  may  be  insured  generally,  ib. 

nature  of  interest  need  not  be  expressed,  ih. 

declaration  of  interest,  what  and  when  requisite,  ib. 

does  not  reqiiire  underwriter's  assent,  ib. 

but  ought  to  be  communicated  to  him,  427. 


ORIGIXAL  WORK.  -r21 

MARITIME  INSURANCE— coH^mMetZ. 
Voyage  insured, 

must  be  accurately  described,  427,  423. 

effect  of  omissions,  428. 

effect  of  words  at  and  from,  428,  429. 

effect  of  naming  several  ports  of  destination,  430. 

effect  of  misdescription  of  voyage,  ib. 

insurance  to  an  island  or  district  protects  the  ship  to  her  first  port 

there,  431. 
protects  goods  to  the  port  of  delivery,  ib. 
duration  of  risk  on  ship,  ib. 
effect  of  words  "  in  good  safety,"  ib. 
duration  of  risk  on  goods,  432. 
goods  must  be  landed  with  reasonable  expedition,  ib. 
are  protected  after  a  transhipment  into  lighters,  ib. 
unless  the  insured  interfere,  ib. 
Perils  insured  against. 

meaning  of  words  lost  or  not  lost,  433,  434. 

perils  of  the  sea,  434-436. 

fire,  436. 

enemies,  436,  437, 

pirates,  rovers,  and  thieves,  437,  438. 

jettison,  438. 

arrests,  restraints,  and  detainments  of  kings,  princes,  and  people, 

438-440. 
barratry,  440-442. 
other  perils,  442. 
General  Observations  respecting  Perils. 

underwriters  not  liable  for  loss  naturally  incidental  to  the  thing 

insured,  442,  443. 
in.  some  cases  the  loss  falls  not  on  the  underwriter,  but  the  ship- 
owner, 443. 
in  policies  on  freight,  underwriter  is  not  liable  while  the  goods 

exist,  though  they  be  sold  or  left  behind,  ib. 
loss  is  properly  ascribed  to  the  peril  which  was  its  immediate 

cause,  ib. 
where  two  causes  equally  contribute,  may  be  ascribed  to  either, 

443-445. 
Date  and  Subscription  of  Policy,  446,  447. 
Memorandum,  448. 
its  effect,  ib. 

effect  of  word  stranded,  449-451. 
Stamp, 

must  be  impressed  when  policy  is  effected,  451,  452. 
exception  in  case  of  policies  of  mutual  insurance,  452. 
what  alterations  may  be  made  without  a  fresh  stamp,  452,  453. 
stamp  duty,  amount  of,  453. 
Warranties, 

46 


722  IXDEK  TO  THE 

MARrriME  mSJJRANCE— continued. 
what,  ib. 

must  be  literally  complied  -with,  453 
distinction  in  this  respect  between  warranties  and  representationa 

ib. 
warranties  are  either  express  or  implied,  ib. 
Express  Warranties. 
Of  time  of  sailing. 
effect  of  warranty  to  sail  on  a  particular  day,  454. 
to  depart  or  sail  from  a  place,  454,  455. 
Of  safety  of  ship  on  a  particidar  day. 

its  effect,  455. 
2o  depart  with  convoy. 
convoy,  what,  455,  456. 
master  must  obtain  sailing  instructions,  456. 
must  keep  with  convoy  dui-ing  the  vo^'age,  ib. 
Of  netdral  property. 
its  effect,  456,  457. 

sentence  of  a  foreign  court  when  conclusive  evidence  of  breach 
of  warranty,  457. 
Of  freedom  from  seizure  in  port  of  discharge. 
vessel  when  considered  in  port,  458. 
deviation  to  avoid  seizure,  its  effect,  ib. 
Implied  Warranties. 
Not  to  deviate. 

deviation  discharges  underwriter  from  losses  subsequent  to  it, 

459,  460. 
but  not  ab  initio,  460. 
what  acts  amount  to  deviations,  460,  461. 
liberty  to  deviate,  how  construed,  461,  462. 
unreasonable  delay  in  sailing  is  in  the  nature  of  a  deviation, 

463. 
an  intention  to  deviate  does  not  discharge  the  vmderwriter,  ib. 
deviation,  if  necessary,  may  be  justified,  ib, 
as  if  to  join  convoy,  ib. 
or  if  occasioned  by  stress  of  weather,  ib. 
or  the  approach  of  enemies,  ib. 
or  succoring  distress,  ib. 
or  mutiny,  desertion,  or  sickness,  ib. 

'but  the  necessity  must  not  arise  from  the  insured's  fault,  ib. 
Seaworthiness, 

not  requisite  till  time  of  sailing,  464. 

warranty,  when  satisfied,  466. 

only  applies  to  commencement  of  voyage,  468. 

effect  of  unseaworthiness  occasioned  by  mistake  or  accident, 

465. 
effect  of  admission  of,  469. 
That  a  loss  shall  not  happen  by  the  insured's  own  default. 


ORIGINAL  WORK.  723 

MARITIME  INSURANCE— coH/<«i<fc?. 

documentation  a  branch  of  this  -warranty,  4G9. 

difference  between  implied  and  express  warranties  of  docu. 

mentation,  ib. 
warranty  of  documentation  may  be  waived  by  liberty  to  carry 

simulated  papers,  470. 
is  not  implied  in  an  insurance  of  goods,  ib. 
unless  they  belong  to  the  shipowner,  ib. 
Result  of  Contract  of  Insurance 

Safety  or  loss  of  the  thing  insured,  472. 
Loss  is  either  total  or  partial,  ib. 
Total  loss, 

is  either  total  per  se,  or  rendered  total  by  abandonment,  ib. 
Loss,  total  per  se,  when,  473-478. 

may  Be  rendered  total  by  abandonment,  475,  476. 
notice  of  abandonment  must  be  given  within  what  time,  478,  479. 
abandonment  cannot  be  partial,  479. 
nor  conditional,  except  by  underwriter's  consent,  ib. 
abandonment  must  be  express  and  positive,  ib. 
informality  in  it  may  be  waived,  ib. 
may  be  so  by  parol,  ib. 
effect  of  an  abandonment,  ib. 
total  loss  of  part,  480. 
Partial  loss. 

loss  pritna  facte  total  may  become  partial,  ib. 
amount  of  partial  loss,  how  calculated,  480,  481. 
Fartial  Zo.ss  followed  by  a  total  one,  no  ground  of  claim,  482. 
exception,  ib. 
Proceedings  after  a  loss. 

Where  the  tmderwriter  admits  his  liability,  ib. 
adjustment,  what,  483. 
how  far  binding,  ib. 
Where  underwriter  contests  his  liability. 

grounds  of  defence  enumerated,  483,  484. 
Afisrepresentation  of  a  material  fact  avoids  the  policj-,  484. 
what  facts  are  material,  ib. 
misrepresentation  to  the  first  underwriter  avoids  the  policy  as  to 

the  rest,  ib. 
contra  if  to  any  other  underwriter,  484,  485. 
representation  need  only  be  substantially  true,  485. 
Concealment  of  a  material  fact  avoids  policy,  486. 
what  facts  are  material,  486,  487. 

qualific:>tions  of  the  rule  respecting  concealment,  488,  489 
Return  of  premium, 

claimable  when  the  risk  has  not  been  run,  490. 

return  for  short  interest,  what,  491. 

when  an  entire  risk  has  commenced,  no  return  clamable,  491,  492 

apportionment  of  premium,  when  allowed,  ib. 


724  INDEX  TO  THE 

MARITIME  mSURANCE—co7itinued. 

no  return  allowed  when  the  insured  has  committed  fraud,  493. 

or  if  the  insurance   were  illegal,  and  the  voyage  have  been  per 

foi-med,  ib. 
contra  when  the  voyage  has  not  commenced,  ib. 
but  notice  of  rescinding  contract  must  be  given,  ib. 
action  against  underwriter,  usual  form  of,  ib. 
consolidation  rule,  what,  493,  494. 
binding  on  the  defendant,  494. 
but  not  on  the  plaintiff,  ib. 
MARKET  OVERT, 

sale,  594,  595.    See  Sale. 
MASTER  AND  SERVANT,  532.     See  Hiring  and  Service. 
MASTER  OF  SHIP, 

his  powers  and  duties,  172,  173. 
his  liability  for  contracts,  370. 
his  remedy  for  wages,  553,  554. 
when  he  may  sell  ship,  241. 
what  is  requisite  on  changing  him,  235. 
his  authority  to  hypothecate,  529.    See  Bottomry, 

hia  duties  under  contracts  of  affreightment,  380-389.    See  Affreightment. 
MEASURES.     See  Weights  and  Measures. 
MEMORANDUM, 

of  bargain,  615,  616.     See  Sale. 
in  policy,  448.     See  Maritime  Insurance. 
to  bill  or  note,  as  to  place  of  payment,  275. 
MERCANTILE  PROPERTY. 
Incidents  of,  221. 

transferable  under  the  bankrupt  laws,  ib. 
exempted  from  ihajus  accrcscendi,  222. 
real  property  only  exempted  in  equity,  223. 
chattel  property,  whether  both  at  law  and  in  equity,  223,  224. 
real  property  of  a  firm  considered  personal  in  equity,  224. 
unless  there  be  an  agreement  to  the  contrary,  ib. 
privilege  of  goods  delivered  to  a  trader  in  the  way  of  his  trade  from  distresa^ 

224,  225. 
removability  of  mercantile  fixtures,  225. 
MERCHANT, 

his  duties  under  contract  of  affreightment,  389,  390.    See  Affreightrtwni. 
MISCONDUCT, 

of  servants,  justifies  dismissal,  when,  534. 
MISREPRESENTATION, 

of  a  material  fact,  avoids  maritime  policy,  484. 
life  policy,  500,  501. 
fire  policy,  506,  507. 
MONTH, 

signification  of  in  bill  or  note,  275. 
MORTGAGE, 

of  ships,  246.     See  Shipping. 


ORIGINAL  WORK.  725 


K 


NAME, 

of  each  contracting  party  must  be  exj^ressed  in  a  memorandum  of  a  bargain,  016 
617.     See  Sale. 

of  insured,  how  described  in  policy,  424.     See  Maritime  Insurance. 

of  ship,  how  described  there,  425. 
NAVIGATION  ACT.    See  Shipping. 
NECESSITY, 

justifies  deviation,  463.     See  Deviation. 
NEGLIGENCE, 

whether  it  invalidates  transfer  of  negotiable  instruments,  292. 

of  agent.     See  Principal  and  Agent. 
NEGOTIABLE  INSTRUMENT, 

transfer  of,  passes  the  property,  255. 

except  in  case  of  fraud,  ib. 

what  bills  and  notes  are  negotiable,  256. 

may  cease  to  be  so,  how,  256,  257. 

bill  of  lading  nogotiable,  377. 
NT;UTRAL  PROPERTY, 

warranty  of,  in  policy,  457.     See  Warranties,  Maritime  Insurance. 
NONFEASANCE, 

agent  not  liable  for,  to  third  parties,  216,  217. 
NOTE, 

in  writing  of  bargain,  what  it  must  contain,  616,  617. 
NOTICE, 

by  carrier  to  limit  his  responsibility,  362.    See  Carriers. 

of  dishonor,  322,  327.    See  Bill  of  Exchange. 
NOTING, 

of  bill  or  note,  what,  328. 

unnecessary  on  inland  bills,  327. 

expenses  o^  whether  recoverable,  337. 


0. 

OFFICERS.    See  Public  Officers. 

OPEN  POLICY.     See  Maritime  Insurance. 

OWNER, 

of  ships.     See  Shipping. 

his  duties  under  contracts  of  affreightment,  380-389.     See  Affreightment. 


P. 


PAPERS, 

of  ship  simulated  vitiate  policy,  when,  469. 
liberty  to  carry,  470. 


726  INDEX  TO  THE 

PARTIAL  LOSS, 

occurs  when,  480-482. 

amount  of,  how  calculated,  480,  481. 
PARTICULAR  AVERAGE, 

what,  390. 

exemption  from  in  memorandum  to  policy,  448. 
PARTNERS.     See  Partnership. 
PARTNERSHIP, 

1.  What,  43. 

communit}-  of  profit  constitutes  it,  44. 

such  profit  must  be  taken  as  a  principal,  46. 

partnership  governed  by  same  principle  as  other  contracts,  47,  4S 

attempt  to  contract  partnership  by  infant,  49. 

hj  feme  covert,  ib. 

alien  enem}',  50. 

illegal  partnership,  ib. 

nominal  partner,  what,  51. 

his  liability  to  strangers,  ib. 

what  a  holding  himself  out  as  a  partner,  52. 

what  not,  ib. 

2.  Partnership,  how  formed,  ib. 

must  be  by  intervention  of  all  parties,  ib. 

exception,  52. 

need  not  be  by  writing,  ib. 

3.  How  dissolved,  53. 

As  between  the  partners  themselves,  ib. 
where  a  term  was  prefixed,  ib. 
where  no  tei'm  was  prefixed,  54. 
entire  firm  dissolved,  54,  55. 
As  to  strangers,  56. 

4.  Jiiffhts  and  Liabilities  of  Partners  inter  se,  56. 

As  to  their  interest  in  the  joint  stock,  ib. 

are  joint  tenants  thereof,  ib. 

subject  to  rule  jus  accrescendi  inter  mercatores  locum  no?i  habtt,  ib. 

and  in  equity  to  the  state  of  accounts,  56,  57. 

what  constitutes  the  joint  stock,  58,  59. 

as  to  their  conduct  towards  each  other,  60. 

strict  fidelity  required,  ib. 

one  must  not  profit  at  the  expense  of  the  rest,  ib. 

or  place  himself  under  a  temptation  to  do  so,  61. 

breach  of  faith,  ground  of  equity  to  dissolve  firm,  ib. 

this  done  with  reluctance,  ib. 

articles  of  partnership,  62. 

as  far  as  they  go,  must  be  acted  on,  62,  63. 

how  construed,  63. 

their  usual  contents,  64-68. 

rights  of  partners,  inter  se,  how  enforced,  68. 

at  law,  68-70. 


ORIGII^AL  WOllK.  727 

PARTNERSHIP— co«(!»it<eJ. 
in  equity,  70-73. 

5,  Mights  of  third  Persons  against  Partners,  73. 

each  partner  agent  for  the  rest,  to  wliat  extent,  ib. 

his  authority  not  restrainable  by  private  arrangement,  74. 

cannot  bind  the  rest  by  deed,  unless  authorized  by  deed,  75. 

not,  though  partnersliip  articles  were  under  seal,  75,  76. 

such  a  deed  binds  himself,  76. 

may  bind  firm  by  release,  ib. 

can  only  bind  them  to  contracts  respecting  the  partnership  business,  ib. 

"what  contracts  are  of  that  description,  71-80. 

may  bind  them  by  negotiable  instruments,  80,  81. 

in  ■what  manner,  81. 

not^  unless  purposes  of  firm  require  the  circulation  of  such  instruments,  82. 

or  unless  usual,  ib. 

how,  if  it  be  a  farming  or  mining  concern,  ib. 

he  to  -whom  firm  is  bound,  must  have  dealt  bona  fide,  82,  83. 

taking  partnership  security  for  separate  demand,  a  badge  of  fraud,  84. 

its  effect,  ib. 

contra,  if  no  separate  demand,  ib. 

as  in  case  of  discount,  ih. 

transfer  of  partnership  security  may  be  fraudulent,  pro  tanto,  ib. 

other  instances  in  which  firm  is  bound  by  act  of  partner,  85. 

when  answerable  for  his  tort,  ib. 

for  breach  of  re  venue  laws,  ib. 

sometimes  even  criminally,  86. 

liability  of  partner  for  engagements  of  the  rest,  commences,  when,  ib. 

ends,  when,  ib. 

not  prolonged  by  a  wrongful  user  of  his  name,  87. 

notice  of  dissolution,  how  given,  ib, 

in  Gazette,  when  sufficient,  ib. 

by  circulars,  when  proper,  ib. 

by  other  means,  ib. 

in  case  of  dormant  partners,  what  sufficient,  87,  88. 

liability  of  a  retired  partner  on  contract  previous  to  dissolution,  88,  89. 

representative  of  deceased  partner  discharged  at  law,  89. 

not  in  equity,  ib. 

joint  securities,  when  construed  joint  and  several  against  him,  91-94. 

liability  of  late  partner,  or  his  representative,  reduced  by  payments  mado 

since  dissolution,  94. 
not  discharged  by  an  agreement  with  the  other  partners,  95, 
unless  creditor  of  firm  consent,  ib. 
such  consent,  when  binding,  96. 
firm,  when  discharged  by  act  of  one  partner,  97. 
payment  by  one,  payment  by  all,  ib. 
release  to  one,  release  to  all,  ib. 
covenant  not  to  sue  one,  no  release,  ib. 

6.  Rights  of  Partners  against  third  Persons,  97. 


728  INDEX  TO  THE 

PARTWEE&BIP— continued. 

on  loan  of  partnership  money  by  a  single  partner,  98. 
sale  of  partnership  goods  by  single  partner,  ib. 
guaranty  given  to  one  for  benefit  of  all,  ib. 
■when  considered  to  be  so  given,  ib. 
effect  of  change  in  firm  on  partnership  securities,  99. 
liabilities  to  firm  may  be  released  by  one  partner,  ib. 
satisfied  by  payment  to  one,  ib. 
suspended  by  indulgence  by  one,  100. 

cannot  be  enforced,  if  enforcement  would  be  unconscientious  in  one,  ib. 
partner  may  hold  shipping  in  the  name  of  the  firm,  242. 
PART-OWNERS, 

of  ships.    See  Shipping. 
vPAYEE,  .    ■ 

of  bill  or  note,  27 5-277.     See  Bill  of  Exchange. 
PAYMENT, 

bow  to  be  made,  654.  See  Debt. 
in  bill  or  note,  effect  of,  659. 
in  goods,  657. 

appropriation  of,  668-672.    See  Appropriation  of  Payments. 
of  bill  or  note,  334.     See  Bill  of  Exchange, 
supra  protest,  335. 

to  agent,  is  payment  to  principal,  190. 
by  one  partner  is  payment  by  all,  97. 
PERILS, 

comprised  in  policy  of  insurance,  433,  434.     See  Insurance. 
PILOT, 

master  and  owner,  when  not  liable  for  acts  of,  388. 
PIRATES, 

perils  by,  437,  438.     See  Perils. 
PLEDGE, 

by  factor  of  principal's  goods,  invalid  at  common  law,  178. 
when  valid  by  statute,  ib. 
POLICY, 

of  insurance.     See  Insurance. 
POST, 

notice  of  dishonor  sent  by  post,  sufficient,  322. 
remittance  of  money  or  bill  by  post,  when  sufficient,  654,  663. 
POST-DATING, 

bill  or  note,  consequence  of,  274. 
POSTMASTER  GENERAL, 

his  exemption  from  liability,  211,  212. 
PREMIUM, 

return  of,  when  allowed,  489,  490. 

return  of,  for  short  interest,  441.     See  Maritime  Insurance. 
PRESENTMENT, 

of  bill  or  note,  303-321.     See  Bill  of  Exchange. 
PRICE, 

if  fixed,  must  be  expressed  in  memorandum  of  bargam,  617. 


ORIGINAL  WORK.  729 

PRICE — continued. 

not  otherwise,  617. 

for  -what  agent  should  sell,  162,  163. 
PRBIAGE, 

■what,  390. 
PRINCIPAL  AND  AGENT. 

1.  Definition  and  character  of  Agent. 

agent,  what,  147. 

appointed  by  whom,  ib. 

cannot  delegate  his  agency,  148. 

but  may  sometimes  employ  assistants,  ib. 

who  may  be  agents,  149. 

{eine  covert,  ib. 

infant,  ib. 

appointed,  how,  ib. 

by  bare  words,  ib. 

appointment  may  be  inferred  from  the  conduct  of  principal,  iSi. 

when  it  must  be  in  writing,  ib. 

when  by  deed,  149,  150. 

factors  and  brokers,  distinction  between,  150. 

statutory  enactments,  concerning  brokers,  150-152. 

2.  Rights  of  Principal  against  Agent. 

depend  on  agent's  instructions,  1 53. 

in  the  absence  of  specific  instructions,  agent  must  pursue  the  usual  cours3  o. 

business,  ib. 
is  bound  to  have  sufficient  skill  for  that  purpose,  154. 
is  responsible  for  those  whom  he  employs  under  him,  ib. 
loss  resulting  from  his  exceeding  his  authority,  falls  on  himself,  155. 
but  if  gain  result  it  belongs  to  his  employer,  ib. 
excess  cured  by  subsequent  recognition,  155,  156. 
strict  good  faith  required  from  him,  156. 
agent  employed  to  sell,  must  not  become  the  purchaser,  ib. 
except  under  peculiar  circumstances,  156,  157. 
cannot  dispute  the  title  of  his  principal,  157. 
must  keep  a  clear  account,  ib. 

principal  entitled  to  all  increase  made  from  his  own  property,  158. 
ex.  gr.,  to  interest  made  on  his  own  money,  ib. 
unless  the  agent  be  a  stakeholder,  ib. 

agent  charged  with  all  payments  actually  made  to  him,  ib. 
or  losses  incurred  through  his  own  negligence,  ib. 
or  the  imposition  of  a  forger,  ib. 
but  not  for  losses  incurred  without  his  default,  159. 
exception,  ib. 

principal  may  recover  the  balance  due  to  him  in  assumpsit,  IGO,  161. 
may  obtain  an  account  by  bill  in  equity,  161. 
or  sue  agent  at  law  for  its  refusal,  ib. 
Duties  of  an  Agent  employed  to  sell. 
must  keep  the  goods  carefull}',  ib. 
must  insii/e  them,  in  what  cases,  162. 


730  INDEX  TO  THE 

PRINCIPAL  AND  AGE^T—co?itmued. 

must  sell  for  the  price  limited  by  his  instructions,  162. 

if  none  limited,  for  what  the  goods  are  worth,  163. 

not  upon  credit,  ib. 

unless  that  be  usual,  ib. 

del  credere  commission,  what,  ib. 

once  thought  to  create  original  liability,  ib. 

but  now  only  a  suretyship,  ib. 
Duties  of  Agent  employed  to  purchxse. 

if  he  transgresses  them,  principal  may  refuse  the  goods,  16i. 

must  do  so  in  a  reasonable  time,  ib. 
Difference  between  Principal's  rights  against  a  remunerated  and  an  unremun«- 
rated  Agent. 

former  may  be  compelled  to  commence  his  task,  165. 

latter  cannot,  ib. 

but  is  liable  for  misconduct  in  performing  it,  ib, 

though  less  skill  is  required  than  if  he  were  paid,  ib. 

unless  he  act  in  a  public  or  professional  character,  ib 

embezzlements  by,  how  punished,  ib. 

3.  Rights  of  Agent  against  Principal. 

to  receive  his  commission,  166. 

amount  thereof,  how  fixed,  ib. 

how  he  may  be  deprived  of  it,  166,  167. 

may  charge  principal  with  advances,  if  made  according  to  the  course  of 

business,  167. 
not  otherwise,  ib. 

unless  rendered  necessary  by  circumstances,  108. 
and  not  occasioned  by  his  own  misconduct,  ib. 
when  entitled  to  indemnity  from  his  principal,  168,  169. 

4.  Rights  of  third  Persons  against  Principal. 

agent's  authority  to  bind  principal  to  third  person,  either  express  or  in 
ferred,  170,  171. 

when  inferred  is  measured  by  the  extent  of  his  usual  employment,  171. 

and  continues  till  its  determination  is  made  known,  ib. 

general  agent,  what,  172. 

powers  of,  cannot  be  limited  by  private  orders,  173. 

contra  of  particidar  agent,  ib. 

principal,  by  his  subsequent  assent,  confirms  the  invalid  act  of  agent,  174. 

but  must  confirm  it  wholly  or  not  at  all,  ib. 

authority  of  agents  strictly  construed,  ib. 

if  given  to  two,  not  executable  by  one,  ib. 

if  given  to  three,  jointly  and  severally,  not  executable  by  two,  ib. 

court  search  the  instrument  for  the  principal's  intention,  174,  175. 

agent's  authority  includes  permission  to  use  the  necessary  or  usual  means  of 
accomplishing  the  object  in  view,  l7o. 

agent  employed  to  get  a  bill  discounted  may  indorse  it,  unless  expreosly  re- 
stricted, ib. 

policy  brokers  may  adjust  loss,  ib. 

in  case  of  unforeseen  contingency,  176,  177. 


ORIGINAL  WORK.  73I 

PRINCIPAL  AKD  AGENT— cond^iMeJ. 

agent  to  execute  a  deed,  how  he  must  sign,  177. 

agent  employed  to  draw,  accept  or  indorse,  how  he  laust  act,  177,  178. 

agent's  power  to  bind  principal  by  a  disposition  of  his  goods,  how  it  stood 

at  common  law,  178. 
how  it  stands  under  the  Factor's  Act,  6  Geo.  4,  c.  94,  and  5  <fe  6  Vict.  c.  39, 

178-187. 
agent  employed  to  purchase,  purchasing  in  principal's  name,  binds  him,  187 
vendor  knowing  agent's  character,  and  electing  to  give  him  credit,  is  bound 

by  his  election,  ib. 
undisclosed  principal  may  be  charged  when  discovered,  187,  188. 
except  in  certain  cases,  188. 
principal  cannot  by  a  premature  settlement  with  agent  deprive  vendor  of 

his  election,  ib. 
agent's  representation  binds  principal,  when,  ib. 
his  suppression  or  misrepresentation,  ib. 
his  admission,  189. 
paj-ment  to  an  agent  in  the  course  of  his  employment,  is  paj-ment  to  princi 

pal,  190. 
distinction  between  payments  to  brokers  and  factors,  ib. 
agent  writing  off  money  due  to  him  from  debtor,  does  not  discharge  the 

latter  against  principal,  ib. 
qualification  of  this  rule,  190,  191. 

debtor  not  exonerated  by  payment  to  factor  after  express  notice,  191. 
unless  principal  be  indebted  to  factor  on  the  balance  of  account,  ib. 
debtor  on  a  security  must  see  that  the  agent  he  pays  is  in  possession  of  it,  ib 
delivery  to  agent  a  delivery  to  principal,  192. 
principal  responsible  for  agent's  wrongs,  if  committed  in  the  negligent  execu 

tion  of  his  orders,  192,  193. 
but  not  if  wilful  or  malicious,  194. 
responsible  for  his  fraud,  195,  196. 
not  in  general  criminally  responsible  for  him,  196. 
when  his  authority  to  commit  criminal  act  may  be  presumed,  196,  197. 
authority  of  agent  how  determined,  197-202. 
C    Jiiffhts  of  Principal  against  third  Parties. 

principal  may  adopt  agent's  contract,  though  unauthorized,  202. 

must  adopt  it  altogether,  ib. 

difference  between  his  right  to  adopt  a  contract,  and  a  bare  act,  ib. 

his  right  to  adopt  contracts  made  for  him  by  an  agent  dealing  in  his  cwn 

name  subject  to  the  contractee's  rights  against  agent,  203,  204. 
difference  between  right  to  set  off  a  debt  due  from  a  broker,  and  one  from  a 

factor,  204. 
payment  or  delivery  by  agent  is  payment  or  delivery  by  principal,  205. 
principal  may  recover  money  paid  by  an  agent,  without  sufficient  considera- 
tion, ib. 
may  sometimes  recover  where  agent  could  not,  205-207. 
may  avail  himself  of  agent's  evidence,  207. 
6,  Hiffhts  of  Agent  against  third  Parties. 


732  IXDEX  TO   THE 

PRINCIPAL  AOT)  AGE^T— continued. 

agent  may  sue  on  contracts,  in  the  subject  of  wliich  he  had  a  special  pro 

perty,  208. 
or  for  his  master's  property,  transferred  by  him  under  circumstances  which 

give  a  right  to  recover  it,  ib. 
or  for  torts  done  to  it  when  in  his  possession,  ib. 
may  sometimes  sue  for  his  own  benefit,  ib. 

may  sue  on  contract  mada  by  him  in  his  own  name  for  undisclosed  princi- 
pal, 209. 
right  to  sue  on  contracts  made  as  agent,  when  in  fact  principal,  ib 
v.  Rights  of  third  Parties  against  Agent. 

agent  contracting  as  such  for  a  known  principal,  incurs  no  liability,  ib, 

exception  in  the  case  of  the  master  of  a  ship,  210. 

contracting  for  an  unnamed  principal  is  prima  facie  liable,  ib. 

Tesponsibility  of  British  agent  for  foreign  principal,  ib. 

of  agent  contracting  for  irresponsible  principal,  ib. 

exception  in  favor  of  public  ofiicers,  211,  212. 

agent  will  be  liable  where  he  has  expressly  bound  himself,  212. 

difficulty  of  ascertaining  where  this  is  intended,  213. 

person  acting  as  agent  without  authority,  when  liable,  ib. 

agent  exceeding  his  authority,  liable  for  a  resulting  loss  to  third  persons,  ib, 

when  liable  for  money  paid  to  him  for  his  principal  under  circumstances 

which  would  entitle  some  one  to  recover  it,  214-216. 
liable  to  third  parties  for  torts  committed  in  his  master's  service,  216 
but  not  a  mere  nonfeasance,  216,  217. 
PRINCIPAL  AND  SURETY.     See  Guaranty. 
PRIVILEGES, 

of  British  ship,  228.     See  Shipping. 
PRIZES, 

cruising  for,  without  liberty,  a  deviation,  462. 
liberty  to  convoy,  when  requisite,  ib. 
PROFITS, 

insurable,  426. 
PROPERTY, 

in  goods  passes  to  vendee,  when,  596-600.     See  Sale. 
in  ships,  238.     See  Shipping. 
PROTEST.     See  Bills  of  Exchange. 
PUBLIC  OFFICERS, 

Of  Government,  their  exemptions  from  liability  for  their  subordinates,  211,  212 
of  banks,  283,  284. 


R. 

REASSURANCE, 
illegal,  417. 

except  in  certain  cases,  ih. 
what  must  be  expressed  in  policy  in  those  cases,  ib. 


ORIGINAL  WORK.  733 

RECAPTURE, 

of  a  British  vessel  entitles  owner  to  have  her  again  on  payment  of  salvage,  407 

of  an  ally's  vessel  entitles  the  owner  in  like  manner,  407,  40S. 

unless  his  government  act  on  a  less  liberal  principle  towards  British  property 
408. 
RECEIPT, 

may  be  tendered  on  payment,  673. 

penalty  for  not  signing,  ib. 

effect  of,  in  evidence,  ib. 

when  it  requires  a  stamp,  ib. 
RECOGNITION, 

of  agent's  authority  cures  previous  excess,  174. 
RE-EXCHANGE, 

when  recoverable,  327. 
REGISTRY, 

of  ships,  231,  232.     See  Shipping. 
REIMBURSEMENT, 

how  obtained  by  surety,  585.    See  Guaranty. 
RELEASE, 

by  one  partner  binds  firm,  76. 

to  one  partner  discharges  firm,  97. 
RENEWAL, 

of  bill  or  note,  346. 
REPRESENTATIONS, 

of  agent  bind  principal,  195,  196.  i 

distinction  between  representations  and  warranties,  in  sales,  637-640. 

in  insurances,  453. 

substantial  compliance  with,  sufficient,  ib. 

Representations  in  the  Nature  of  Guaranties, 

by  Lord  Tenterden's  act  must  be  in  writing,  588. 
construction  of  that  statute,  588,  589. 
RESPONDENTIA,  527.    See  Bottemry. 
RESTRAINT, 

of  trade  generally,  illegal,  38. 

partially,  when  suffered,  ib. 
RETURN, 

of  premium,  when  allowed,  489-491. 

S. 
SALE, 

Contract  of, 

how  it  differs  from  exchange,  590. 
1.  Ability  of  Vendor  to  sell, 

when  he  has  the  property  of  the  goods,  593. 

when  he  has  not  the  property,  ib. 

market  overt,  what,  594. 

sale  in,  when  unavailable  to  seciu'c  purchaser,  595. 

sale  by  agent  in  fraud  of  his  principal,  when  valid,  596. 


734  IXDEX  TO  THE 

3ALE — continued. 

sale  of  negotiable  instrument,  ib. 
2.  Form  and  Requisites  of  Contract  of  Sale. 
may  be  either  by  deed  or  parol,  ib. 
if  by  deed,  property  passes  on  the  delivery,  597. 
if  by  parol,  is  to  take  effect  either  in  prctsenti  or  infuturo,  ib. 
mode  of  contracting  a  sale  to  take  effect  in  prcesenti  at  common  law 

597,  598. 
effect  of  tender,  part-payment,  and  earnest  in  binding  bargain,  598. 
their  effect  in  passing  the  property,  598-601. 

agreement  to  be  completed  infaturo  passes  the  property  when,  601-604. 
sale  not  to  be  completed  within  the  year  must  be  contracted  in  writing, 

604. 
parol  agreements  which  possibly  may  be  performed  within  the  year 

valid,  604,  605. 
so  if  one  part  is  to  be  performed  within  the  year,  605. 
sales  of  goods  of  the  value  of  10^.  and  upwards  must  be  contracted  in 

the  mode  prescribed  by  seventeenth  section  of  the  Statute  of  Frauds, 

605,  606. 
what  articles  are  goods  within  the  meaning  of  that  act,  607,  608. 
what  amounts  to  an  acceptance,  608-614. 
what  amounts  to  earnest,  615. 

note  or  memorandum  in  writing,  what  it  must  contain,  615,  616. 
"memorandum  of  the  bargain,"  not  so  strictly  construed  as  "memoran- 
dum of  the  agreement,"  616. 
but  must  express  names  of  contracting  parties,  ib. 
and  price,  if  one  be  fixed,  G17. 
but  not  otherwise,  ib. 
what  a  sufficient  signature,  617,  618. 
signature  of  party  to  be  charged  only  required,  618. 
signature  by  agent,  when  sufficient,  ib. 
agent  maj'  be  authorized  by  parol,  ib. 
must  not  be  the  other  contracting  party,  ib. 
nor  an  agent  who  sues  in  his  own  name  on  the  contract,  619. 
auctioneer  the  agent  of  both  parties,  ib. 
his  authority,  how  executed,  ib. 
how  long  revocable,  619,  620. 
broker  the  agent  of  both  parties,  620. 

binds  his  principals  by  delivery  of  bought  and  sold  notes,  620,  621. 
bought  and  sold  notes  constitute  the  contract,  621. 
must  correspond,  ib. 
the  entry  in  broker's  book  may  be  sufficient,  if  there  be  no  bought  and 

sold  notes,  ib. 
8.  Duties  of  the  Vendor. 

To   deliver    Goods   on    the   Vendee's    performance    of    conditions    prece- 
dent, 622. 
readiness  to  pay  price,  a  condition  precedent,  623,  624. 
dispensed  with  in  case  of  credit  given,  624. 


ORIGINAL  WORK.  735 

SALE — continued. 

or  constructive  delivery,  625-627. 
To  comphj  with  Warranties,  630. 
Implied  warranties,  ib. 

cannot  arise  where  there  is  an  express  agreement,  632. 
or  be  implied  from  amount  of  price,  ib. 
Express  warranties,  what  amounts  to  one,  633. 
no  oral  allegation  previously  to  a  sale  by  written  contract  is  a  war 

ranty,  633,  634. 
vendee's  remedy  on  breach  of  warranty,  634. 
cannot  return  article,  if  he  have  received  it,  ib, 
except  in  certain  cases,  ib. 
future  event  may  be  warranted,  636. 
warranty  cannot  be  against  an  obvious  defect,  ib. 

differs  from  untrue  representations  not  actionable  unless  wilful,  638-640 
4.  Duties  of  Vendee. 

To  accept  the  goods  and  pay  tlte  Price,  640. 
form  of  action  for  non-acceptance,  ib. 

conditions  which  vendee  must  perfoi-m  before  suing,  640,  641. 
must  tender  the  goods,  when,  641. 
must  enter  them  when  sent  by  carrier,  how,  ib. 
must  allow  vendee  to  inspect  them,  when,  ib. 
vendee  is  excused  from  accepting  by  vendor's  fraud,  642. 
by  his  employing  puffers  at  an  auction,  ib. 
contract,  amounting  to  wager,  vendor's  rights  upon,  644. 
form  of  action  in  case  of  non-payment,  ib. 

breach  of  contract,  by  the  vendor,  in  what  cases  a  defence,  644,  645. 
value  of  goods,  how  estimated  in  the  absence  of  agreement,  646. 
6   Illegality  of  Contract  an  Excuse  for  Non-performance  by  either  Party,  ib. 

distinction  between  breaches  of  laws  for  the  protection  of  the  public  and 

breaches  of  laws  for  the  protection  of  the  revenue,  647,  648. 
Bale  when  illegal,  because  contracted  on  Sunday,  648. 
when  illegal  because  a  stock-jobbing  contract,  649. 

when  illegal  on  account  of  the  use  of  improper  weights  and  measurea, 
650-652. 
SAMPLE, 

sale  by,  641.     See  Sale. 
SALVAGE, 

what,  404,  405. 

Fratn  Perils  of  the  Sea. 

amount  of  salvor's  compensation,  how  ascertained,  406. 
how  recovered,  407. 
From  Enemies. 

owner  of  the  recovered  property,  his  rights  at  common  law,  ib. 
by  statute,  ib. 

amount  of  salvage  on  recapture,  408. 
SATISFACTION, 

of  bill  or  note,  what  amounts  to,  347. 


736  INDEX  TO  THE 

SEA, 

perils  of,  434-436.     See  Perils. 
SEAMEN, 

when  considered  British,  230. 
Contracts  with. 

nature  and  form  of  contract,  538-541. 
duties  of  seamen  under  it,  542,  543. 
rights  of  seamen  under  it,  543-548. 
•wages  how  lost,  548-553. 
how  forfeited,  ib. 

remedies  of  seamen  for  them,  553-556. 
SEAWORTHINESS, 

warranty  of,  464-466.     See  Warranty. 
SENTENCE, 

of  foreign  court,  its  effect  in  falsifying  warranties,  467      See  Court. 
SERVANT. 

See  Hiring  and  Service. 
SERVICE.     See  Hiring  and  Service. 
SET-OFF, 

right  to  set-off  against  principal  debt  due  by  agent,  when  it  exists,  203,  204. 
SHIPPING. 

Tlie  privileges  of  a  British  Ship,  228. 

1.  What  Ships  are  British,  230. 

ship  in  order  to  be  British  must  be  navigated  as  one,  ib. 

and  registered,  ib. 

when  navigated  as  a  British  ship,  ib, 

what  seamen  considered  British,  ib. 

ships  trading  between  places  in  America  may  be  navigated  by  British 

negroes,  ib. 
ship  within  the  Company's  charter  by  Lascars,  231. 
due  proportion  of  British  seamen,  when  excused,  ib. 
penalty  for  excess  of  foreign  seamen,  ib. 

penalty  for  goods  illegally  imported,  exported,  or  carried  coastwise,  ib. 
ship  not  to  be  allowed  to  depart  from  British  port,  unless  duly  navigated,  ib, 

2.  Registry  of  Ships. 

unregistered  vessel  exercising  the  privileges  of  a  British  vessel  forfeited,  ib 

what  ships  entitled  to  registry,  ib. 

on  what  events  a  registered  ship  ceases  to  be  British,  232. 

ship,  where  to  be  registered,  232,  233. 

by  whom,  233. 

what  must  be  done  by  owners  to  obtain  registry,  ib. 

declaration,  what  to  be  subscribed,  234. 

by  whom,  if  ship  belong  to  corporation,  ib. 

bond,  what  to  be  given,  ib. 

account  under  builder's  hand  to  oe  produced,  ib. 

in  case  of  the  registry  of  a  prize  ship,  what  necessary,  235 

certificate  of  registry,  its  contents,  ib. 

certificate,  loss  of,  how  repaired,  ib. 

certificate,  remedy  for  detention  of,  ib. 


ORIGINAL  WORK.  737 

SHIPPING — continued. 

registry  entered  in  a  book,  233. 
what  to  be  done  on  change  of  master,  ib. 
registry  de  novo,  when  required,  236,  237. 
registry  when  dispensed  with,  237. 

only  necessary  to  confer  the  privileges  of  a  British  ship,  233. 
3,  Title  to  a  British  Ship. 
Hoio  acquired. 

by  building  her,  ib. 
by  capture  and  condemnation,  ib. 

rules  respecting  the  competency  of  condemning  courts,  238,  239. 
How  transmitted. 

under  bankrupt  or  insolvent  law,  239. 
by  conveyance  from  the  master,  ib. 
when  master  has  a  right  to  dispose  of  ship,  239-241. 
by  conveyance  from  the  owner,  241. 
conveyance  regulated  by  8  &  9  Vict.  c.  89,  241-246. 
property  in  ship  divided  into  sixtj'-four  parts,  241. 
no  one  can  be  registered  owner  of  less  than  one  sixty-fourth,  ib. 
rules  concerning  other  fractional  parts,  241,  242. 
partners  may  hold  shares  in  the  name  of  firm,  242. 
cannot  be  more  than  thirty-two  owners,  ib. 

provision   for   equitable   right   of  minors,    heirs,    legatees,    creditors,    and 
others,  ib. 
Mode  of  Conveyance. 
by  bill  of  sale,  ib. 
which  must  recite  certificate,  ib. 
but  is  not  void  for  a  mistake  in  recital,  242,  243. 
must  be  produced  to  collector  and  comptroller  of  ship's  port,  243. 
must  be  entered  in  book  of  registry,  ib. 
and  indorsed  on  the  certificate  of  registry,  ib. 
becomes  effectual  against  the  vendors  and  all  others,  ib. 
except  subsequent  purchasers,  from  time  of  entry  in  book,  ib. 
rival  vendees  and  mortgagees  of  the  same  property  take  precedence  accord- 
ing to  the  time  when  the  indorsement  is  made  on  certificate,  ib. 
thirty  days  allowed  to  each  transferee  to  produce  certificate,  244. 
if  ship  at  sea,  thirty  days  reckoned  from  her  return  to  her  port,  ib. 
further  time  may  be  granted,  i6. 

how  indorsement  maybe  procured  during  ship's  absence  from  her  port,  .4o. 
production  of  bill  of  sale  or  power  of  attorney,  when  dispensed  with,  246. 

on  what  conditions,  i6.  ,.    t       o<a  oaT 

mortgagee  of  ship,  how  far  the  property  in  it  is  transferred  to  him,  246.  247. 
preferred  to  assignees  of  mortgagor  in  case  of  bankruptcy,  248. 
4,  Mights  of  Part-ow7UTrs,  tb. 

part-owners  of  a  ship  may  be  joint-tenants,  ib. 

but  are  usually  tenants  in  common,  ib.  ,  ,        .       .,        ■,._. 

the  majority  cannot  employ  her  against  the  consent  of  the  minonty.  without 
indemnifying  them,  ib. 
47 


788 


INDEX  TO  THE 


SHIPPING — continued. 

indemnity  enforced  by  Court  of  Admiralty,  248. 
may  take  ship  from  minority  upon  indemnifying  them,  249. 
m  case  of  an  equal  division,  either  half  may  apply  to  court,  ib. 
adjustment  of  ship's  accounts,  how  obtained,  ib. 
part-owners  resemble  partners,  ib. 

and  are,  generally  speaking,  all  liable  for  ship's  necessary  expensea,  249,  260. 
are  not  in  reality  partners,  250. 
differences  between  part-owners  and  partners,  251. 
SHORT  INTEREST, 

return  of  premium  for,  491.     See  Premium. 
SIGNATURE, 

of  vendor  or  vendee,  what  a  sufficient  one,  618.     See  bale. 
of  guaranty,  564.     See  Guaranty. 
SMALL  DEBTOR'S  ACT,     See  note  on  Insolvency. 
STAKEHOLDER, 

not  responsible  for  interest  made  with  tlie  deposit,  158. 

STAMP, 

for  receipt,  when  necessary,  673.    See  Receipt. 

to  guaranty,  when  requisite,  580,  581.     See  Guaranty. 

to  policy,  451,  452.     See  Policy  of  Insurance. 

on  bill  or  note,  273,  274.     See  Bill  of  Exchange. 
STOPPAGE  IN  TRANSITU, 

right  of,  what,  677-680. 

whether  its  effect  be  to  rescind  sale,  680,  681. 

who  possesses  it,  682. 

how  long  it  continues,  682-685. 

how  defeated,  685-687. 

how  exercised,  687. 
STRANDING, 

what  in  policy,  448^51. 
SUB-AGENTS, 

chief  agent  responsible  for,  154. 
SURETY.     See  Guaranty. 
SURVIVORSHIP.     See  Jus  Accrescent 
SUSPENSION, 

of  remedy  on  bill  or  note,  346. 


T. 

TENDER, 

what  a  legal  tender,  657. 

must  be  in  money  or  its  equivalent,  ib. 

Bank  of  England  notes,  when  equivalent  to  cash,  ib. 

tender  of  country  bank-notes  good  unless  objected  to  ih. 

tender  of  a  larger  sum  legal,  658. 

unless  change  be  required,  ib. 

tender  subject  to  a  condition  bad,  ib. 


I 


ORIGINAL  WORK.  7,'{{) 


TEKDER— continued. 

informal  tender,  how  cured,  659. 

tender  to  an  agent  sufficient,  ib. 

ov  to  one  of  several  joint  creditors,  ib. 
TITLE, 

of  principal  not  disputable  by  agent,  157. 

to  British  ships,  238.     See  Shipping. 
TORTS, 

of  agent,  principal  ■when  liable  for,  192,  19S. 
TOTAL  LOSS, 

when  it  occurs,  4'7S. 
TRADING, 

with  an  enemy  illegal,  418, 

except  by  royal  license,  ib. 
TRADER, 

in  general,  who  may  be,  37. 

who  disqualified,  40,  41. 
TRANSFER, 

of  bill  or  note,  288.     See  Bill  of  Exchange. 

of  negotiable  instruments  passes  the  property,  ib, 
TRANSITUS.     See  Stoppage  in  Transitu. 

TJ. 

UNDERWRITER.    See  Insurance. 
USAGE, 

of  trade  admissible  to  explain  teim.s  of  policy,  420, 

of  Lloyd's  not  binding  on  non-subscribers,  421. 
USANCE, 

signification  of,  321. 
USURY, 

what  constitutes  usury,  665-668. 

penalty  for,  667. 

avoids  contracts,  666. 

invalidates  bill  or  note,  when,  344,  345. 


VALUED  POLICY,  421.     See  Polici/  of  Insurance. 
VENDEES.    See  Sale. 

of  property  in  shipping,  their  priority  against  each  other,  243.     See  Shipping, 
VENDOR.    See^aZe. 
VOYAGE, 

description  of,  in  policy,  427,  428.     See  Maritime  Insurance. 


W. 

WAGER  POLICY, 

meaning  of  term,  414. 
generally  illegal,  415. 


740  INDEX  TO  THE  ORIGINAL  WORK 

\TAGES, 

of  seamen,  548.     See  Seamen.  • 

not  insurable,  417. 

of  servants,  532.    See  Hiring  and  Service. 
WARRANTY, 

in  policy,  453.    See  Insurance. 

on  sale,  630-640.     See  Sale. 
WEIGHTS  AND  MEASURES, 

statutory  provisions  concerning,  650-652. 
\\^OiIAN, 

married,  cannot  trade,  40. 

exceptions,  41. 

married,  may  be  an  agent*  149. 


INDEX 

TO  NOTES   OF  THE  AMERICAN  EDITORS. 


AFFREIGHTMENT. 

Authority  of  master  to  sell  ship  or  cargo  limited  to  cases  of  necessity,  239,  240. 
Not  confined  to  cases  arising  in  a  foreign  port,  or  port  of  another  state,  240. 
Deliverance  of  the  vessel  after  a  sale  not  sufficient  to  disprove  the  necessity 

of,  ib. 
What  evidence  will  be  required  of  a  purchaser  at  such  sale  to  establish  his 

title,  240. 
Charter-party,  definition  of,  370. 
Kot  confined  to  the  hire  of  a  ship  to  a  merchant,  ib. 

Not  required  to  be  in  writing,  3Y0,  3*71. 

Demurrage,  what,  371,  372. 

How  much  allowed  on  wrongful  seizure,  or  detention  of  vessel  without  circum- 
stances of  aggravation,  372. 

What  detention  embraced  by  a  covenant  to  pay,  ib. 

At  what  time  consignee  is  bound  to  receive  goods  where  a  charter-party  allows 
a  certain  number  of  lay  days  for  unloading,  373. 

When  a  general  owner  is  responsible  for  the  conduct  of  the  master  and  mar 
iners,  and  when  a  general  freighter,  375. 

Bill  of  lading,  effect  of  indorsement  of  by  a  consignee  to  a  bona  fide  purchaser 
for  a  valuable  consideration,  378. 

Indorsement  of  a  bill  of  lading  by  the  consignee  will  not  transfer  the  property 
without  delivery  of  the  goods,  ib. 

Modified  enunciation  of  the  law  on  the  above  point,  379. 

Warranty  of  seaworthiness,  what  included  under,  381. 

Goods  are  prima  facie  supposed  to  be  shipped  to  be  put  under  deck,  ib. 

Master  must  take  all  possible  care  of  the  cargo,  383. 

What  degree  of  necessity  is  required  to  constitute  master  agent  for  all  con- 
cerned, ib. 

Right  of  the  master  ceases  on  the  arrival  of  the  ship  at  her  port  of  de»- 
tination,  384. 

Merchant  has  lien  on  ship  for  value  of  his  goods  sold,  ib. 


742  INDEX  TO  NOTES 

AFFRElGWTMENT—coyitinued. 

Master  is  not  bound  in  general  to  deliver  goods  to  consignee  personallj^  385. 

Ride  as  to  carriers  engaged  in  inland  navigation,  ib. 

No  distinction  as  to  liability  of  master  and  o-svners  between  foreign  and  inland 
voyage,  386. 

Wliere  freight  is  to  be  repaid,  391. 

What  -will  entitle  the  ship-owner  to  freight,  392. 

In   what   cases   full   freight   is   due   notwithstanding   the   non-arrival   of   the 
goods,  393. 

When  the  consignor  will  be  responsible  for  freight,  395. 

Duty  of  master  to  procure  another  vessel  and  forward  cargo  where  his  own  hac 
been  disabled,  398,  399. 

In  what  cases  freight  pro  rata  itlneris  is  due. 
AGENT.     See  Frhicipal  and  Agent. 
APPLICATION  OF  PAYMENTS.     See  Payment. 
APPRENTICESHIP. 

Indenture  of,  executed  by  father,  without  concurrence  of  child,  not  only  void- 
able, but  void,  558. 
AVERAGE,  GENERAL. 

When  allowed,  403-405. 

On  total  loss  of  the  ship  occasioned  by  voluntary  stranding,  if  the  cargo  is 
saved,  404. 

When  wages  of  the  crew  are  subject  to  contribution,  ib. 

Where  the  jettison  is  of  deck  load,  owner  not  entitled  to  benefit  of  general 
average,  405. 

How  the  value  of  the  goods  thrown  overboard  is  to  be  ascertained  on  a  general 
average,  ib. 

Lien  of  the  master  upon  cargo,  to  enforce  contribution  to,  ib. 
BAILMENT. 

Distinction  between  contract  of  bailment  and  of  sale,  591,  592. 
BANKS. 

Liability  of  for  acts  of  notary,  154. 

After  receiving  their  own  notes  cannot  dispute  their  genuineness,  655. 
BANKRUPT  AND  INSOLVENT  LAWS. 

Effect  of  upon  contracts  made  previous  to  their  existence,  or  with  citizens  of 
another  state,  352. 
BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES. 

Considered  as  simple  contracts,  262. 

Effect  of  adding  seal  to,  ib. 

Character  of  promissory  notes  in  various  states,  ib. 

Period  at  which  promissory  notes  and  inland  bills  wei'e  rendered  negotiable,  264. 

Distinction  between  indorsements  which  will  render  a  party  responsible,  aa 
maker  or  as  guarantor,  265. 

Question  as  to  whether  certificate  of  deposit  is  a  negotiable  instrument,  267. 

Note  or  bill  payable  out  of  a  particular  fund  not  payable  unconditional Ij",  268 

So  of  a  bill  drawn  by  one  government  upon  another,  ib. 

As  to  bill  or  note  clogged  with  unusual  conditions,  269. 

Bills  of  exchange  drawn  between  the  several  states,  foreign,  2*71. 

Note  not  valid  in  Louisiana  where  amount  expi'essed  in  figures  only,  273. 


OF  THE  AMERICAN  EDITORS.  743 

BILLS  OF  EXCnANGE  AND  PROMISSORY  NOTES— con^inwcci 
"Words  "for  value  received"  not  essential,  272. 
Not  essential  to  bill  of  exchange  that  it  should  be  negotiable,  275. 
Whether  a  note  paj'able  to  maker's  own  order  is  a  promissory  note  under 

statute  of  Anne,  27 G. 
When  action  can  be  maintained  upon  one  of  a  set  of  exchange  without  producing 

the  rest,  279. 
How  a  person  may  become  a  party  to  a  bill  of  exchange  by  jirocuration,  280. 
Nature  of  the  contract  of  indorsement,  287. 
Indorser  may  incur  greater  liability  than  drawer,  ib. 
Whether  an  indorsement  may  be  made  "without  putting  the  name  of  the  party 

on  the  paper,  288. 
Rights  of  a  bona  fide  holder  where  the  indoi'sement  is  in  blank,  289. 
"Equities,  subject  to  which  an  overdue  note  is  taken,  293,  294. 
Indorsers  of  accommodation  paper  not  co-sureties,  295. 
Transfer  of  bank-note  by  delivery  is  a  warranty  of  its  genuineness,  ib. 
Whether  there  is  an   implied  warranty  of  value  upon  the  transfer  of  bank- 
notes, ib. 
Diversity  between  English  and  American  doctrine  as  to  a  promise  to  accept  a 

non-existing  bill  of  exchange,  298. 
Present  inclination  of  the  courts,  299. 
Rights  and  duties  of  an  acceptor  supra  protest,  301,  302. 
When  presentment  for  acceptance  is  unnecessary,  303. 
On  the  loss  or  destruction  of  a  bill,  demand  not  good,  unless  indemnity  tendered 

to  both  maker  and  indorser,  304. 
Where  there  are  several  makers  of  a  note,  what  demand  is  sufficient  to  charge 

indorser,  ib. 
Conflict   of  authority   whether   presentment  by   the   clerk   of  the   notary   ia 

sufficient,  804,  305. 
Distinction   taken   in   Kentucky   between   the   clerk   and   the   deputy   of  the 

notary,  305. 
American  rule   as  to  the  pkce  where  presentment  is  to  be  made  to  charge 

maker,  305,  30G. 
Rule  different  where  it  is  sought  to  cliarge  indorser,  306. 
Allowance  in  the  United  States  of  days  of  grace,  ib. 
The  fourth  of  July  treated  as  a  holiday,  ib. 

Question  whether  daj's  of  grace  are  allowable  on  bills  payable  at  sight,  ib. 
Protest  unnecessary  on  inland  bills  or  promissoj-y  notes,  30G,  307. 
Advantages  of  the  practise,  307. 
Whether  protest  should  be  under  notai'ial  seal,  ib. 
Protest  must  state  distinctly  the  presentment  of  the  bill,  ib. 
How  far  protest  of  foreign  bill  is  evidence  of  dishonor,  ib. 
Who  may  give  notice  of  dishonor,  308. 
In  the  case  of  joint  indorsers  not  being  partners,  notice  of  dishonc  r  must  be 

given  to  each,  ib. 
Where  the  notice  must  be  given,  ib. 
Various  cases  upon  this  subject,  308,  309. 
When  a  notice  at  either  of  several  places  is  sufficient,  308. 


744  ■       INDEX  TO  NOTES 

BILLS  OF  EXCHANGE  AND  PROMISSORY  l^OTES—coyitmued. 

Exception  to  the  general  rule  that  notice  must  be  personal  where  holder  and 

indorser  live  in  the  same  town,  309. 
No  prescribed  form  of  notice,  ib. 
Effect  of  mistake  in  the  description  of  a  note,  309. 
Whether  the  statement  that  a  note  "has  been  protested  for  non-paj'ment"  and 

the  indorser  "looked  to  for  payment  of  the  same"  is  sufficiently  full,  310. 
Cases  upon  the  subject  of  due  diligence  in  giving  notice,  ib. 
It  is  not  necessary  that  the  notice  should  be  actually  received,  310,  311. 
Due  diligence  required  of  the  United  States  as  well  as  of  individuals,  311. 
Holder  not  required  to  give  notice  to   the   drawer  where   the  drawing  waa 

fraudulent,  ib. 
Rule  where  the  drawer  has  no  effects  in  the  hands  of  the  drawee  nor  expectation 

of  an}',  312. 
Notice  must  be  given  to  indorser,  although  he  becomes  executor  of  the  maker 

before  maturity  of  the  note,  ib. 
Or  although,  from  some  circumstance,  holder  is  unable  to  make  demand  upor 

maker,  ib. 
Partial  assignment  of  maker's  property  to  indemnify  indorser  does  not  dispensf 

with  notice,  313. 
But  otherwise  where  the  assignment  is  of  all  liis  effects,  ib. 
Notice  necessary  unless  the   assignment   has  imposed  upon  the  indorser  the 

obligation  of  taking  up  the  note,  313,  314. 
As  to  what  time  the  formal  protest  may  be  drawn  up  when  the  fact,  recorded  on 

protest,  has  taken  place,  328. 
When  promise  to  pay  by  an  indorser,  who  is  discharged  by  the  laches  of  the 

holder,  will  be  binding,  331. 
Cases  establishing  that  an  accommodation  drawer  or  indorser  is  entitled  to 

notice,  332. 
Bill   of  exchange,    or   promissory  note,    always   imports   prima  facie   a  con 

sideration,  338. 
Title  of  indorsee  in  negotiable  note  found  in  circulation  after  it  is  due,  ib. 
Conflict  of  opinion  as  to  the  manner  in  which  a  creditor  will  hold  a  negotiable 

instrument  taken  as  a  collateral  security  for  an  existing  debt,  341. 
Whether  taking  higher  security  for  same  debt  extinguishes  the  lower  one 

347-349. 
Payment  of  bill  before  maturity  will  not  protect  acceptor  from  claim  of  eubse 

quent  bona  fide  purchaser  before  maturit}',  349. 
Conflict  of  authority  as  to  effect  of  new  promise  in  reviving  negotiability  ol  a 

note  barred  by  a  discharge  in  bankruptcy,  352. 
What  agreement  to  give  time  will  be  sufficient  to  discharge  indorser,  353. 
The  English  and  American  law  on  the  subject  of  lost  bills,  356. 
CASHIER  OF  BANK.     See  Principal  and  Agent 
CERTIFICATE  OF  DEPOSIT.    ^e&  Bills  of  Exchange. 
CHECK. 

Definition  of,   263. 

Whether  it  must  be  payable  to  bearer  or  on  demand,  ib. 

Measure  of  diligence  required  in  the  presentation  cf  ehecks,  ib. 


OF  THE  AilERIC/VX  EDITORS.  745 

CHECK — continued. 

Distinction  between  checks  and  bills  of  exchaneie,  2G3. 
COMMERCIAL  LAW. 

Importance  of  a  uniform  sj'stera,  33. 

Decisions  of  the  State  courts  upon,  not  binding  on  Federal  tribunals,  203. 
COMMON  CARRIERS. 

Only  liable  for  ordinary  neglect  in  transporting  slaves,  359. 

Not  responsible  for  injury  to  traveller  occasioned  by  his  own  want  of  ordinary 

care,  ib. 
When  liable  as  such  for  the  transportation  of  specie  or  bank-bills,  360. 
Money  taken  for  personal  use  is  part  of  traveller's  baggage,  ib. 
Limitations  upon  their  obligation  to  receive  passengers,  361. 
Cases  considering  "what  constitutes  an  act  of  God  excusing  carrier,"  ib. 
Conflict  of  American  authorities  as  to  the  validity  of  stipulations  by  carriers 

limiting  their  responsibility,  363. 
Common  law  rule  as  to  delay  did  not  extend  to  time  of  delivery,  3S'2. 
Common  carriers  by  water  allowed  to  restrict  their  general  liability,  386. 
Act  of  Congress  allowing  this  limitation,  ib. 

Question  as  to  whether  a  general  notice  by  carrier  of  intention  to  assume  a 
limited  responsibility,  brought  to  knowledge  of  bailor,  will  have  same  effect  as 
a  special  contract,  364. 
Responsibilities  of  common  carrier  not  varied  by  reservation  in  bill  of  lading 
of  privilege  of  transhipment,  367. 
CONSIDERATION. 

Adequacy  of,  not  inquired  into,  88. 

An  exception,  to  the  common  law  rule,  that  a  seal  imports  a  consideration, 
exists  where  the  condition  is  in  restraint  of  trade,  ib. 
CONTRACTS. 

By  what  law  to  be  governed,  19. 
CORPORATIONS. 

Capacity  of,  to  contract  beyond  the  limits  of  the  sovereignty  creating  them, 

140,  141. 
Effects  of  a  foreign  corporation  liable  to  attachment  b}'^  foreign  creditor,  141. 
Corporations  created  bj-  charter  not  required  to  act  by  a  common  seal,  142-144. 
Extent  to  which  trading  corporations  are  generally  affected  by  those  legal  and 

equitable  considerations  which  affect  the  rights  of  natural  persons,  144. 
An  action  by  an  individual   stockholder  against  a  director  not  maintainable, 
the  director  being  the  agent  of  the  corporation,  145. 
CUSTOMS.     See  Usage. 

EVIDENCE.     See  Affreightment,  Maritime  Insurance. 
FIXTURES. 

Antiquity  of  the  rule  as  to  fixtures  in  favor  of  trade,  226,  211. 
Test  to  determine  whether  a  fixture  falls  within  the  exception  or  not,  226. 
Not  material  that  building  to  be  removed  has  been  occupied  as  a  residence,  227. 
GOODWILL. 

Unsettled  state  of  the  law  as  to,  253. 

Whether  the  goodwill  of  a  mercantile  establishment  survives  on  the  death  ol 

one  partner,  or  belongs  to  the  partnership  assets,  ib. 
Question,  is  the  subscription  list  of  a  newspaper  a  part  of  the  goodwill,  253,  254 


746  INDEX  TO  NOTES 

GUARANTIES. 

Definition  of  guaranty,  562. 

Wliat  constitutes  a  guaranty,  562,  563. 

Contract  of  a  dd  credere  factor  not  -witliiii  the  jjurview  of  ihe  Statute  of  Frauds 

663,  564. 
Discrepancy  between  the  later  and  earlier  English  and  American  cases  upon  the 

question,  whether  a  promise  by  one  to  indemnify  another  against  a  liability 

assumed  by  him,  at  promisor's  request,  for  the  debt  of  a  third  person,  is 

within  Statute  of  Frauds,  564,  565. 
Ccmstruction  of  guaranty,  565. 
Letter  of  credit,  a  guaranty,  ib. 

Letters  of  credit  are  of  two  kinds,  general  and  special,  ib. 
When  general,  ib. 
When  special,  ib. 

Any  one  may  accept  and  act  upon  a  general  letter  of  credit,  ib. 
When  the  letter  is  special,  he  alone  to  whom  it  is  addressed  has  the  right  to  act 

upon  and  acquire  rights  under  it,  ib. 
To  determine  whether  a  guaranty  is  a  continuing  one  or  not,  the  intent  of  the 

parties  the  only  sure  guide,  566. 
Conflict  of  authority  as  to  whether  the  maxim,  that  the  words  of  an  instrument 

are  to  be  taken  most  strongly  against  the  party  using  them,  should  apply  to 

a  guaranty,  ib. 
Guaranties  are  to  be  construed  with  reference  to  the  xisages  of  trade,  ib. 
Consideration  of  guaranty. 
To  support  a  guaranty  of  a  prior  debt  there  must  be  a  consideration  independent 

of  the  original  debt,  567. 
The  giving  credit  or  the  making   the   contract,  a  sufficient  consideration  to 

suppoi't  the  guaranty  of  a  contemporaneous  or  subsequent  debt,  ib. 
A  valuable  consideration,  however  small,  if  given  in  good  faith,  is  sufficient  to 

support  an  action  on  a  guaranty,  ib. 
Distinction  between  cases  in  which  the  guaranty  is  contemporaneous  with,  and 

those  in  which  it  is  subsequent  to,  the  principal  debt,  ib. 

1.  When  the  guaranty  is  collateral  to  the  principal  contract,  but  is  made  at  the 
same  time,  and  becomes  an  essential  ground  of  the  credit  given  to  the 
principal  debtor,  this  class  not  within  the  Statute  of  Frauds,  567,  568. 

2.  Cases  in  which  the  collateral  undertaking  is  subsequent  to  the  creation  of 
the  debt,  and  not  the  inducement  to  it,  though  the  subsisting  liability  is  the 
ground  of  the  promise,  without  any  distinct  and  unconnected  inducement. 
This  class  also  is  within  the  Statute,  ib. 

3.  When  the  promise  to  pay  the  debt  of  another  arises  out  of  some  new  and 
original  consideration  moving  between  the  newly  contracting  parties,  this 
class  not  within  the  Statute,  ib. 

Quayre,  is  the  third  class  not  within  the  Statute,  568-570. 
Authoi'ities  on  the  construction  of  the  term  agreement,  570,  571. 
Acceptance  of  guaranty,  571. 
When  notice  of  acceptance  necessary,  ib. 
Rule  in  New  York,  572. 

Omission  of  notice  does  not  imply  injury  to  the  guarantor  as  a  matter  of 
course,  ib. 


OF  THE  AMERICAN  EDITORS,  741 

GUARANTIES— conduiMf  J. 
Kotice  of  default,  572. 
When,  if  ever,  necessary,  572,  573. 
In  Massachusetts,  settled  that  an  extension  of  the  time  of  payment  will  discliarge 

a  guarantor,  where  it  would  have  that  effect  on  an  ordiiiar}-^  contract  of 

suretj'ship,  583, 
INSURANCE,  FIRE. 

Any  species  of  property  liable  to  be  injured,  or  any  amount  of  interest,  may  be 

insured,  503. 
"What  parties  competent  to  form  the  contract,  \b. 
Liberal  construction  to  be  given  to  policy,  504. 
Conflict  of  aiithority  as  to  a  distinction  between  affirmatory  and  promissory 

representations,  505. 
And  also  as  to  the  obligations  upon  the  insured  to  communicate  the  nature  of  big 

interest  in  the  policy,  where  it  is  a  limited  or  conditional  one,  506,  507, 
Questions  arising  concerning  the  description  of  the  property,  507,  508. 
Whether  answei's  to  interrogatories,  referred  to  in  the  policy,  and  attached  to  it, 

are  to  be  treated  as  representations  or  warranties,  508,  509, 
Construction  of  clause  requiring  notice  to  be  given  where  there  is  a  double 

insurance,  510. 
Where  no  notice  is  given  of  prior  insurance  on  obtaining  second,  and  the  latter 

is  thus  rendered  void,  there  is  a  conflict  of  authority  as  to  whether  it  can  be 

set  up  to  defeat  the  first,  511. 
Construction  of  clause  relating  to  the  amount  to  be  recovered  in  case  of  double 

insurance,  512-514. 
Decisions  on  the  clause  as  to  inci'ease  of  risk  in  use  of  the  building,  514,  515. 
As  to  increase  of  risk  from  alteration  of  building,  51G. 
Where  certificate  is  to  be  given  by  notary  public  most  contiguous  to  place  of 

fire,  what  will  be  sufiicient,  516,  517. 
At  what  stage  of  the  proceedings  insurers  can  object  to  formal  defect  in  pre 

liminary  proof,  517,  518. 
Assignment  of  fire  policy  before   loss   not  valid  imless  some  interest  in  the 

property  go  with  it,  518,  519. 
Nor  available,  without  notice  to  or  consent  of  underwriters,  520. 
Re-insurance  valid,  521, 

Duty  of  first  underwriter,  on  application  for,  ih. 

Principle  upon  which  amount  of  loss  is  ascertained  and  paid,  521,  522, 
Questions  arising  upon  insurance  of  mortgaged  property,  mortgagor,  mortgagee, 

and  underwriters,  523,  524, 
Distinction  between  contract  of  fire  and  marine  insurance  in  the  mode  of  adjust- 
ment and  satisfaction,  524,  525. 
Evidence  admissible  to  prove  gross  negligence  and  gross  misconduct  of  the 

plaintiff  as  the  cause  of  the  destruction  of  the  building,  625,  526. 
INSURANCE,  LIFE. 

Assured  must  have  an  interest  in  life  insured,  496. 

What  will  amount  to  it,  ib. 

What  is  death  by  suicide,  498. 

Consequence  if,  in  the  representation  on  which  a  life  insurance  is  effected,  a 

material  fact  is  untruly  stated  or  concealed,  501. 


748  IXDEX  TO  XOTES 

CN'SUEAXCE,  MARITIME. 

Whether  the  contract  of  insurance  must  be  in  ■writing,  410. 

Equity  will  decree  the  specific  execution  of  a  valid  agreement  for  insurance,  or 
an  action  for  damages  may  be  maintained,  on  the  non-performance  thereof,  at 
law,  411. 

The  part  owner  of  a  vessel  has  no  authority,  as  such,  to  insure  for  the  other 
o^wnei-s,  413. 

Validity  of  wager  policies,  414. 

"What  interest  will  support  an  insurance,  416. 

Contract  for  reassurance  allowed  in  the  United  States,  41Y. 

What  is  a  double  insurance,  and  principles  applicable  thereto,  4lY,  418. 

How  far  a  contract  of  insurance  is  afifeeted  by  a  subsequent  illegality  in  the 
voyage,  419. 

Policy  of  insurance  valid,  although  the  uame  of  the  assured  is  left  blank,  424. 

Meaning  of  the  phrase,  in  a  policy,  "  whom  it  may  concern,"  424,  425. 

Meaning  of  an  insurance  upon  a  ship  for  a  certain  voyage,  427. 

What  is  embraced  by  a  policy  on  goods  to  be  shipped  between  two  certain 
days,  428. 

What  is  embraced  by  the  exception,  "perils  of  the  sea,"  and  dangers  of 
"  the  river,"  434. 

More  comprehensive  than  "the  act  of  God,"  or  "the  public  enemies,"  ib. 

But  this  exception  does  not  exclude  responsibility  for  negligence,  435. 

Policy  covers  the  loss  occasioned  by  the  explosion  of  the  boiler  of  a  steam- 
boat, ib. 

If,  after  tlie  commencement  of  the  voyage  insured,  a  war  breaks  out  between 
the  country  to  which  the  property  belongs  and  a  foreign  countr}-,  the  policy 
is  not  vacated,  436. 

Conflict  of  authority  as  to  the  meaning  of  the  word  "thieves,"  in  a  policy,  437. 

What  is  embraced  xmder  the  clause  against  "arrests,  restraints,  and  detain- 
ments," 438. 

Whether  fraud  is  essential  to  constitute  "barratry"  of  master  or  mariners,  440. 

Insurers  not  responsible  for  the  destruction  of  a  vessel  by  worms,  in  the  Pacific 
Ocean,  unless  mentioned  in  the  policy,  442. 

K^egligence  of  master  and  crew  no  defence  to  the  insurer,  where  the  loss 
happens  from  an  enumerated  peril,  and  there  is  also  a  clause  against 
barratry,  444. 

Insurers  responsible  for  amount  of  damage  done  to  another  vessel  b\'  a  collision 
with  the  vessel  insured,  and  which  the  owners  of  the  latter  have  been  com- 
pelled to  pay,  445. 

Kor  is  it  material  that  the  collision  was  the  result  of  negligence  in  the  master 
or  crew  of  the  vessel  insured,  ib. 

Doctrine  modified  bj'  recent  decision,  ib. 

Legal  efi'ect  of  the  memorandum,  448. 

Whether  the  insurer  will  bo  responsible  where  the  commodity  specifically 
remains,  although  of  no  value,  ib. 

What  will  amount  to  a  deviation,  459. 

When  it  can  be  predicated  of  river  navigation,  ib. 

Authorities  on  various  points  connected  with,  4G0. 

What  is  included  under  a  warranty  of  seaworthiness,  465,  466. 


I 


OF  THE  AMERICAX  EDITORS.  749 

IN'SUEAXCE,  MARITIME— coni!i«7<f J. 

"Whether  it  embraces  defects  arising  in  the  course  of  the  voN-age,  46G. 

It  seems  that  in  this  case  they  must  be  brought  to  the  notice  of  tlie  owner,  and 

an  opportmiity  be  lost  of  repairing  the  vessel,  or  he  will  not  be  respon- 
sible, ib. 
The  owner  of  the  vessel  is  required,  under  this  warranty,  to  have  some  one  on 

board  capable  of  navigating  her,  besides  the  master,  467. 
A  policy  of  insurance  being  a  personal  contract  of  indemnitj',  does  not  pass  as 

an  incident  upon  the  transfer  of  the  vessel,  471. 
Is  assignable  in  equity,  but  whether  it  may  be  rendered  negotiable  so  as  to  vest 

a  right  of  action  in  the  assignee,  in  his  own  name,  is  not  settled,  470,  471. 
Consent  of  the  underwriters  is  not  necessary  to  render  an  assignment  valid, 

unless  there  is  a  clause  to  that  effect  in  the  policj',  471,  472. 
Abandonment,  whether,  when   once   made,   it   is   affected   by  any  subsequent 

events,  473. 
When  the  right  to  abandon  exists,  473,  4*74. 
Eule  in  the  United  States  as  to  the  amount  of  damage  which  will  give  a  I'lght  to 

abandon,  474. 
In  ascertaining  this  amount,  principle  upon  which  the  value  of  the  ship  is  to  be 

estimated,  26. 
Authorities  upon  various  questions  connected  with  abandonment,  475. 
The  right  of  abandonment  in  cases  of  consti'uctive  total  loss  confirmed,  476. 
The  propriety  of  requiring  notice  of  abandonment,  ib. 
The  insurers  on  a  ship,  if  they  pay  a  total  loss,  are  not  liable  for  any  prior 

partial  loss  which  has  not  been  repaired,  482. 
If  a  total  loss  occurs,  from  which  they  are  exempt,  they  are  not  liable  for  any 

prior  partial  loss  which  in   that  event  does   not  prove  prejudicial  to  the 

assured,  ib. 
Rule  as  to   the  deduction  of  one-third  new  for  old   is  applicable  to  steam- 
boats, 4S2,  483. 
Effect,  upon  a  policy,  of  fraud,  concealment,  or  misrepresentation,  485. 
"Whether  the  concealment  of  a  material  fact,  b}'  an  agent,  from  his  principal, 

will  vitiate  a  policy  negotiated  in  good  faith  by  the  latter,  4SG. 
"When  the  insured  is  entitled  to  a  return  of  premium,  although  but  for  his  own 

fault  the  peril  insured  against  might  have  been  run,  490. 
INTEREST. 

By  what  law  the  rate  of  is  to  be  determined,  663. 
How  calculated  where  there  have  been  partial  payments,  663,  664. 
Compound  interest  not  generally  allowed  in  the  United  States,  660. 
JOINT  STOCK  COMPANIES. 

The  English  law  formerly  recognized  no  distinction  in  unincorporated  partner- 
ships growing  out  of  the  number  of  partners  and  extent  of  objects  undertaken, 

101,  102. 
Provisions,  similar  to  those  passed  in  England,  are  to  be  found  in  few,  if  any,  of 

our  states,  102. 
Test  by  which  to  determine  whether  a  subscriber  to,  is  liable  to  third  persons  as 

a  partner,  136. 
LA"W  MERCHANT. 
How  expanded,  24. 


750  INDEX  TO  NOTES 

LAW  MERCHANT— coH<»i«eJ. 

History  of,  24. 
LIEN. 

May  exist  under  tlie  maritime  law,  or  in  equity,  independent  of  possession,  68ft, 

Conflict  of  decisions  as  to  whether  an  innkeeper  has  a  lien  for  his  charges  i? 
keeping  a  horse  not  belonging  to  a  guest,  691. 

If  a  stolen  horse,  he  being  ignorant  of  the  theft,  ib.' 

"Whether  carrier  has  a  lien  against  the  rightful  owner,  ib. 

Lien  cannot  be  acquired  by  any  wrongful  act,  692. 

Growth  of  the  doctrine  in  modern  times,  ib. 

Authorities  as  to  various  classes  of  liens,  694. 

EflPect  of  the  loss  of  possession  upon  the  right  of  lien,  697 
MEMORANDUM. 

What  memorandum  will  be  suflBeient  under  the  Statute  of  Frauds,  615,  616. 

May  be  explained  by  reference  to  the  usage  and  custom  of  trade,  616. 
PARTNERSHIP. 

Necessity  and  importance  of  the  relation,  43. 

Principles  on  which  mutual  responsibility  of  partners  depend,  44,  45. 

Limited  partnerships,  where  allowed,  45. 

Suggestions  as  to  their  expediency,  46,  47. 

Difference  between  partnerships  i7iter  se,  and  as  to  third  persons,  48-50. 

As  to  those  i?iter  se,  the  intention  of  the  parties  is  the  key,  48. 

As  to  third  personS;  what  interest  in  the  profits  will  create  a  partnership,  ib. 

The  true  criterion  of  liability  furnished  by  the  general  law  of  contracts,  50. 

Dissolved  by  seizure  of  the  interest  of  one  partner  on  execution  for  separate 
debt,  54. 

How  it  may  be  continued  after  tlie  death  of  one  partner,  55. 

Interest  of  one  partner  may  be  sold  upon  an  execution  at  law,  for  his  separate 
debt,  and  possession  given  to  the  purchaser,  57. 

The  law  unsettled  as  to  the  mode  in  which  the  separate  creditor  of  one  partner 
may  make  his  execution  available  against  his  debtors'  interest  in  the  partner- 
ship assets,  57,  58. 

"Whether  a  court  will  enjoin  a  sale  until  the  value  of  the  interest  can  be  ascer- 
tained by  an  account,  58,  59. 

Real  estate,  purchased  with  the  funds,  and  used  in  the  business  of  a  partnership, 
treated  in  equity  as  personalt}-,  between  the  partners  themselves,  or  their 
creditors,  59. 

Its  character  as  between  the  heirs  and  personal  representatives  of  a  deceased 
partner,  60. 

Rule  of  the  civil  Jaw  as  to  apportionment  of  profits  in  the  absence  of  stipu- 
lation, ib. 

When  one  partner  is  entitled  to  compensation  from  his  copartner,  61. 

Form  of  deed  of  partnership,  62-66. 

Propriety  of  inserting  in  it  a  stipulation  as  to  the  mode  of  dividing  the  partner- 
ship assets  on  a  dissolution,  67. 

Remedies  between  partners,  68. 

Action  of  account  lies  only  in  the  case  of  a  mercantile  partnership,  70. 

Whether  a  court  of  equity  will  decree  the  specific  execution  of  a  contract  to  form 
a  partnership,  7L 


OF  THE  AMERICAN  EDITORS.  751 

PARTNERSHIP— coni!«tM«J. 

Distinction  between  general  and  special  partnerships,  73,  74. 

Authority  of  dormant  partners,  74. 

Modern  doctrine  as  to  power  of  one  partner  to  bind  his  co-partner  by  deed, 
75,  76. 

Conflict  of  authorities  as  to  the  right  of  one  partner  to  make  a  general  assign- 
ment of  the  partnership  effects  for  the  benefit  of  creditors,  79,  80. 

A  transfer  of  all  the  effects  of  a  firm  for  the  payment  of  its  debts  is  a  virtual 
dissolution  of  the  partnership,  80. 

Real  estate  of  a  firm  belongs  to  the  partners  as  tenants  in  common,  ib. 

One  partner  has  no  right  to  make  accommodation  indorsements  or  guaranties  in 
the  name  of  the  firm,  83. 

Efi'ects  of  a  dissolution  upon  the  rights  of  the  partners,  88. 

As  to  the  acknowledgment  of  a  debt  by  one  partner  after  dissolution,  88,  89. 

Respective  rights  of  the  joint  and  several  creditors  of  a  partnership,  89-94. 

Obligation  of  creditor  to  sue  surviving  partner,  95. 

One  partner  cannot  apply  assets  of  the  firm  to  payment  of  his  separate  debt^ 
nor  will  ignorance  by  the  creditor  of  the  fraud  affect  the  rights  of  his  co- 
partner, 97. 

The  maxim,  "Jus  accrescendi  inter  mercatores  locum  non  habet,"  applies  to  partner- 
ship chattels,  223. 
PAYMENT. 

Payment  in  counterfeit  bills  a  nullity,  655. 

Exception  where  payment  is  made  bo7ia  fide  to  a  bank  in  its  forged  bills,  ib. 

Whether  a  payment  in  current  bank-notes,  which  are  genuine,  but  -worthless, 
both  parties  being  ignorant  of  the  fact  at  the  time,  will  be  good,  ib. 

When  the  acceptance  of  a  promissory  note  is  to  be  considered  a  payment  of  a 
precedent  debt,  656. 

Present  rule  in  New  York,  656,  657. 

Payments,  application  of  rule  where  the  duty  devolves  on  the  court,  668. 

Whether  the  creditor  has  a  right  to  apply  an  indefinite  payment  in  the  manner 
least  beneficial  to  his  debtor,  668,  669. 
PRINCIPAL  AND  AGENT. 

Agency  is  a  personal  trust  and  confidence,  and  is  sometimes  thus  expressed : — 
delegata  potesias  non  potest  delegari,  148. 

Powers,  requiring  the  exercise  of  discretion,  cannot  be  delegated  by  a  corpora- 
tion to  its  directors,  ib. 

Agent  maybe  appointed  to  make  a  contract  respecting  real  estate  bj  parol,  149. 

Classes  of  commercial  agents,  151. 

Leading  distinctions  between  factors  and  brokers,  ib. 

Ordinary  duties  of  cashiers  of  banks,  152. 

Authority  of,  ib. 

No  right  to  allow  any  violati  )n  of  the  established  rules  or  usages  of  the  bank,  ib. 

Rule  of  responsibility  and  measure  of  damages  applicable  to  commercial 
agents,  154. 

Liability  of  banks  acting  as  agents  for  the  collection  of  commercial  paper, 
154,  155. 

Whether  responsible  for  neglect  of  notary  in  making  presentment,  or  giving 
notice  of  dishonor,  155. 


752  INDEX  TO  NOTES 

PRINCIPAL  ANT)  AGEWr—contimied 

"When  a  subsequent  ratification  will  render  principal  liable  for  the  acts  of  an 

unauthorized  agent,  156. 
Eule  applicable  to  corporations,  ib. 

Limitation  where  act  of  agent  is  unlawful  and  directly  injurious,  ib. 
Principal  not  liable  for  a  wilful  trespass  committed  by  his  servant,  because 

approved  by  his  general  agent^  ib. 
Duties  of  agent  towards  his  principal,  159. 
Consequences  of  the  breach  of  any  of  his  obligations  to  the  prejuflice  of  his 

principal,  ib. 
When  agent  justified  in  disobeying  instructions,  ib. 
To  what  extent  is  the  maxim,  "  ipiorantia  legis  neminem  excusat,"  applif-flble  to 

the  duties  of  an  agent,  160. 
Agent  not  allowed  to  derive  any  personal  benefit  from  the  exercise  of  his  agency 

to  the  prejudice  of  the  principal,  ib. 
Agent,  when  the  agency  has  closed,  is  bound  to  render  an  account  thereof  to  his 

principal,  ib. 
Qualification  of  the  agent's  liability  to  render  an  account,  ib. 
Efi"ect  of  the  agent's  neglecting  to  keep  proper  accounts,  161. 
The  law  attributes  to  his  account  a  prima  facie  credit,  ib. 
As  to  liability  of  agent  under  a  del  credere  commission,  163,  164. 
When  the  principal  can  recover  property  in  the  hands  of  a  factor,  upon  his  death 

or  insolvency,  165,  166. 
Eights  and  liabilities  of  factors  upon  consignments,  with  or  without  instruc- 
tions, 168,  169. 
Distinction  between  cases  of  joint  and  several  authority,  175. 
Exception  in  the  case  of  public  agencies,  and  in  commercial  transactions,  ib. 
Implied  authority  connected  with  either  general  or  special  agencies,  176. 
Notice  to  the  pledgee  that  the  goods  were  transmitted  to  the  consignee  with 

directions  to  sell  simply,  does  not  vitiate  the  pledge,  180,  181. 
Limitation  of  the  rule,  that  if  the  vendor  treat  the  agent  as  the  principal 

debtor,    knowing  the  relation,    he   cannot   afterwards   resort   to   the   prin- 
cipal, 187. 
Restrictions   upon   the   general   responsibility  of  the   master   for   acts   of  his 

servant,  192,  193. 
Extent  of  the  master's  liability  for  the  acts  of  his  servant  done  in  disregard  of 

the  general  orders  or  special  command  of  the  master,  194,  195. 
Effect  upon  the  authority  of  an  agent  on  death  of  principal,  197-200. 
Rule  where  the  agency  is  coiipled  with  an  interest  in  the  subject  thereof,  198. 
Qucere,  as  to  the  doctrine  where  third  persons  deal  with  the  agent  in  ignorance 

of  the  implied  revocation,  199. 
An  agent  contracting  on  behalf  of  his  principal,  and  in  ignorance  of  his  death, 

not  personally  responsible,  200. 
Effect  of  notice  given  by  principal  to  purchaser  to  pay  him  and  not  agent,  202. 
Conflict  of  authority  as  to  responsibility  of  an  agent  contracting  for  a  foreign 

principal,  211. 
Difference  in  extent  of  the  liability  of  public  and  private  agents,  212. 
Exemption  of  principal  from  responsibility  does  not  carry  with  it  that  of  the 

agent,  213. 


I 


OF  THE   AilEPJCAX  EDITORS.  753 

PRIXCIPAL  AM)  AGE^T—contlniieJ. 

Liability  of  an  agent  who  has  paid  over  money  wrongfulU-  to  his  princiiJal,  216. 
Principal  alone  is  responsible,  for  omission  or  neglect  of  duty  of  agent,  to  third 

persons,  217. 
SALE. 

Distinction  between  contract  of  bailment  and  of  sale,  591,  592. 

What  may  be  the  subject  of  sale,  593. 

Possession  of  the  thing  by  the  rightful  owner  is  not  essential  to  the  validity  of 

a  sale,  594. 
English  law  of  market  overt  does  not  prevail  in  this  coimtry,  and  the  title  of 

the  purchaser  depends  upon  that  of  the  vendor,  ib. 
Illustration  of  this  principle,  ib. 
Fraud  will  vitiate  a  contract  of  sale,  although  possession  has  been  delivered,  as 

between  the  parties,  597. 
But  a  purchaser,  for  a  valuable   consideration,   and  without  notice,  from  a 

fraudulent  vendee,  acquires  a  good  title,  ib. 
Distinction  between  what  is  necessary  on  a  contract  of  sale  to  vest  tlie  right  of 

propert}^  and  to  give  the  right  of  possession,  ib. 
On  a  contract  of  sale  the  right  of  property  will  be  changed  by  an  absolute 

delivery,  unless  the  parties  expressly  state  that  the  title  shall  not  pass  until 

payment  be  made,  600. 
Consideration  of  the  general  rule,  that  while  anything  remains  to  be  done  to 

ascertain  the  value,   quantity,   or   quality  of  the  thing   sold,  the   right  of 

property  does  not  pass,  602. 
The   mere   transfer   of  possession  where   the   vendee   does  not  comply  with 

a  condition  to   be  performed   contemporaneousl}-,   does   not   amount   to    a 

delivery,  622. 
Construction  of  the  clause  in  the  Statute  of  Frauds,  requiring  an  agreement,  not 

to  be  performed  within  one  j-ear  from  the  time  of  the  making  thereof,  to  be  in 

writing,  605. 
Distinction  taken  under  the  Statute  of  Frauds,  between  a  contract  for  a  thing 

existing  in  solido,  and  an  agreement  for  a  thing  not  yet  made,  to  be  delivered 

on  a  future  day,  607 
TTie  mere  handing  over  goods  under  tlie  expectation  of  immediate  payment,  does 

not  constitute  absolute  delivery,  622. 
Vendee  cannot  refuse  to  receive  a  larger  quantity  of  goods,  which  is  intended  as 

a  mere  compliance  with  his  order,  and  not  sent  for  the  purpose  of  charging 

him  with  the  excess,  ib. 
When  a  sale  is  procured  by  fraud  no  title  passes  to  the  vendee,  629. 
Purchase  of  goods  with  a  preconceived  design  not  to  pay  for  them,  will  avoid  the 

sale,  ib. 
A  sale  and  delivery,  procured  through  a  false  representation  of  the  vendee  in  re- 
gard to  his  solvenc}  and  credit,  passes  no  title  as  between  the  parties  ;  and 

vendor's  remedies  thereon,  ib. 
Contract  for  sale  of  goods  obtained  by  fraud  is  voidable  at  the  instance  of  the 

party  defrauded,  630. 
Authorities  disapproving  the  tendency  of  modern  decisions  towards  the  doctrine 

of  the  civil  law  as  to  the  implied  warranty  of  the   quality  of  an   article 

sold,  631. 
48 


754  INT)EX  TO  NOTES 

SALE — continued. 

Distinction  as  to  implied  -warranty  of  quality,  between  an  executed  and  executory 

contract  for  the  sale  of  goods,  631. 
Warranty  implied  on  a  sale  by  sample,  ib. 
"Warranty  implied  on  a  sale  of  provisions  for  domestic  use,  ib. 
But  otherwise  when  they  are  sold  as  articles  of  merchandise,  632. 
Where  there  is  a  particular  express  warranty,  the  law  will  not  extend  that  war- 
ranty by  implication,  633. 
The  rule  that  a  warranty  of  title  is  implied  on  the  sale  of  personal  property, 
only  applies  where  the  possession  is  in   the   vendor   at  the   time  of  sale, 
633,  634. 
Consideration  of  the  doctrine  as  to  when  an  affirmation  at  the  time  of  sale,  f 
bill  of  parcels,  an  invoice,  or  words  of  description  in  a  bill  of  sale,  will  amount 
to  a  warranty,  637-640. 
Held  that  a  purchase  made  at  an  auction  sale  of  goods,  at  one  and  the  same 
time,  and  from  the  same  vendor,  although  the  articles  purchased  are  nxime- 
rous,  and  are  struck  off  separately  at  separate  and  distinct  times,  constitute 
but  one  entire  contract,  642. 
SfflPPING. 

Reference  to  Acts  of  Congress  relating  to  American  shipping,  228. 

British  navigation  laws  substantially  repealed,  229,  230. 

Bill  of  sale  of  ship  valid  without  enrolment,  23S. 

Object  of  latter,  ib. 

Authority  of  master  to  sell  the  ship  or  cargo,  239,  240.     See  Affreightment. 

Effect  of  the  Registry  acts  of  P92  and  of  1850  respective!}',  242,  243. 

Liability  of  mortgagee  of  a  shij    whether  in  or  out  of  possession,  246,  247. 

As  to  the  power  of  a  Court  of  Admiralty  to  decree  a  sale  of  the  vessel,  on  the  disc 

agreement  of  the  owners  about  a  particular  vo3'age,  249. 
One  part  owner  is  agent  for  the  other  jm-t  owners,  in  all  that  concerns  the 

repairs  and  necessaries  of  the  ship,  250. 
Master  agent  for  them  all,  ib. 
Responsibility  of  part  owners  for  torts,  ib. 

One  part  owner  can  only  dispose  of  his  own  interest  in  the  vessel,  251. 
Creditors  of  both  part  owners  entitled  to  no  priority  of  payment  out  of  the  ves 
sel  over  the  separate  creditors  of  either,  ib. 
STOPPAGE  EST  TRANSITU. 
Nature  of  the  right,  679. 
Does  not  rescind  the  contract  of  sale,  ib. 
How  long  it  continues,  683. 
SURETY. 

Can  only  be  charged  when  the  case  is  brought  within  the  very  terms  of  his  con- 
tract, and  court  will  not  go  into  an  inquiry  whether  the  surety  has  been 
injured  by  a  departure  from  those  terms,  582,  583. 
TRADE  MARKS. 

Recognition  of  property  in,  254. 
What  will  amount  to  an  invasion  of,  ib. 

When  and  on  whose  behalf  Courts  of  Equity  will  interfere,  ib. 
TRADE,  RESTRAINT  OF. 
Contracts  in,  38-40. 


OF  THE  MIERICAN  EDITORS.  755 

TRADE,  RESTRAINT  OF— continued. 

Difference  between  general  and  partial  restraints,  38-40. 

"What  is  a  reasonable  restraint,  39. 
USAGE. 

Principles  upon  which  evidence  of,  is  admitted,  29-31. 

Distinctions  between  particular  usages  of  trade  and  customs  of  merchants,  31. 

The  existence  of  a  particular  usage  a  question  of  fact,  ib. 

Proposition,  that  no  usage  inconsistent  with  the  rules  of  law  can  be  established, 
must  be  received  with  qualification,  32. 

How  far  admissible,  to  explain  what  is  doubtful,  but  never  to  contradict  what 
is  plain,  ib. 
USURY. 

What  necessary  to  constitute,  665. 

General  principles  as  to,  665,  666. 


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